What's the real cost of those unfilled vacancies?

Published on : 13th September 2022

What's the real cost of those unfilled vacancies?

Every day and each month millions of jobs go unfilled and we constantly hear from our own clients about the impact it has on them and their teams.  You may have even had the pain yourself when someone leaves or is grabbed by another internal department, or business demand increases putting pressure on already stretched resources.

Sometimes you may just have to leave it unfilled rather than compromise on your own standards but what is the impact of not filling that role?

 
Personnel Costs
 
There could be a significant impact on other team members in your organization who are affected by vacant roles. The added workload and higher stress levels often result in a number of problems. These include reduced engagement and increased frustration which can lead to a lack of creativity and innovative thinking.
 
Greater incidences of illness, absenteeism and tardiness can also be noticed. A reduced ability to focus on the growth of the current employees leads to low morale, less chance of employees reaching individual goals and higher staff turnover.

Team Costs
 
Open positions can also decrease the effectiveness of your work teams in terms of reduced leadership, idea generation, and skills 'voids’. There will be an increased chance that other members will leave, and there will be disruption in team cohesiveness.
 
If the vacancy is for a team leader or manager then team efficiency will definitely be affected, (if not why were they in the role in the first place?).
 
Management Costs
 
Managers in charge of departments with open positions must contend with a number of headaches which include less time to manage remaining employees and increased frustration and stress due to the inability to deliver.
 
Reduced opportunity costs are also evident because managers have to spend valuable time performing fill-in duties. Vacancies in management and team leader positions also have a negative multiplier effect on productivity and the recruitment of others.
 
Customer Costs
 
Vacancies in critical areas can affect customer satisfaction levels, sometimes with serious consequences. These can include a loss of sales volume due to the inability to manage orders, reduced sales volumes because of poor service quality and increased customer attrition due to delays in new product development and new product launches.
 
There is frequently an increased customer perception that you are weak and do not care about them which could lead to losing their business.

Revenue Costs
 
A typical manager should generate between three to four times their annual salary in revenue and dividing the annual revenue by the number of employees will give a very rough figure of the cost impact on your business.
 
Other effects include delayed revenue resulting from longer time-to-market for new products, lost revenue resulting from products/services that are not introduced and reduced output because employees are inefficient at performing unfamiliar roles.

 
Competitive Advantage Costs
 
Open positions can affect your ability to remain competitive in the marketplace because word will get around that the company isn’t performing, leaving you weak and vulnerable. It also affects your hiring strategy by sending a message to prospective employees that the company is in trouble (especially relevant for high-demand positions).
 
It also negatively impacts your corporate culture and ongoing vacancies at the senior leadership level can affect financing, supplier and partnering opportunities.
 
I hope this provides some useful insight and helps you make the right decision!