The Cost Of Job Vacancies
Employees are expensive, but having too few on your crew will probably end up costing you more. We get calls from employers every day regarding how much cashflow they’re losing while a seat goes vacant. It could be anywhere from $250,000 a month, to tens of thousands every hour, in the case of industries that suffer production interruptions due to a lack of maintenance staff, such as mining or manufacturing. It is crucial to match the real impact of recruitment with the real cost of a business, in order to reduce the costly daily impact on companies.
The cost of hiring goes far beyond simply paying an employee’s salary, and includes recruitment, training, benefits, and more. According to the Human Capital Benchmarking Report, companies on average will spend 42 days attempting to fill a role, and spend more than $1,500 on employee training once they’ve made a hire. Not only that, but it can take six months or more for a company to balance its investment in hiring.
If that doesn’t inspire you to speed up the hiring process, consider how your current employees feel, having to stretch themselves to fill the gaps. Even if the employee is being compensated for their extra time and effort, it’s not a sustainable solution. Keep in mind too, vacancies in strategic, management, and team leadership positions have a multiplier effect on productivity and recruitment. It is amazing how often we hear that someone is quitting due to the manager they liked leaving or due to overwork. If that happens to you, you could be doubling or tripling the cost of your job vacancies in one fell swoop.
Temp employees from agencies are an option, but keep in mind, temp workers tend to have a higher error rate than the average employee, and they are unlikely to generate as many new ideas. That’s another reason why finding the right, long-term fit is so important.
Although average personnel costs vary depending on the industry and type of activity, it is worth looking into outside recruitment services if your company needs to fill positions with qualified professionals. Although the cost of recruitment may seem higher than the cost of unfilled positions, that does not mean they are worth the risk, not to mention the snowball effect that high unfilled positions can have when other employees are overworked. If positions are filled too quickly with the wrong hire, high turnover costs can be more than saving personnel costs.
Human resources managers say the average cost they incur for longer vacancies is more than $800,000 a year. Having one role vacant in mining could cost a company $25 million a year, and can exceed $20.1 billion a year for sectors like high-tech. So what are vacancies costing your company?
Sources:
https://www.investopedia.com/financial-edge/0711/the-cost-of-hiring-a-new-employee.aspx
Kael Campbell is President and Lead Recruiter of Red Seal Recruiting Solutions, a company providing recruitment services in mining, equipment and plant maintenance, utilities, manufacturing, construction, and transportation. When he is not recruiting, Kael spends as much time as possible with family in the great outdoors and on the water. He volunteers his time as a Board Member of the Entrepreneurs Organization of Vancouver Island. We have a wide variety of services to help you find the best employees. See how we can help on our Recruiting Solutions page.