Vacant positions in your company can carry many problems that are not always clear at first sight. Therefore, we created this Vacancy Costs Calculator to clarify these costs. Using the average salary for each position, importance factor and average vacancy days, we can estimate how much money you are losing on a yearly-basis.
Vacancy costs are the estimated losses in revenue that a company's faces due to vacancies and describes the business impact of the shortage of skilled workers. Today, many organizations tend to have a strong focus on cost minimization, overlooking the potential long-term and negative impact of how they handle vacancies. Consequently, there is a discrepancy between understanding a vacancy as saving costs or as an investment.
Unresolved personnel issues are widely spread among German medium-sized businesses. As a result, companies suffer from lost sales, unmanageable workloads and an overall reduction in productivity and profitability. At first glance, savings in salaries, overheads and benefits seem to increase the company's turnover. However, a profound confrontation with the issue quickly reveals that the opposite is the case.
Problems with vacant positions become increasingly significant, depending on the relevance of a position for a company. If, for example, a company is struggling with deficiencies or problems in sales, such a vacancy is more severe than in a stable situation. This is why it is extremely vital to analyse the economic consequences of the lack of an efficient employee in key positions within your company.
Most top managers are aware of the challenges behind vacancy costs and consider them critical to the success of their business. However, the right measures are not always the ones taken. This is usually due to the following causes:
Open vacancies present various direct and indirect problems for the company. Significant consequences include:
Unfilled vacancies may be a challenge, but they are certainly not unsolvable. But clear and targeted solutions are required:
Be aware that factors like the adoption of tasks by less qualified employees, the slowing down of any competitive advantage of the company or an increased dissatisfaction of existing employees due to increasing workloads will negatively affect the profitability of your company. In the worst case scenario, this may also lead to a loss of corporate culture.
For determining vacancy costs we use the average salary per position in Germany, the factor of the business relevance* of the employee for your company and the average number of vacancy days for filling this position. Of course, in this context, we provide you with the average vacancy times per position. In addition, you can also insert a salary according to your salary expectations.
*Explanation of the business relevance factor: The criterion of business relevance depends on the degree of seniority and the direct impact on turnover generated by the core business. The coefficient is divided into three levels according to the respective weighting.
Factor 1: This factor corresponds to the lowest level of business relevance and refers to an employee with low seniority and no direct relevance to the core business.
Factor 2: This factor corresponds to the medium level of business relevance and refers to an employee who EITHER proves to have a high degree of seniority OR has a direct influence on the turnover in the core business.
Factor 3: This factor corresponds to the highest level of business relevance and refers to an employee who has BOTH a high degree of seniority AND a direct influence on the turnover in the core business.
Remark: Of course, the factor of business relevance cannot always be clearly determined. Consider the example of an eCommerce-shop: You need both customers and a functional shop. In case you have additions to the approach described here, please send your suggestions to [email protected]