Cost of Vacancy Calculator
Use this free tool to help calculate potential revenue losses due to vacant positions.
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Cost of vacancy concerns and consequences
Time is money. And while some organizations assume they’re containing costs by allowing roles to remain unfilled, it’s often the opposite. Vacancies can cost an organization significant amounts of money in terms of lost revenue, which is what our tool calculates.
But it’s also important for employers to recognize that the financial impact of unfilled positions can be far greater when factoring in the costs of unfinished business; the costs of not fully executing on plans to grow and transform your company or department. So, beyond the issue of lost revenue, vacancies can also result in “soft cost” losses that snowball the longer a role sits open. These indirect costs can include but are not limited to reduced productivity, missed opportunities, decreased customer satisfaction, poor reviews, team burnout, blown deadlines, damaged worker morale, and eventually, employee retention issues.
In many cases, these costs won’t be visible until it’s too late. A top performer resigns. A stalled project is abandoned completely. A key account is lost.
Our calculator and the FAQ section below are intended to 1) help employers to gain a more concrete understanding of the range of costs associated with a job vacancy and 2) spotlight the value of streamlining the hiring process and rethinking your overall approach to finding talent.
How do you calculate the cost of a vacancy?
Our calculator estimates the cost of a job vacancy for a company by taking into account its annual revenue, total number of employees, and length of time the position is vacant. Our tool first calculates the revenue generated per employee by dividing the company's annual revenue by the number of employees. Next, it determines the daily revenue generated per employee by dividing the revenue per employee by the number of days worked in a calendar year. The calculator then applies a revenue impact multiplier based on the job level. This reflects the financial impact of the vacant position on revenue by calculating the daily revenue the employee could be generating if the position were filled. Finally, the calculator multiplies the employee's projected daily revenue by the number of days that the job is vacant to estimate the revenue lost. Overall, the calculator can provide a rough estimate of the revenue-related implications of a job vacancy. The calculator does not account for the countless soft costs associated with an extended vacancy.
What are ways to speed up the hiring process?
Streamlining the hiring process is crucial to finding and hiring top talent without wasting resources. More and more organizations are recognizing the value of adopting a strategic but speedy approach. It starts with clearly defining the role requirements and writing a detailed and compelling job description so that you attract the right people. Eliminating unnecessary rounds of interviews can also help. It's important to thoroughly vet candidates, but too many interviews slow down the hiring process and can drive away top talent. Remember that talent, particularly those with the most in-demand skills, have no shortage of options. When you identify a great candidate, consider extending an offer before faster-moving competitors take them off the market.
How can Upwork help solve cost of vacancy concerns?
Upwork is all about providing agile talent solutions. Partnering with Upwork enables you to build a flexible, scalable workforce—and fast. The average time to engage with talent on the platform is just three days! The longer the delay in filling a critical project need or skill gap, the more revenue you miss out on and the more detrimental the intangible costs. Bringing in freelance talent for specific assignments or with specialized skill sets can help you meet immediate needs and keep key projects on track. Upwork also has a simple and streamlined process that makes it a cinch to hire talent for full-time roles.
How long does it typically take to fill a vacancy?
The average time to hire in the United States is 54 days for non-executives, according to a 2022 report from the Society for Human Resource Management (SHRM). But many companies take much longer—sometimes many months. Again, the longer a position remains unfilled, the higher the amount of lost revenue and the more significant the soft costs.
What are the costs of vacancy in terms of the impact on existing employees?
Leaving a job vacancy open can have a profound negative effect on the employees left to shoulder the extra work. It often doesn’t take long for increased workloads to cause spikes in stress and decreased job satisfaction. And vacancies will present even more pronounced problems for employees who were already operating at full capacity. And when employees feel overwhelmed or unsupported, they can become flight risks. This is another reason why it’s essential to streamline (and proactively manage) the recruitment process and mitigate the impact on existing employees. Consider bringing in skilled freelancers to tackle specific tasks or projects, helping to ensure workloads remain manageable and employees can concentrate on their core responsibilities.
What is a contract-to-hire arrangement?
A contract-to-hire arrangement starts with a short-term contract to perform a specific project for a business. After the contract period ends, the business has the option to hire the person for a full-time opportunity. This arrangement helps build relationships and empowers you with the option to transition talent to full-time roles when the time is right. (Learn more about Upwork’s contract-to-hire offerings.)
Can the cost of vacancy differ between industries or job types?
Absolutely. The cost of vacancy can vary between industries and job types, depending on a host of factors, including the availability of skilled candidates, the level of the position, the education and experience required, and the competitive landscape. For instance, specialized roles in hot fields may have a notably higher cost of vacancy than entry-level roles in industries with a larger pool of qualified candidates.
How can companies measure the success of their efforts to avoid the costs of a vacancy?
Companies can measure the effectiveness of their efforts to reduce the costs of a vacancy by closely tracking time-to-hire averages, turnover rates, and employee satisfaction. If these metrics are improving and new efficiencies are being unlocked, it is a clear sign that the company's efforts are paying off. Additionally, organizations can conduct regular employee surveys to get feedback on their enhanced hiring and retention efforts.
The cost of a vacancy can vary widely based on a range of factors. Please note that our cost of vacancy calculator focuses on potential revenue losses and is meant to be an initial step only in understanding the impact of unfilled positions.