Cost of a vacant position

Employee retention is of the utmost importane for every compnay in every industry.

Without a doubt, it is an inescapable reality that nearly every company, regardless of its size or industry, will inevitably find itself grappling with vacant positions at any given time. These vacancies arise from a multitude of factors, including internal promotions, terminations, voluntary resignations, and various other personnel fluctuations. While it might be tempting to believe that a vacant position brings relief by eliminating the need for immediate salary disbursements, it is important to realize that this does not automatically translate into actual cost savings for the company.

The notion that an empty position simply signifies a halt in expenditure is deceptive. On the contrary, the repercussions of a vacancy can be far-reaching and encompass a range of tangible and intangible costs that may not be immediately evident.

Hard Costs

These are the direct costs you will incur for every aspect of the hiring process. There are direct monetary costs associated with vacancies. These include expenses related to recruitment and hiring processes, such as advertising the position, engaging the services of a recruitment agency like ours, conducting background checks, and employing candidate assessment tools. Each of these steps incurs expenditures that can quickly add up, particularly for specialized or executive-level positions.

Furthermore, the process of filling a vacant position extends beyond mere recruitment cost.

Once a suitable candidate is identified, additional expenses arise in the form of training and onboarding. These encompass various aspects, such as orientation programs, training materials, mentorship initiatives, and the valuable time and resources contributed by existing employees to facilitate the new hire’s integration into the company’s operations.

Soft Costs

Lost Productivity

When an employee leaves, their workload must still be accounted for. If projects are brought to a standstill while the position remains open, you can expect delayed releases and lost revenue. Additionally, the strain caused by unfilled positions can have a cascading effect on your existing workforce.

The existing employess now have to spend time integrating the new employee leading to them having less time to focus on their main role in the company.

Negative Impacts to Employee Engagement & Morale

Overburdened employees may become stretched thin, leading to burnout, decreased morale, and increased turnover. This not only exacerbates the productivity issues but also adds to the costs associated with hiring and training new employees to fill the gaps.

The exit of a beloved team member can strike a substantial blow to employee engagement and morale. Other employees may wonder if they too should follow suit and look for alternative employment.

Damage to Your Employer Brand

Establishing a reputation as a revolving-door employer is unlikely to appeal to individuals seeking long-term employment with a desire to make a substantial impact. The continual presence of open positions, or positions that remain unfilled for extended periods, can significantly undermine how your customers perceive your organization. This negative perception may arise due to concerns about stability, commitment, and the ability to deliver consistent quality. Consequently, it becomes essential to prioritize employee retention and create a supportive environment that fosters loyalty and dedication.


Lost Opportunity Costs

The consequences of leaving key can be profound, affecting multiple facets of your business.

One of the major drawbacks is the missed opportunity for business growth and development. Unfilled positions prevent you from fully capitalizing on potential opportunities that arise in the market. Whether it’s identifying new market segments, pursuing strategic partnerships, or exploring innovative product ideas, strained operations limit your ability to explore these avenues effectively. As a result, you find yourself unable to expand your business and tap into its full potential.

Moreover, the absence of key personnel stifles your ability to scale your operations. Scaling requires a strong foundation, and that includes having the right people in the right positions. Without key roles filled, you may find it difficult to handle increased demand, expand into new markets, or streamline operations. This lack of scalability not only hampers your ability to grow but also puts you at a disadvantage compared to competitors who have their teams fully optimized.

Furthermore, the absence of key personnel can impact decision-making and strategic planning. Without the expertise and insights provided by those positions, you may lack the necessary perspectives to make informed decisions. This can result in missed opportunities, flawed strategies, and suboptimal outcomes.

Salary Cost Sample

Research suggests that the average employee’s value is between one and three times their annual salary. For this calculation, let’s assume that an employee earning $75,000 brings two times their annual salary ($150,000) in value to their organization every year.

$150,000/260 = $576.92 a day!


Cost per Day Number of Days Total Cost of Vacancy


x 42

= $24,230.64


x 60

= $34,615.20


x 90

= $51.922.80

Loss of Revenue Sample

This formula works well for revenue-generating positions, such as salespeople. For this calculation, let’s assume your average salesperson generates $500,000 in annual revenue.

$500,000/260 = $1923.08 a day!


Cost per Day Number of Days Total Cost of Vacancy


x 42

= $80,769.36


x 60

= $115,384.80


x 90

= $173.077.20

The calculations are based on 260 working days per year, and look at cost of vacancy (COV) for positions that remain open for 42 (average number of days it takes to fill a position according to SHRM), 60 and 90 days.

The average time to fill varies greatly by industry and/or position. Positions that require highly skilled professionals typically remain open for 90+ days.

Salary/Revenue Cost Calculator

Annual Salary/Revenue
Working Days
Days Vacant