COLUMN Employment Strategy Corner
Unfilled Positions Can Cost You Real Money
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fter many years in the employment, recruitment and staffing profession---and as founder and president of the search firm Kemper Associates, I am amazed to find how many companies perform in a damage control and seat-of-the-pants fashion in many everyday business operations. Yes, it is true. This is especially so in a company’s staffing and recruiting activities. We react to circumstances, rather than plan a strategy designed to control our company’s destiny through careful staff planning. It’s time to get very practical. Let’s examine how much it costs to delay filling the open positions in your company. We’re going to find it’s expensive to procrastinate in hiring. Yes, the open desk, cubicle, or office within your company, represents money lost every day. Each hour a chair remains unfilled, customers and prospects go uncalled, questions go unanswered, orders go untaken, projects are understaffed, expensive free-lancers are used, and new efficiencies go undiscovered. Let’s calculate the cost of unfilled positions Don’t be put off or scared by the few minutes of very basic math we will use in the next few paragraphs, as we work to show just how much we lose when one of our positions is left unfilled for long. The results will surprise you, and be worth it, I assure you. By assuming that each current employee has a positive revenue impact, which they should, it is easy to calculate an average minimum baseline cost of each of your open positions. Use the following values in the two-step calculation below. 16 September/October 2017 Exhibit City News
One way of determining if you should invest more in recruiting for such a position is to determine if different recruiting tactics lead to filling this position faster, and if the cost of that is By Philip H. Kemper less than the cost of leaving this position open then you need to get on trying to get that opening filled. For example, let’s say that in a cerIt’s easy to see the money lost in other tain department the daily revenue per businesses on things like unrented apart- employee is $500 and the department ments, unfilled airline seats or unsold hires for five positions per year. If the produce at the local market. Although it department was able to invest more in may be tempting to disagree, open posirecruiting strategy and shave five days off tions in our companies represent a very recruiting per position, this would save similar, lost revenue opportunity. the company $12,500 in lost potential revenue per employee. Meaning it would Set your lost revenue limit be in the company’s best interest to Do not be deceived into thinking your spend more on recruiting to make a hire open position has no real value. Do the quicker. Here’s where using an employabove calculation and then identify an ment specialist makes sense. acceptable future loss level. For example, These numbers often go unrealized if step two revealed that your daily revwhen a position is open, but they can enue per employee is $300, and you are help you to build a case against keeping ok with future lost revenue of $10,000, a position open too long. It is important you have about 33 days to fill your open you realize the money that can be saved position, $10,000 divided by $300 when you incorporate the right solution equals 33.33 days. into your recruiting efforts. The right recruiting solution, including the proper Cost of open position use of contract professionals, not only versus recruiting spend brings in quality candidates when you Of course, different positions have need then, but it improves your compadifferent costs per day based on how ny’s bottom line in the process. much revenue that role brings in to the organization. Some positions, realistiPhilip Kemper is Founder/President of Kemcally, cost a company more to leave open perAssociates, a 40-year-old Chicago-based than others, and many companies more national executive search firm. Phil can be actively recruit for these positions based contacted online at kemperassociates.org or on this increased cost-per-opening. kemperassoc@hotmail.com. R = Annual company revenue E = Number of employees Step one – Calculate Revenue per Employee R / E = Revenue per Employee Step two – Calculate Daily Revenue per Employee Revenue per Employee/365 = Daily Revenue per Employee