January 12, 2021

The High Cost of Unfilled Jobs

Just before the Christmas and New Year holidays, I read that US Employers were cutting back on hiring. Here’s a quote from US News and World Report [December 4, 2020]. 

With the viral pandemic accelerating across the country, America’s employers sharply scaled back their hiring last month, adding 245,000 jobs, the fewest since April and the fifth straight monthly slowdown.

At the same time, the unemployment rate fell to a still-high 6.7%, from 6.9% in October as many people stopped looking for work and were no longer counted as unemployed, the Labor Department said. November’s job gain was down drastically from a 610,000 gain in October.

Friday’s report provided the latest evidence that the job market and economy are faltering in the face of a virus that has been shattering daily records for confirmed infections. Economic activity is likely to slow further with health officials warning against all but essential travel and states and cities limiting gatherings, restricting restaurant dining and reducing the hours and capacity of bars, stores and other businesses.

Most experts say the economy and job market won’t be able to fully recover until the virus can be controlled with an effective and widely used vaccine. And the picture could worsen before it improves.

When I read that I started calculating the various business costs that were apparent and hidden. Some were tangible, such as the cost of an unfilled position per day; a simple formula bears this out. 

Position’s annual salary / 220 Working days X Average days to hire

Calculated at a base pay of $95,004.00 and 30 days time to hire, an open job costs the company $431.84 per day.  

  • $25,910.40 at the point of 60 days without a hire
  • $38,865.60 at the point of 90 days without a hire
  • And so on… 

cost of unfilled jobs-07

Now imagine you have 10 jobs to fill at that same salary rate and the level of anxiety that would likely produce. (FYI, that would be $950K+ in the first 30 days.) Other effects to the business are less evident but just as impactful. When hiring slows the work still needs to be accomplished and that means fewer people taking on more responsibilities, likely without an immediate increase in pay. What does that do to the morale of your employees? There is a high probability that they will begin to feel overworked and unappreciated which would result in resentment. This could cause some to seek employment elsewhere exacerbating your dilemma in ways you might not immediately recognize - “brain drain.” Ari Bixhorn, Vice President of Marketing at Panopto, said this in an interview with HR Daily Advisor. 

Whether a company’s employee turnover is above or below average, your workforce becomes at least temporarily less efficient every time someone leaves. In our research, we found that on average, 42% of the skills and expertise required to capably perform in a given position will be known only by the person currently in that position. In other words, should that person leave, their remaining colleagues won’t be able to do 42% of their work, and someone hired into that role will need to learn 42% of it from scratch.

That has real consequences. According to our research, the average new hire will spend almost 200 hours working inefficiently (asking colleagues for information and waiting for responses, forging ahead by trial and error, and/or “reinventing the wheel” to duplicate the work of his or her predecessor). These inefficiencies lead to employee frustration, unnecessary delays in work products, and an overall loss of productivity that can significantly impact a company’s bottom line.

I would add to that quote another bottom line factor - a negative employer brand. When workers reach a high level of discontent there is a real danger of venting on employer review websites like Glassdoor. Should this happen, it becomes all the more challenging to recruit talent because passive candidates will take those comments into account when considering employment with your company.  If your enterprise already has image impediments that discourages top talent from considering you for employment, the longer your jobs are unfilled and as a result, the bigger the snowball effect. 


We here at Proactive Talent offer an on-demand type of recruitment process outsourcing (RPO) service that many of our competitors cannot. Due to our size and level of expertise, we can meet your on demand recruiting, employer branding and recruitment optimization needs more nimbly while also being a more cost effective option.  Contact us today to learn more about how we can help you prevent costs of unfilled positions.

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