recruitment
Calculating the
Cost of Vacancies
FIVE COSTLY RECRUITING SINS
By Loren Miner, with assistance from Tom Brennan
Every company deals with turnover, but the most effective
companies deal with it quickly. Failure to respond to a job
vacancy promptly can cost a company thousands of dollars
and have harmful, non-monetary effects. To put it in perspective,
most industry analysts agree that an employee generates
revenue at a rate of one to three times his or her salary. Assuming
there are 220 working days in a year, this means a vacancy in a
$70,000 position can cost the company $318 to $954 a day.
In order to develop an effective strategy for responding to vacancies,
it’s important to calculate the costs of various options. There
are more ways to do this than can be described here, but all useful
calculations should consider both direct and indirect costs. Direct
costs include recruiting, separation pay and formal training for a
new employee. Indirect costs might include on-the-job training,
loss of efficiency and loss of productivity. There are non-monetary
costs, too, such as burning out the employees shouldering the extra
weight.
Here are the five most costly mistakes companies make regarding
vacancies and advice for avoiding them.
COSTLY SIN #1:
PUTTING OFF BACKFILLING
The costliest sin of all is deciding not to backfill. It may look good
on paper – just distribute the responsibilities among other team
members, and save on salary and benefits. However, it is more
complicated than that. Burning out team members saddled with
additional responsibilities will impact productivity. In addition,
position accountabilities aren’t Lego® bricks that can connect to
just any other brick – an intangible synergy created when one individual
owns a particular set of accountabilities may be at stake.
COSTLY SIN #2:
DRAWING OUT THE RECRUITMENT PROCESS
Diligence and thoroughness are essential in filling a vacancy, but
speed is just as important. A-list talent will have multiple suitors,
and slowpokes may have to settle for B- and C-list candidates.
Here are some ways to streamline the process:
■■ Make sure all stakeholders consider recruitment a high
priority. Treat recruitment like a project, with deadlines and
deliverables, and hold people to them.
■■ Put the decision in the hands of no more than three people and
hold no more than three interviews.
■■ Keep the schedule tight. For example, book all of a candidate’s
interviews for the same morning and gather stakeholders in the
afternoon to make a decision. Contact the candidate that same
day with a decision.
COSTLY SIN #3:
ASSESSING TALENT POORLY
Human resources should provide coaching to ensure hiring decision
makers are competent at assessing talent. Everyone involved
should ask the same questions and evaluate the same criteria.
More importantly, they should be asking the right questions.
Clarify the most important evaluation criteria early in the recruitment
process, including both “hard” skills and culture fit. There
are professional tools for assessing hard and soft skills, but keep
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HRPATODAY.CA ❚ MAY/JUNE 2015 ❚ 47