Why Hunting for Purple Squirrel is A Damaged Deal?
What is the Cost of Vacant Positions? Can HR really afford to keep a position open for long?
How long is too long, when it comes to scraping the dust off the “Vacancy” board and putting it in the cupboard for good, until next time? The era of hanging “Vacancy boards” outside and waiting for the right candidate to strut through the doors is over. However, turns out that companies are still pretty much hanging the proverbial “board” and waiting to catch that purple squirrel aka the perfect match for the job.
Companies wait it out – the drill is to post open vacancies on sites like LinkedIn and pray for the right candidate to show up in the next 45 days. The average waiting period for most companies is 45 days before they take any proactive steps. Once the rush starts, it’s another 23 days before they find the right person for the job.
The Ignored Cost
What is the hold up in getting the right person within the right timeframe? The very fact that the cost of a vacancy is often intangible or unquantifiable. Let’s take an example of an unused fleet of trucks lying idle in the garage due to want of a driver. There is bound to be a cost behind the unused vehicles – they depreciate without running a single mile. Similar is the case with any vacant position and the higher it goes, the bigger the numbers are.
Every employee contributes to the total revenue and then there are high impact employees – executives and engineers whose loss is sorely missed in terms of revenue opportunity lost. A simple salary multiplier can formulate the direct cost:
(Annual revenue/number of employees)/220 working days X 1, 2, 3…n multiplier
Glassdoor says that unfilled vacancies in the U.S. tech market cost $20.1 billion. The cost increases in the U.K. with the vacant tech positions adding up to 63 billion pounds per year. Vacant positions may save benefits and payroll costs in the short run, but in the long haul delegating the task to contractors and outsourcing skills cost more than hiring an employee. When open positions stay untouched for long, you get a negative answer to the equation:
(Salary savings + benefit savings) – (cost of contingent labor + cost of overtime)
It is not just the monetary cost of overtime, but keeping that vacancy open for long can generate ripples through the team. One of them is the discontent among team members on the extra pile of work that now sits at their desk, just because the company is not finding the right person. For line managers and especially for team members it is a discomforting wait that can further spike the turnover rate within the team. All this while the HR manager is looking for that fabled unicorn – too good to be true, while the true, hardworking and almost-there candidate is sitting unnoticed under the pile of emails and resumes.
The Cost of Missed Opportunities
Gad Levanon, managing director of macroeconomic and labor market at The Conference Board says, “The problem is companies haven’t relaxed their expectations as the market has tightened.” The road to hire fast in the current situation is not being supremely selective and looking for perfection – this was a luxury in a weak labor market. Levanon defines the phenomena as “opportunistic upskilling” and it is the first stepping stone towards a faster recruitment process. Scott Wintrip, President of Wintrip Consulting Group says, “Often, there’s a gap between the hiring profile, whether written or simply in mind and who actually needs to be hired.”
Even when you are spreading the word across all social media channels and building the right networking strategies, hiring managers as Wintrip says, “get hung up on having to hire the ‘ideal’ person.” The result, as researches found out are piles of unattended CVs and your next hire sitting amidst them, in hiding while you scout for that purple squirrel. Line managers see that empty desk, feel the pain of missed business opportunities and overtime load on other team members, but they often miss out to address the elephant in the room – recruitment process. Recruiters, on the other hand, are never comfortable asking the right questions and following up with line managers fearing a backlash. As the vicious cycle charts the course in days than in months, companies pay with poor customer service, lost business and revenue opportunities. One of the biggest risks of keeping a position open for too long is the loss of funds for the position. If this sets in, it can double the turnover as the overworked employees turn in their resignations too.
Setting the Right Pace
Networking, as indicated earlier, should be an immediate step and should start way before you have an actual open position. In a tight job market, content marketing should be your ace up the sleeve. Pitch your brand as an employer of choice and just as it takes a village to raise a child, it takes all the stakeholders to build a brand image. While you are building a brand, remember to tweak your job descriptions to get the best deal and reach the candidate you want for the job. Understand the perks and ask what your value addition is and how feasible will be its implementation?
The cost of a vacant position is an important albeit ignored factor in recruitment. The focus goes to the recruitment budget and cost of a good hire and a bad hire. Understanding the cost of a vacant position will allow companies to device a recruitment strategy that is proactive, fast and effective.