Vacant Positions Cost Firms Value
Each day a position remains vacant is another day of lost productivity and lost value for the firm. Nowhere is this more evident than in high demand jobs such as Science, Technology, Engineering or Math (STEM) positions where the average vacancy is open for 50 days, compared to a national average of 33 days.
We'll look at an example of how each STEM vacancy costs one firm $25,400 and ways you can stop similar value leakage at your firm.
Example: Software Engineer
We'll use an example of vacant software engineering position at an unnamed, publicly traded software firm. According to Glassdoor, the average salary for a software engineer at this firm is $95,695. In 2014, the firm's ~10,000 employees produced $3.1 billion of revenue. So, each employee generated $850 per day of revenue and earned an average of $342 per day (Salary + 30% for benefits), resulting in a positive difference of $508 per day. At the average STEM vacancy of 50 days, this vacancy costs a total of $25,400!
While a single vacancy resulting in $25,400 in lost value may seem insignificant to a firm with an annual revenue of $3 billion+ and net Income of $251 million+, it is very significant when considering the number of annual vacancies. Applying the national average of annual turnover (15.1%) to the firm's 10,000 employees, the result is a staggering 1,510 vacancies per year. If every vacancy at the firm had the same impact, that would equal $38 million per year of lost value.
Paying attention yet? Thinking about how you can shorten your average vacancy duration?
Focus Areas
There are ways to shorten your time to hire.
Increase employee engagement to retain more employees
Recruiterbox suggests creating an employment cycle to keep a steady stream of candidates interested
Cut down on the time between "you're hired" and the employee's first day. This is where Global can help!
How Global Backgrounds Can Help You Recoup this Lost Opportunity
We often hear from our new clients that their current provider takes 5-10 business days to return results and complete the background check process. Our typical turnaround time for standard employee screening is the same day to 24 hours. We can save our clients, on average, 4-9 days in the hiring process. Using the figures from the example above, this translates into $2,032 - $4,572 of increased firm value per hire!
If your current background check provider isn't moving fast enough, give us a call. Not only are we fast, we deliver high quality data and are very competitively priced. We stand ready to answer your questions, customize a package to best suit your needs, and walk you through this process.
*Note: The firm used in this example is not a client of Global Backgrounds. All of the data and information used in this article are found in the public domain.