The True Cost of Vacancy: How to Measure the Impact of Open Roles

Understanding the financial, operational, and strategic impact of unfilled positions in your organization

When a position sits vacant for 60, 90, or 120 days, most finance teams see a line item savings—no salary, no benefits, no payroll taxes. But ask the department manager, and you’ll hear a very different story. They’ll tell you about missed deadlines, strained teams, delayed projects, and frustrated customers.

The reality is that vacant positions carry significant costs that rarely appear on a P&L statement. Understanding and calculating these costs isn’t just an HR exercise—it’s a strategic imperative that affects your organization’s ability to grow, compete, and innovate.

Why cost of vacancy matters now more than ever before

Labor costs typically represent 50-70% of an organization’s total expenses, making talent your most significant investment. Yet many organizations lack a clear methodology for quantifying what it costs when that talent isn’t in place. In an era where:

• Time-to-fill has increased to an average of 44 days across industries (with specialized roles often taking 3-6 months)
• Competition for skilled talent has intensified across virtually every sector
• The pace of business requires faster execution and adaptation

The ability to measure and understand vacancy costs has become a critical business competency. Organizations that can accurately calculate these costs make better decisions about resource allocation, hiring processes, compensation strategies, and workforce planning.

The three-tier framework for calculating cost of vacancy

Tier 1: Direct financial costs

These are the most straightforward costs to calculate and often provide the initial wake-up call for leadership teams.

Revenue impact (for revenue-generating roles)

For sales, business development, or billable consulting positions, calculate:

• Average revenue per employee per day × number of days vacant
• For example: A sales representative generating $500,000 annually produces approximately $2,000 per working day. A 90-day vacancy costs roughly $180,000 in lost revenue opportunity.

Coverage costs

When positions remain open, organizations typically:

• Pay overtime to existing employees (often at 1.5× regular rates)
• Hire temporary workers or contractors (typically 40-80% more expensive than full-time employees)
• Engage consultants at premium rates

Calculate the delta between normal staffing costs and these elevated coverage expenses.

Recruitment and onboarding expenses

Longer vacancies mean:

• Extended advertising and job board costs
• More recruiter/HR hours invested in screening and interviewing
• Increased likelihood of needing external recruitment support
• Higher offer amounts to secure candidates in a prolonged search

Industry research suggests cost-per-hire ranges from $4,000-$20,000 depending on role level, with costs escalating the longer positions remain open.

Tier 2: Operational impact costs

Industry research suggests cost-per-hire ranges from $4,000-$20,000 depending on role level, with costs escalating the longer positions remain open.

Productivity loss across the team

When teams operate understaffed:

• Remaining employees split responsibilities, reducing efficiency across multiple functions
• Context-switching and task fragmentation reduce overall productivity by 20-40%
• Knowledge gaps slow decision-making and execution
• Projects get delayed or deprioritized

To quantify this, estimate: (Number of team members affected × % of productivity loss × average fully-loaded cost per employee × days vacant)

Quality and service degredation

Understaffed teams often must choose between speed and quality:

• Defect rates may increase
• Customer service response times lengthen
• Thoroughness in processes suffers
• Innovation and improvement initiatives stall

Consider measuring quality metrics (defect rates, customer satisfaction scores, service level agreements) before and during extended vacancies to quantify impact.

Strategic opportunity cost

This is perhaps the most overlooked category:

• New product launches delayed
• Market opportunities missed due to execution capacity
• Strategic initiatives postponed
• Competitive advantages eroded

Ask: What strategic priority is not being executed because this position is vacant? What is the cost of that delay?

Tier 3: Cultural and retention costs

The longest-term impacts of extended vacancies affect your organizational culture and employee retention.

Employee burnout and morale

Extended periods of understaffing create:

• Increased stress and burnout among remaining team members
• Decreased engagement scores
• Higher likelihood of additional turnover (creating a cascading effect)

Research shows that burnout-related turnover can cost 50-200% of an employee’s annual salary when you factor in separation costs, knowledge loss, recruitment, and replacement training.

Employer brand erosion

Long-vacant positions signal to candidates:

• The organization may be struggling
• The role might be undesirable
• The company doesn’t prioritize filling critical needs

This damages your ability to attract top talent across all positions, not just the vacant one.

Manager productivity loss

Hiring managers often must:

• Personally perform tasks that should be delegated
• Spend significant time interviewing and evaluating candidates
• Manage team morale and workload distribution

Calculate: (Manager hourly rate × hours spent covering/hiring for the position)

Industry variations: when context changes the equation

Cost of vacancy isn’t uniform across industries or roles. Understanding these variations helps you prioritize and allocate resources appropriately.

High-impact variations

• Technology/software development: A single vacant senior engineer role can delay product releases affecting millions in revenue and competitive positioning
• Healthcare: Vacant clinical positions directly impact patient care capacity and can result in turned-away patients or compromised care quality
• Manufacturing: Production line positions affect output in measurable units; specialized maintenance roles can impact entire facility operations
• Professional services: Billable consultant or attorney vacancies represent direct revenue loss with minimal offsetting cost savings

Role-level considerations

• Executive positions: Extended C-suite vacancies create strategic uncertainty and can affect investor confidence and board dynamics
• Specialized/niche roles: Positions requiring rare skills or extensive certifications often take 2-3× longer to fill, multiplying all associated costs
• High-volume roles: While individual impact may be lower, aggregate vacancy costs across many similar positions can be substantial

A practical calculation model you can use today

Here’s a simplified formula to get started:

Basic cost of vacancy = (daily revenue impact + daily coverage costs + daily team productivity loss) × days cacant +recruitment costs

Example calculation:

For a mid-level marketing manager position (vacant for 90 days):

• Daily revenue impact: $400 (portion of pipeline influence)
• Daily coverage costs: $300 (existing team overtime/consultant)
• Team productivity loss: $600 (3 team members at 20% reduced efficiency)
• Recruitment costs: $8,000 (total recruitment investment)

Total cost of vacancy = ($400 + $300 + $600) × 90 + $8,000 = $125,000

This doesn’t even account for Tier 3 costs related to morale, turnover risk, and strategic delays.

Critical questions leaders should be asking

To truly understand your organization’s vacancy costs, leadership teams should regularly address:

• What is our current average time-to-fill, and how does it compare to industry benchmarks?
• Which vacant positions have the highest cost per day, and are we prioritizing them accordingly?
• What would justify increasing our hiring budget or changing our recruitment approach?
• Are we measuring the downstream effects of vacancies on team performance and retention?
• What strategic initiatives are stalled or slowed due to open positions?
• Do our hiring managers understand the true cost of delaying hiring decisions or being overly selective?
• Are we making data-driven decisions about when to use premium recruitment resources?

Beyond speed: when quality matters more than time-to-fill

It’s important to note that minimizing cost of vacancy doesn’t always mean hiring faster. A bad hire can cost significantly more than a prolonged vacancy—typically 30% of the employee’s annual salary for junior roles and up to 400% for executive positions when you factor in severance, disruption, and re-recruitment costs.

The goal isn’t simply to fill positions quickly; it’s to:

• Understand the true cost of vacancies so you can make informed decisions
• Identify which vacancies warrant accelerated or premium recruitment approaches
• Balance speed with quality based on the specific role and business context
• Build recruitment capabilities that consistently deliver both speed and quality

Making this actionable in your organization

Start with a pilot: Select 3-5 critical positions and calculate their vacancy costs using the framework above. Present findings to leadership with specific recommendations.

Create transparency: Build a dashboard that tracks time-to-fill alongside estimated vacancy costs. Make this visible to hiring managers and executives.

Establish thresholds: Define at what vacancy cost point the organization should escalate recruitment efforts or consider alternative strategies.

Review regularly: Make cost of vacancy a standing agenda item in talent reviews and workforce planning discussions.

Educate stakeholders: Help hiring managers understand that delaying by two weeks to find a “perfect” candidate might cost $15,000—is the marginal improvement in candidate quality worth that investment?

How leading organizations are responding

Companies that have embraced cost of vacancy as a strategic metric are transforming their approach to talent acquisition. Some are investing in advanced recruitment technologies that reduce time-to-fill through AI-powered matching and automated screening. Others are building internal recruitment capabilities with specialized talent teams for hard-to-fill roles. Many are exploring flexible staffing models that reduce vacancy impact through contractor pools or redeployment programs.

Some organizations are partnering with external recruitment specialists—including recruitment process outsourcing (RPO) providers, executive search firms, or specialized staffing agencies—particularly for high-volume hiring or specialized talent needs where internal capabilities may not match the urgency and cost of extended vacancies.

The common thread among successful organizations isn’t a single solution—it’s a commitment to measuring what matters and making data-informed decisions about talent acquisition investments.

Calculating cost of vacancy: the bottom line

Cost of vacancy represents one of the most significant yet least visible expenses in most organizations. By developing a robust framework for calculating and communicating these costs, you transform talent acquisition from a reactive administrative function into a strategic value driver.

The question isn’t whether vacancies cost your organization money—they absolutely do. The question is whether you’re measuring that cost accurately enough to make informed decisions about where to invest, how to prioritize, and when to change your approach.

What would you discover if you calculated the true cost of your current open positions?

Have questions about calculating cost of vacancy in your specific industry or situation? Our talent acquisition experts are here to help. Reach out to discuss your unique challenges.