What is cost of vacancy?
Cost of vacancy (COV) is the opportunity cost of unfilled positions. COV is the difference between benefits and payroll savings minus hard and soft costs—like loss of revenue, productivity, and employee morale—from not having that employee. This is one metric recruiters use to help them prioritize hiring.
How to calculate cost of vacancy
On the surface, the formula for calculating cost of vacancy for tech employees appears simple. But there’s a little more math going on behind the scenes. Benefits and payroll savings are straightforward, but determining hard costs like lost revenue varies by role.
Every employee contributes to revenue to some extent, but some roles—like those in sales or technology—impact revenue more directly. Before calculating cost of vacancy, do some upfront due diligence to estimate each employee’s contribution to gross revenue.
Recruiting strategies
Offer remote work
Many workers now expect their employers to offer options for remote work, and that’s especially true among workers. If you can’t offer fully remote options, aim for offering hybrid work accommodations.
Create an inviting and inclusive work environment
Find creative ways to be competitive
External vs. internal recruitment
| External | Internal | ||
| Specialized by industry or field of work | Specialized by industry but not field of work | ||
| Flexible with shifting hiring demands | More rigid in responding to changing hiring demands | ||
| Able to focus heavily on difficult hires | Unable to devote full attention to filling difficult positions | ||
| Agility with urgent hiring | Better-suited for less urgent hiring |
