Cost of Vacancy


Cost of Vacancy

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

Specialized by industry or field of workSpecialized by industry but not field of work
Flexible with shifting hiring demandsMore rigid in responding to changing hiring demands
Able to focus heavily on difficult hiresUnable to devote full attention to filling difficult positions
Agility with urgent hiringBetter-suited for less urgent hiring
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