What Job Vacancies Really Cost (and What to Do About It)

Acquiring digital skills is a near-universal requirement for today's organizations, regardless of industry. But finding the right talent with those necessary digital skills — from simple computing to specialized tech expertise — can often be a challenge.

Recent labor and skill shortages remain a pressing issue across the European Union, with council members emphasizing the urgent need to address mismatches in critical sectors such as digital and green technologies. In the U.K., more than 60% of organizations say they're impacted by skill shortages, which continues to widen gaps in technical expertise and hold back growth. 

That not only hurts workforce planning and transformation — it also affects businesses' bottom lines. When a future-critical role is unfilled, the costs of lost productivity, lack of innovation, project delays, and declining morale start adding up.

Calculating the Cost of an Unfilled Role

Let’s say a tech company based in Germany — with an annual revenue of €150 million, 230 working days, and 2,500 employees specializing in various tech roles — has several vacant positions. To determine the revenue lost from unfilled roles, we would first look at the company's revenue per employee per day.

In this hypothetical scenario, each employee at the tech company contributes about €260.87 to the company’s daily revenue. If the average time to fill that role is 30 days, that adds up to nearly €7,826 in lost revenue for the time a position remains unfilled.

Now let's say the company had several job vacancies at once — possibly due to skill shortages in the labor market or other factors. If there are 15 other unfilled positions, that adds up to more than €117,000 in revenue loss for the company in the time it takes to fill all those vacancies.

And that's not counting other financial implications — hard and soft costs, both direct and indirect — when dealing with open positions for specialized, tech-skilled talent.

How Unoccupied Positions Impact Organizational Efficiency, Costs

The vacancy of specialized positions in the organization can significantly undermine its efficiency and increase costs. Such vacancies disrupt workflows, delay projects, increase existing workloads, and require additional hiring and training — all of which ultimately affect the bottom line.

• Lost productivity and efficiency: The absence of certain roles or essential skills can slow down processes and tasks, reducing productivity and compounding financial losses for the company. Many companies recognize the urgency of closing these skill gaps and implement various strategies to mitigate the problem.
• Project delays, quality impact, and customer satisfaction: When specialized roles aren't fulfilled, it can stretch project timelines and jeopardize output quality. It can also lead to additional costs for correcting issues and harm the organization’s reputation, possibly resulting in client dissatisfaction. Skilled professionals often directly impact customer satisfaction and loyalty, especially in roles that interact with clients or influence product/service quality. A vacancy in such positions can lead to diminished customer service, affecting satisfaction and potentially leading to customer loss, impacting revenue.
• Training costs for replacement: Hiring new talent for specialized roles takes time and money — including formal training and ramp-up time until they're fully productive. Recent estimates indicate the average expense per new hire exceeds $4,000 while training an existing employee averages around $1,200 annually.
• Impact on innovation and competitiveness: Skilled professionals are essential for innovation and ensuring an organization’s competitive edge. Without talent in key roles, organizations become less resilient and adaptable, causing financial losses as firms struggle to adapt to market alterations.
• Employee morale and turnover costs: Vacancies force teams to shift workloads and responsibilities to remaining employees, which can quickly lead to burnout, decreased morale, and higher turnover rates. This, in turn, requires organizations to invest even more in retention, recruitment, and training efforts to operate effectively. Balanced workloads and adequate support are critical to maintaining employee well-being and organizational efficiency.

5 Ways to Combat Costly Job Vacancies with Data

So what does it take to fill a specialized job opening quickly and effectively? A lot of it depends on the data you have at your fingertips.

Global labor market intelligence and workforce analytics provide organizations with a holistic view of their workforce to identify gaps, plan for future needs, and transform existing strategies to acquire in-demand skills and successfully fill critical roles. Data and insights also support the creation of robust talent pipelines and enhance employer branding, attracting top talent more effectively.  

By continuously refining workforce strategies based on detailed data analysis and market trends, organizations can optimize their hiring processes, reducing the time to fill vacancies while ensuring they attract and retain suitable candidates for future success.

Here are a few examples of how data insights can help businesses focus on filling costly vacancies.

1. Benchmark time-to-fill with workforce data

Internal workforce data helps refine and streamline recruitment strategies using precise time-to-fill benchmarking across roles, skill levels, locations, and other criteria. Understanding these nuances — including industry types, local employment rates, and economic conditions — enables recruitment teams to adapt and improve the efficiency and effectiveness of the hiring process.

This approach also emphasizes the importance of analyzing the hiring process, from candidate sourcing channels to the ins and outs of screening and interviewing. By reviewing historical data and outcomes — including the quality of hires and offer acceptance rates — organizations can gain insights into what works well and what doesn’t. This retrospective analysis, combined with a forward-looking perspective on future job profiles, enables hiring managers to anticipate and prepare for evolving skill requirements, thereby aligning recruitment efforts with strategic business goals.

2. Insight into market demand, supply, and other trends

Comprehensive labor market data provides valuable insight into the supply and demand for certain roles and skills across industries and locations. With this information, organizations can make more informed build-borrow-buy decisions on talent — especially in markets with skill shortages or increased competition — based on availability, costs, and ease of hiring.  

Keeping up with the latest market trends also enhances:

• Strategic decision-making: Understanding the competitive landscape enables organizational leaders to optimize business processes and workforce performance.

• Adaptive job architecture: Incorporate the latest trending roles, titles, skills, and more into building future-ready roles to ensure companies remain relevant and competitive.

• Future-fit analysis: Identifying and following skills — including those around technology — as they evolve in the market helps businesses develop competitive and future-oriented workforce.
  

3. Track evolving job roles and skills

People analytics data is vital for taking an internal talent inventory, spotting workforce gaps, and building upskilling and reskilling initiatives. But regular insight into specific roles and skills in the labor market, too, allows HR leaders to strategically align workforce development with industry trends to ensure sustainable growth and competitiveness. This includes:

• Forecasting future needs: Companies can strategically plan their workforce development by understanding and forecasting the demand for specific job roles and skills, ensuring they remain agile and responsive to market changes.

• Effective skills management: Using internal workforce data and external market intelligence to identify and bridge skill gaps ensures businesses are well-equipped to meet current and future demands.

• Refining talent acquisition strategies: Anticipating future needs based on skills and market trends enables organizations to make data-backed and cost-effective decisions on recruiting new talent and/or upskilling employees to meet evolving job demands.

4. Keep an eye on the competition

Labor market data not only provides visibility into talent trends — it can also reveal critical competitive insight, too.

Data on competitor hiring patterns, location strategy, and even employer branding enable businesses to calibrate their talent acquisition, employee engagement, and employee value proposition (EVP) approach to attract and retain skilled talent. Competitive and market benchmarking also empower workforce planning and transformation, giving organizations a holistic view of skill and technology trends as they align talent strategy with future business goals.

5. Enhance your EVP and employer brand

Internal and external data and sentiment analysis offer crucial direction and validation for EVP development. This includes:

• Exit interview and employee survey metrics

• Trending EVP attributes gathered from analyzing global job postings

• Competitive benchmarking within the market  

• Employer brand sentiment analysis to gauge market perception

By combining these data-driven insights with the company's unique values and objectives, organizations can create an EVP that truly resonates in the market.