How Much Does an Unfilled Position Cost a Company?

An open position can look like a savings at first. There is no salary going out, no benefits cost, and no new employee to onboard.

But the work usually does not disappear just because the position is vacant.

Someone else picks it up, customers wait longer, overtime increases, projects move slower, or certain tasks simply stop getting done. In some roles, the cost of leaving a position open can exceed the cost of filling it.

Start with lost productivity

The easiest place to begin is the work the position was supposed to handle.

If the role supports production, sales, administration, service, or scheduling, estimate what slows down when that person is missing. The answer will not always be precise, but even a reasonable range is useful.

Add overtime and temporary coverage

Open positions often push work onto existing employees.

If several people are working extra hours to cover the gap, the business may already be spending a meaningful percentage of the missing employee's salary without getting the full capacity of another person.

Temporary labor, contractors, and third-party support should be included too.

Look at delayed or lost work

This is where vacancy costs can become much larger.

An open sales role may mean fewer customers are contacted. A missing service employee may create a backlog. A vacant administrative position may slow invoicing or scheduling. A production vacancy may reduce output.

Not every delay turns into lost revenue, but some do. That is why it is worth separating work that is merely postponed from work the company may never recover.

A simple vacancy-cost framework

You can estimate the total impact using:

Vacancy Cost = Lost Productivity + Overtime + Temporary Labor + Recruiting Costs + Lost Revenue or Delayed Work

A hypothetical example

Suppose a role normally supports about $8,000 per month of economic value for the business. If the position stays open for three months, the gross productivity impact could be around $24,000.

That is only an illustration. The real number could be much lower or much higher depending on the role, the company, and how easily coworkers can absorb the work.

Then add overtime, recruiting expenses, temporary help, and any revenue or customer impact created by the vacancy.

Some vacancies cost more than others

A highly specialized role may be difficult to cover. A revenue-producing role can have an outsized impact because the vacancy affects both workload and incoming revenue.

Other positions may be easier to leave open temporarily, especially if the workload can be redistributed without creating delays or burnout.

An open position is also a chance to rethink the work

Filling the role exactly as it existed is not always the best answer.

A vacancy can be a useful time to ask whether the responsibilities still make sense, whether some work can be automated, or whether part of the role could be outsourced.

The key is not to assume that an unfilled position is free.

Sometimes hiring is expensive. Sometimes leaving the seat empty costs more.

Related reading: How to Compare Outsourcing vs. Hiring In-House →