Cost of vacancy

How is cost of vacancy estimated?

The standard approach: annual revenue divided by number of employees gives revenue per employee; divide by 261 Australian working days for a daily figure; multiply by a role factor (below 1 for easily covered junior roles, above 1 for revenue-generating or leadership roles). Multiply by days open and you have the running total. It is an estimate with honest assumptions, and it is far closer to the truth than the default assumption, which is zero.

What the simple model misses

Both directions. It misses covered costs: colleagues absorbing the work at overtime rates, managers backfilling instead of managing, and the slow degradation of quality under sustained overload. It also overstates where a role's output genuinely pauses without loss. The refinement that matters most is the role factor; a vacant sales territory and a vacant back-office role do not cost the same per day, and pretending otherwise discredits the whole calculation.

What the number is for

Prioritisation and urgency. It tells a hiring manager what a week of interview-scheduling drift costs, tells finance why recruiting under-resourcing is false economy, and ranks which of twelve open requisitions deserves the recruiter's afternoon. It also underwrites the maths on speed investments: if a role costs $1,150 a day open, a referral bonus that saves ten days pays for itself several times over.