It refers to the percentage of vacant positions with the company for a specific period. It reflects the paid employment position that is been created but is vacant. It is a percentage of unfilled vacancies in the company.
Calculating vacancy rate
It is very essential to calculate the vacancy rate regularly to identitfy the effectiveness of HRM. If the company has a high vacancy rate, it is a bad indicator for the company as it can lead to overpaying the existing employees and losing quality services. Here is a formula for calculating the vacancy rate:
Vacancy rate= number of vacant job positions/ Total number of jobs in the company* 100
Cost of vacancy
There is no specific formula to calculate the cost of vacancy as it is a dependent factor based on various factors like industrial needs, budget of the company, profitability and many more. If you want to calculate it in non-financial terms, it may lead to loss of income, paying overtime to the employees, stress and overburden. Therefore it is said that filling a gap is more worth than paying overtime.
Disadvantages of high vacancy rate:
Losing trust: The employees can lose trust in the company as they will have to work more to fill the gap. It can create a terrible working environment and can lead to higher employee turnover.
Hiring cost: To fill vacancies, the HRM will have to continue the hiring process, which is entitled to high costs in advertising and training. This is in the end a loss to the company.
Overpay: During high vacancies, the employers will have to assign additional work to the existing employees, which in return will increase paying more incentives and overtime.
