Rising interest rates, risk management, and other financial challenges are regular concerns in commercial banking. But there is an often-overlooked cost that could be costing you tens of thousands of dollars per position on your team that can quickly increase to hundreds of thousands:
The COV or cost of vacancy.
Leaving an unfilled position open can cost thousands of dollars daily. Wait three months to hire, and you’ve lost hundreds of thousands of dollars.
In this blog post we will explore the high cost of not hiring and what you can do to prevent it.
The True Cost of Vacancy
These costs come from a variety of sources; let’s look at some examples:
- Lost productivity – If a role is left vacant for too long, tasks that would normally be delegated to this role are assigned elsewhere or neglected altogether. This causes disruption in workflow and overall productivity.
- Lost revenue – Without key positions filled with qualified professionals, potential sales and revenue opportunities may be missed due to lack of leadership or direction. For example, if the private client advisor role remains unfilled for too long, potential leads may go untapped which can result in loss of revenue.
- Loss of talent – When vacancies remain open for too long it can lead to demoralization among existing employees as they are forced to shoulder additional workloads with no extra compensation or recognition for their efforts.
This can lead to a loss of morale which can eventually lead to higher turnover rates as employees seek better opportunities elsewhere.
- Recruiting fees – Companies often pay hefty recruitment fees when trying to fill vacancies, but these fees only increase when these same companies are indecisive. Due to increasing competition from other companies looking for the same talent, as well as rising salary expectations from applicants, they may have multiple options available at any given time.
- Training & onboarding costs – Training and onboarding new employees takes time and money which increases dramatically with each passing day that a position remains empty. The more time that passes, the longer it takes for new hires to get up-to-speed with all necessary tasks associated with their role which leads to further delays in productivity levels within the company.
The cost of an unfilled position when you start to add the numbers up.
It’s important for commercial banking leaders and bank CEOs alike not only recognize how costly leaving positions vacant can be but also take proactive steps towards filling those positions quickly before costs start piling up.
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