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How Much are Those Empty Seats Costing Your Distributorship?

By Bridget McCrea

Sometimes it's easier and cheaper to overload an existing employee than to hire a new oneā€”but is there a price to pay for this approach?

With 1.2 jobs open for every unemployed person right now, the thought of hiring warm bodies to fill the empty seats at your distributorship can be downright daunting. Add in the fact that there are 993,000 fewer hires than there were job openings in April, according to the U.S. Bureau of Labor Statistics' (BLS) most recent Job Openings and Labor Turnover Survey, and the idea of having to get out into the labor pool and go head-to-head with your competitors for the best talent becomes even more intimidating.

Many times, companies opt to leave positions unfilled and instead pile additional work (and, in some cases, higher compensation to offset the larger workload) onto current workers. This may work for a while, but it's not a good long-term solution. “Vacancies may frustrate other employees, causing them to lower their productivity. They also frustrate other employees, causing them to quit at a higher rate than they normally would,” writes Dr. John Sullivan, head of San Francisco State University's HR management program. 

“A vacancy means that a current employee must do the work of the vacant position,” Sullivan continues. “This can cause a cascade effect causing others to have to fill in for their position, resulting in many 'rusty' people doing unfamiliar jobs and decreasing productivity.”

Picking up the Slack
There are also real, tangible costs associated with leaving seats empty and hoping that existing workers will be able to “pick up the slack.” In The REAL Costs of Not Filling Your Open Position, head hunter Amara Rogers says companies can use this equation to calculate the revenue cost of unfilled positions:

R = Annual Company Revenue
E = Number of Employees

Step 1 – Calculate Revenue per Employee
R / E = Revenue per Employee

Step 2 – Calculate Daily Revenue per Employee
Revenue per Employee/365 = Daily Revenue per Employee

“Do the above calculation and then identify an acceptable future loss level,” Rogers writes. “For example, if Step Two reveals that your Daily Revenue per Employee is $300, and you are okay with Future Lost Revenue of $10,000, you have about 33 days to fill your open position ($10,000/$300 = 33.33 days).”

Who Will Absorb the Growth?
At commercial and mechanical contractor HB McClure Co., in Harrisburg, Pa., Brandy Shope says the company pays close attention to the “dangers” of leaving positions unfilled. “I understand that some companies will load their people up in exchange for some extra compensation or vacation time, but we see this as a loss-loss strategy,” says Shope. “Not only does it create higher employee turnover, but it also leads to a 'bad boss' mentality. This is critical because people don't leave companies; they leave bosses.”

Shope encourages electrical distributors to also consider the lost revenue opportunities associated with a constrained, too-small labor force. And don't forget about the mounds of “tribal knowledge,” that could be passed from veteran employees to younger recruits, if the latter were in place and working.

“Think about your sales goals, business goals, and overall mission as a company,” says Shope. “If you're on a growth path and hoping to increase sales by 35% this year, then you want to make sure you have a labor pool that can accommodate that expansion. Don't expect your current employees to absorb it.”

McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.



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