By Gempro Drysdale, Gemini 2.5 Pro LLM, Resource Erectors heavy industry AI assistant to the CEO.
Editorial Note: This article, initially published by CEO Dan on December 04, 2019, has been updated as per the CEO’s directive with current data and statistics for 2025 to reflect the evolving economic landscape, including post-pandemic inflation, merger and acquisition impact, wage growth, and shifts in the US heavy industry labor market in the dynamic global economy of Trump 2.0.
Calculating COV: The Business Impact of Talent Shortages
COV, or Cost of Vacancy, is the most critical metric for determining the actual dollar impact of vacancies in key positions for industries across the board, and according to one leading HR expert, the COV metric is quite often neglected.
Companies need to think beyond the balance sheet, where all too frequently, vacancies are falsely perceived as mere short-term reductions in administrative expenses. As we’ll see shortly, Resource Erectors’ 25+ years of experience in matching top-qualified candidates for key vacant positions is vital to reducing the expensive daily impact of turnover turmoil in your heavy industry operations.
How Much Are Vacancies Costing Your Company?
Dr. John Sullivan is an internationally renowned HR strategist and Wall Street Journal expert known in the Human Resources sector as “the father of HR metrics”. Ironically, Dr. Sullivan points to a misplaced emphasis on cost containment and a pervasive lack of awareness about the long-term detrimental consequences where COV impact is concerned.
Even back in 2019, Sullivan’s COV calculations revealed that the cost of a single vacancy in a key position ranged between $7,000 and $12,000 per day. In today’s economic climate, with significant inflation and wage growth since then, these figures are understood to be substantially higher. He cites one unique case where the vacancy expense ran as high as $200,000 per day.
While there is no “one size fits all” formula for calculating COV, Sullivan offers both basic and advanced formulas guaranteed to wake up the finance department and raise recruiting to its proper place on the CFO’s priority list. Dr. Sullivan offers a variety of formulas for a deeper dive into the COV numbers at the link above, but here are two examples that demonstrate how negatively COV can impact your business:
Two Fundamental COV Calculations
- Average Revenue per Lost Employee- Total company revenue divided by the number of employees, divided by the number of workdays (conservatively, 220) in the year. This metric tells you how much revenue is lost each day the position remains vacant. A company with 150 employees and total revenue of $50 million is losing $1,515.15 every day.
Calculation: ($50,000,000 / 150 employees) / 220 days = $1,515.15/day
- Simple Salary Multiplier – This calculation relies on research statistics indicating that salaried employees generate between 1 and 3 times their annual salary in value. Obviously, the higher the salary, the higher the lost value. In today’s market, high-level professional vacancies in the $125,000 salary range can cost your company $375,000 in lost value, or $1,704.55 each day the position goes unfilled.
Calculation: ($125,000 x 3) / 220 days = $1,704.55/day
The Impact of Talent Shortages on Mining and Construction Operations
Now that we’ve crunched the basic COV numbers, it’s important to take a look at the other burdens that talent vacancies place on operations, specifically in mining and construction. These are harder to quantify in dollar amounts, but the debilitating effects of understaffing, under-qualified personnel, and the inevitable turnover that every enterprise faces in today’s hyper-competitive employment environment are beyond debate.
In the mining sector, the Bureau of Labor Statistics (BLS) is projecting a 2% growth in demand for Mining and Geological Engineers through 2032, with a 3% growth for all occupations in the US economy. While these growth percentages may seem modest, they don’t account for the wave of retirements from an aging workforce, creating a persistent and acute shortage of experienced talent.
With the BLS reporting a median pay for mining engineers of around $103,710, we already know the high daily expense companies will bear for this vacancy, but there are other tangible ripple effects adding to the COV expense. That’s why our COV-savvy corporate clients offer salaries well above that “median range” when it’s time to recruit and retain top-tier talent for bottom-line damage control.
The Causes of Vacancies in the Construction Sector
In the construction sector, labor shortages and supply chain disruptions have been a primary driver of soaring costs. According to data from the Associated Builders and Contractors (ABC), construction input prices are up more than 40% from pre-pandemic levels, a figure in which labor scarcity plays a significant role.
As Dr. Sullivan notes in his article, understaffing lowers the probability that production targets will be met, but there is also the cost of overtime and the lowering of workforce morale when unfilled vacancies add to the daily workload of loyal employees.
Vacancies can have a domino effect when frustration spreads throughout the workforce.
Safety problems and errors increase. When supervisory and team leader positions are vacant for too long, a cascade of frustrated team members can walk out to avoid overwork. Those who stay are more likely to file grievances and even initiate hostile activity.
Managers may try to resolve these problems by promoting from within, but rushing under-qualified personnel up the ladder can be a serious misstep when leadership positions require years of experience and expertise.
The same principle applies to the “bad hire,” where the rush to fill a critical vacancy can lead to years of costly consequences in wasted salaries, disrupted production, and the expenses of ongoing damage control.
Which brings us to our next vital business metric. You’ve heard of TTM, or Time to Market. If you want to improve that number, you should get familiar with TTR.
TTR- Time To Recruit With Resource Erectors
As we’ve seen, COV costs go up each day that vacancies go unfilled, and prolonged slow recruiting for the top professional positions only exacerbates the costs and disruptions to operations. At Resource Erectors, we bring over 25 years of recruiting experience to the mining, manufacturing, and construction industries. We maintain relationships with thousands of professional and executive candidates to fill your most critical top-level vacancies.
Reduce Your COV and TTR with Resource Erectors
Over 80% of our placed professional candidates are still actively contributing to the success of their companies 5 years later. We screen every candidate for the levels of education, professional experience, and career patterns to align the best available talent to the needs of your organization. When you need to fill critical vacancies in engineering, sales, business development, executive positions, logistics, financial, and more, please don’t hesitate to contact us today for a free consultation.
Every day a critical position remains open, the costs add up. The most effective way to lower your Cost of Vacancy (COV) is to reduce your Time to Recruit (TTR) for the right candidate.
At Resource Erectors, we connect top-tier companies with elite talent.
If you need to fill crucial positions and stop the daily losses from vacancies, it’s time to leverage our industry-leading Recruitment Services.
If you are a highly qualified professional seeking to manage your long-term success, you can find your next opportunity by exploring our Career Services. And most definitely, submit your Resume to our confidential database for general consideration.. Many of our six-figure, career-advancing, professional-level positions are filled with our confidential corporate clients long before they appear, if ever, on public job boards.
To discuss your company’s specific needs or to start your career journey with Resource Erectors, please visit our Contact Page today.
