Prepared for: The Thought Leadership Institute, Corporate Leadership Exchange June 2012
Determining the COV can be simple or extremely complex depending on the position in scope. In any case, it is always unique and the process typically requires very specific information about the position being examined. For these reasons, one may find it useful to have data relevant to one or more positions.
Positions to consider for examination might include those that are:
- Taking too long to fill on a regular basis
- Report to a Hiring Manager or anyone in the process who causes delays in hiring
- In question as to their effectiveness
- Are known as critical to the company’s profitability
- Should be known as critical to the company’s profitability
- Being considered for reorganization, downsizing, upsizing or outsourcing
- Have a direct correlation to company revenue such as Sales or Service with an upsell capability
- Are especially difficult to fill
The kind of data that can be helpful
Think of the COV as an actual Profit and Loss statement per position.
If you were to determine how much the company makes from a particular position what would the components of incoming revenue be? What would the actual cost be?
Once we begin delving into a specific position we discover surprising factors correlating to revenue built or to hidden cost.
A good place to start
Overall company profitability, and then the profitability of a division, department or segment of employment, is a very good starting point. The information is typically easily assessable through Finance or the company’s quarterly/yearly reports.
Although you can jump right to a specific position in question, we have found that using the following succinct method, moving from top down will ease you into the thought process while supplying you with data which you can compare.
For example, if you first determine that COV for the company overall is a negative – (the average cost per position is more than the value); it will be very interesting to know how the positions in question compare.
Sample Descending COV methodology
- Cost of Vacancy for the Company as Whole
- Cost of Vacancy of a Division
- Cost of Vacancy of a Department
- Cost of Vacancy of a segment of employment ( all of Customer Service)
- Cost of Vacancy of a sub-segment (the Retention Dept within Customer Service)
- The Retention position within Customer Service
It is not necessary to determine the COV for each and every segment listed above but choosing a few can be very beneficial.
Who can help?
We have found that incorporating as many departments as possible in the exploration is the most beneficial route. Additionally, one of the biggest benefits of determining the COV is that it prompts other departments to start thinking along the same lines, often improving hiring effectiveness even before it is finalized.
Good Sources of Information
- Business Leaders/ Managers: They know better than most the intricacy of the work being performed. Spending time sitting in the positions seat can bring tremendous insight.
- Finance: If you speak to them in terms of granular position profit and loss, we have found they become very interested and often have data already at hand.
- Employees in the position: Where do they see the greatest value.
- Workforce Planning
- Benefits and Compensation
Components of Revenue
Questions to consider include
- Why is the position in existence?
- What pain points does it address?
- What is the value statement of the position?
- If the position was not in place who would do the work? What would the cost be to perform it?
Components of Cost
Cost components are easier to discover as they are typically tracked by either HR or Finance. However, applying specific cost to the position as compared to shared company cost will provide the best results. For example, if training informs you that it cost $1,800.00 to train a new employee, can they tell you the cost for this specific position?
We hope you find this information inspirational and look forward to a melting of minds and new discoveries.
To learn more about the power of this metric and how to create it,
please contact us or call us today! 888-924-1004