OSI the new KPI
Open Seat Index™ calculates true cost of an empty seat
TechScreen is introducing the Open Seat Index™, a calculation that measures the true impact of an empty seat of a technical professional. Recruiters are measured by seats they fill and the time they take to do it, but there is very little discussion as to the real financial consequences of seats going unfilled. They often worry about trivial distractions like Cost per Hire, which focuses on things like the price of search tools, agency fees and job postings.
The OSI will shed light on how expensive it is for companies to have positions remain open for an extended period of time. An article in Fortune says that US companies suffer $160B a year in productivity loss due to unfilled vacancies. Recruiting solutions that are not focusing on lowering Time-to-Hire are aiming at the wrong problems, but that is only part of the issue.
The productivity time value of a technical professional is far more than the salaries they are paid. A study by the Harvard Business School said that cost is 3 times’ salary, but our calculator is closer to 2 times’ salary. Either ratio means extended vacancies carry millions of dollars in opportunity cost for individuals companies.
It takes considerable investment to fill open seats due to the massive inefficiency of the current process. Reading resumes, forwarding to managers to determine who should get a phone screen and then selecting people worthy of an on-site interview requires a lot of calendar time. A process that has four resumes to get a phone screen, four phone screens to get an on-site and four on-site interviews to get an offer means it takes 64 resumes to get one hire.
The OSI calculates the financial impact of the empty seat plus the decremented productivity time of the managers and engineers it takes to parse all that paper down to get that one hire. The calendar time burned to get through that much paper is the biggest reason Time-to-Hire can run months per position. Ignoring the process that produces such long leads times to fill a seat means companies will pay a heavy price in lost productivity.
The OSI lets companies see how much it is costing them.