Healthcare organizations are facing an unprecedented staffing shortage, especially for talented nurses. To address this crisis, many talent management leaders are being tasked with closely tracking key metrics.
WOBURN, Mass. (PRWEB) May 08, 2018
HealthcareSource®, the leading provider of talent management solutions for the healthcare industry, today announced the launch of the healthcare industry’s first RN Cost-of-Vacancy Calculator, designed to measure the expenses organizations incur due to vacancies and premium labor costs when filling roles to meet patient-to-staff ratios. The company made the announcement during National Nurses Week to highlight the crucial role nurses play in delivering high-quality care.
Cost-of-vacancy is an industry-standard performance metric that can expose underlying inefficiencies in talent management strategies. Premium labor costs, such as overtime pay and contract labor, are driven almost exclusively by an organization’s vacancy rate and its overall cost-of-vacancy. HealthcareSource’s Cost-of-Vacancy Calculator enables organizations to understand how talent shortages directly affect the bottom line and help organizations place the requisite emphasis on recruitment and retention efforts.
“Healthcare organizations are facing an unprecedented staffing shortage, especially for talented nurses,” said HealthcareSource Chief Marketing Officer David Wilkins. “To address this crisis, many talent management leaders are being tasked with closely tracking key metrics, such as premium labor cost, as a means of understanding the business effects of their talent management practices.”
According to Lean Human Capital by HealthcareSource℠, three primary variables contribute to cost-of-vacancy:
- Hard Costs: When a position goes unfilled, the work required of that role needs to be accounted for in one of two ways. Healthcare organizations can cover the vacant position through overtime pay, at minimally 1.5 times the average salary, or through contract labor, typically at 1.3 times salary.
- Soft Costs: Overtime and contract labor lacks the productivity of a full-time employee. According to a Harvard University study, the average employee’s value to an organization is three-times their salary. Since overtime labor is often also overworked and contract labor comes with a learning curve, the labor associated with hard costs can’t fully account for the value lost when a full-time employee leaves an organization.
- Lost Opportunities: Organizations that overspend on labor costs due to high vacancy rates face two critical challenges: expense pressure and a lack of resources. This means they are constrained in their ability to expand their business through service expansion, location growth, or acquisition.
While the two primary contributors to vacancy rates are excessive time-to-fill metrics and high turnover numbers, additional factors act as multipliers for cost-of-vacancy, including the local labor market and fluctuating market rates. Understanding the cost-of-vacancy can help an organization identify red flags in recruiting and retention efforts, and adjust talent management strategies to compensate.
“If hard costs are driving your cost-of-vacancy up, then you’ll want to rework your strategy to rely less on overtime and contract labor by focusing on three key strategies: sourcing to build a stronger pipeline of candidates, hiring for retention via behavioral assessments to reduce dysfunctional turnover, and doubling down on career pathing and development efforts to more effectively hire from within,” added Wilkins. “In doing so, you’ll be growing your own talent, whether external or internal hires, and these employees will be more likely to stay at your organization, giving you the ability to hire from within when turnover at key roles occur.”
Learn more about cost-of-vacancy and healthcare hiring here.
HealthcareSource® is the only comprehensive talent management suite designed specifically to support the healthcare talent ecosystem. Our software, services, content, and analytics enable more than 3,500 healthcare organizations, senior care providers, and staffing agencies, spanning over 6,000 locations, to ensure quality patient and client care by recruiting, retaining, and developing quality talent. HealthcareSource and its award-winning healthcare talent management solutions have been recognized by industry analysts and trade groups.