The Numbers
An open senior role is one of the few expenses a business pays for without seeing it on the ledger. Large companies have built models for making it visible, and the numbers are sometimes uncomfortable. Applying the standard output multipliers used in corporate workforce planning, a critical commercial role models at €3,000 to €8,000 per day of vacancy. At 90 days, that is between €270,000 and €720,000 of cost, even though no invoice is ever issued.
At a Series A startup with €180,000 of monthly burn and an open VP of Engineering role, nobody runs this math. The founder knows the role is expensive to leave empty, but they could not tell you by how much.
This is a gap worth writing about. The tools to cost a vacancy properly are well established in corporate finance. They are also more accessible than they sound.
What corporate finance actually does
The frameworks large companies use to value an open role fall into four groups. None of them are exotic. All of them can be run, in simplified form, on a spreadsheet.
The criticality grid. Most workforce planning functions classify roles before they try to cost them. The cleanest version comes from the academic work of David Ulrich at the University of Michigan, which sorts positions into A, B, and C roles. A roles directly create strategic value. B roles support and enable A roles. C roles can be outsourced or substituted without consequence. Korn Ferry uses a related framework called the Critical Role Index, which scores every role on three dimensions: the business value it produces today, the strategic value it will produce over the next three years, and its scarcity in the external market.
The output is a simple grid. Position criticality on one axis, risk of vacancy on the other. Roles in the top right quadrant get modelled in detail. Roles in the bottom left get filled through ordinary hiring. A founder who does nothing else can gain a surprising amount of clarity just by placing her open roles on this grid.
The revenue or margin multiplier. Once a role is classified as critical, finance teams convert its output into a daily number. The standard approach, used in variants by SHRM, Mercer, and most enterprise workforce planning tools, is to take the role's fully loaded annual cost, divide by working days (around 220 in most European markets), then multiply by an output factor.
The multiplier is where judgment enters. For a customer success analyst, the factor is typically 1x to 1.5x salary, because the role's output roughly tracks its cost. For a senior engineer on a funded product, the factor is commonly 2x to 3x, because the engineer's work determines the shipping velocity of something worth multiples of salary. For a revenue-generating role like an enterprise sales executive or a VP Sales, the factor can reach 3x to 4x, because the pipeline attached to the role is larger than the compensation tied to it.
Applied to a senior engineer in Berlin on a fully loaded €130,000 per year, with a multiplier of 2.5, the daily vacancy cost lands at roughly €1,475. Ninety days empty costs the business around €133,000 in foregone output, offset by perhaps €32,000 in salary savings. Net cost: €100,000.
Ramp time and productivity curves. The sophisticated version. Finance teams at larger companies do not assume the new hire is productive on day one. They apply a productivity curve that typically reaches 50 percent around month three and full productivity around month six to nine, depending on seniority. This matters because it extends the effective cost of the vacancy past the day the role is filled. A role empty for 90 days and then filled does not become cost-neutral on day 91. It continues to drag for another three to six months while the new hire ramps.
For startups, this is the part that most quietly distorts planning. A founder who hires in month four thinks the problem is solved. Her finance partner, if she had one, would tell her the output hit continues well into month ten.
Scenario modelling. At the top of the stack, enterprise finance teams run sensitivity analyses. What does our year look like if this role is filled in 30 days, 90 days, or 180 days? What happens to revenue forecast, to EBITDA, to runway? Tools like Workday Adaptive Planning, Anaplan, Pigment, and Visier have made this routine for companies with dedicated FP&A functions. The same logic runs on a spreadsheet if you are willing to build it.
Why startups skip all of this
Three reasons, in roughly descending order of honesty.
The first is that early-stage startups rarely have a finance function with the time or mandate to build these models. The part-time CFO is focused on the next raise. The founder is focused on product, customers, and hiring itself. Nobody owns vacancy cost as a line item, so nobody calculates it.
The second is that the data is messier at a 40-person company than at a 4,000-person one. Revenue attribution to individual roles requires either a mature business or a lot of assumptions. Ramp time curves require historical hiring data the company does not yet have.
The third is cultural. Startup finance is dominated by burn and runway, both of which treat an unfilled seat as savings. An open role reduces this month's burn. It is counterintuitive to argue that the same vacancy is also expensive, because the expense does not appear in the bank statement. Founders who have only ever read their P&L will not see it.
The consequence is that the company most exposed to vacancy cost, measured as a percentage of its total operating capacity, is the company least likely to quantify it.
A version startups can actually run
None of the corporate frameworks require enterprise software to approximate. A founder with a spreadsheet and an afternoon can build a defensible model in three steps.
First, classify the role. Is it an A role (strategic, value-creating), a B role (supports A roles), or a C role (substitutable)? Only A and high-end B roles justify the exercise.
Second, estimate the output multiplier. For a revenue-generating role, the company's own data will tell you: what pipeline or quota is attached to the position? For a technical role, a reasonable proxy is the role's contribution to a specific product outcome, valued at the fraction of company revenue that product represents. The multiplier will not be precise. It does not need to be. A range is better than nothing, which is what most startups currently have.
Third, apply a ramp assumption. A new senior hire is 50 percent productive at month three, 80 percent at month six. Factor this into the total cost of the vacancy, because the cost does not stop on the day the role is filled.
The output is a range, not a point estimate. For a senior engineering role at a Series A European startup, left empty for 90 days and then filled, the total vacancy cost typically lands somewhere between €120,000 and €250,000, accounting for both the empty period and the ramp. For a senior commercial role, it is routinely higher.
The point of the exercise
The purpose of doing this math is to make a decision visible. A role that has been open for two months is costing the company something. Knowing roughly how much reframes the hiring process as a financial decision rather than an HR one.
Large companies do this because they have made the mistake of not doing it often enough to institutionalise the practice. The frameworks exist because somebody already learned, expensively, that the empty chair is not free.