The Cost of Executive Vacancy Is Underestimated
When a company calculates the cost of an executive vacancy, they typically think about one thing: the salary not being paid. This is the smallest component of the actual cost. The real cost of an executive vacancy is the revenue, productivity, and strategic capability that doesn't exist without the leader in seat — and that cost accrues daily, compounds monthly, and leaves a gap in the organisation that is not visible until it becomes a crisis.
Cost Components by Role
VP of Sales Vacancy — Monthly Cost Components
VP of Engineering Vacancy — Monthly Cost Components
The Compounding Effect
Month 1–2: The coverage period
The founding team or a peer executive typically absorbs the vacant role's responsibilities. This is sustainable for 4–6 weeks. Beyond that, the coverage quality degrades and the covering executive's own function begins to suffer from divided attention.
Month 3–4: The drift period
Without leadership, teams begin to make local decisions that are individually rational but collectively misaligned. Sales teams prioritise their own metrics. Engineering teams deprioritise cross-functional dependencies. Marketing slows without direction. The cost of realignment after this period is significant.
Month 5+: The damage period
Talent begins to leave. The best performers — who have the most options — make the decision first. Customer relationships that depended on executive sponsorship deteriorate. Strategic initiatives that required the executive's function stall indefinitely. The vacancy has now created downstream damage that will persist well beyond the search closing.
"A VP of Sales vacancy that runs 90 days at a $15M ARR company costs approximately $400–600K in total impact — including pipeline not built, deals not closed, and sales team productivity loss. The search firm fee, by comparison, is $50–80K. The math on investing in a fast, rigorous search is straightforward."
The Urgency Calculation
Companies that treat executive search as a deliberate, unhurried process often do so because they underestimate the daily cost of the vacancy. Recalculating that cost — specifically, precisely, for the role in question — changes the urgency of the search and the willingness to invest in a firm with the infrastructure to close it quickly.
Majhi Group's 30–45 day average close time versus the 65–90 day industry median represents 25–45 days of vacancy cost recovered on every search. For a VP of Sales role at a mid-size SaaS company, that delta is worth $150–300K in recovered revenue and team productivity.