Task:
How do I calculate vacancy factor for compensation? Every year we do a budget and every year compensation expenses comes in favorable to budget due to open/term positions. So my boss wants me to include a vacancy factor to reduce the budget compensation expense. My boss said it should be based on a historical % of compensation savings. So do I look at the actuals reported for compensation expenses vs. what was budgeted last year and divide the savings by last years actuals to get a % and then multiply that % by the new budget for compensation expense?