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What is Call Center Shrinkage, and How to Reduce It

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Call centers are only as strong as their workforce. And of course, that workforce is made up of call center agents and call center managers.

But that’s pretty obvious, right? So how can you tell if one contact center has a stronger workforce than another? The answer: look at the data. There are plenty of KPIs that will give you an idea of how successful a team is.

Now, imagine your team of call center agents is amazing when they’re on the phone, and are getting great customer satisfaction ratings. Problem is, they’re not actually on the phone nearly as much as they’re supposed to be. You need to calculate this time spent not at work ... and tracking call center shrinkage can do that for you.

What is Call Center Shrinkage?

Call center shrinkage occurs when agents are scheduled to work, but are not actively working. Shrinkage is an important workforce management (WFM) metric that can help you optimize your outsourced teams.

Shrinkage can be both planned and unplanned as a result of internal and external factors.

  • Planned shrinkage is known in advance, and can be easily accounted for. Examples include when agents are attend training sessions or one-on-one meetings.
  • Unplanned shrinkage is not known in advance, and occurs when an employee is out sick, arrives late, or takes longer breaks than expected.
  • Internal factors that cause shrinkage include lunch breaks, training sessions, scheduled meetings, and work done between calls.
  • External shrinkage factors adding to your shrinkage rages include absenteeism, holiday, vacation, and sick days, lateness, and leaving early.

Shrinkage is impossible to avoid completely, but it is possible to manage it properly to keep the shrinkage rate at a minimum. Average shrinkage rates in the call center industry are between 30 and 35%. While this may seem high, it’s important to remember that employees need planned downtime in order to maintain optimal service levels.

Call Center Shrinkage vs Occupancy Rates

Call center shrinkage rates are different from call center occupancy rates. Occupancy is the measurement of time agents spend on incoming calls in relation to their idle time spent waiting for calls. This measurement takes into account the total hours worked and the total amount of time spent on a call with a customer.

Occupancy rate can be determined via the following formula:

  • Occupancy Rate = Total Handle Time / (Total Handle Time + Available Time)

How to Calculate Call Center Shrinkage

Shrinkage calculation can help with forecasting the correct number of agents needed to handle the call volume.

Shrinkage is measured as a percentage and rates can be determined via the following formula:

Shrinkage = [(Total Hours External Shrinkage + Total Hours Internal Shrinkage) / Total Scheduled Hours] x 100

Call center management can also use the shrinkage percentage to calculate the number of additional staff to cover desired call volume. In an easy-to-compute example, let’s assume that your center has a 33% shrinkage rate. That means every team member scheduled will be off of their primary task one-third of the time. In other words, in our 33% scenario, for every three people scheduled, there’s only two people actually working on their main task at any given time.

As we’ve mentioned, the idea of having a 0% shrinkage rate is a pipe dream. We’re dealing with people, people need (and deserve!) bathroom breaks, lunch breaks, and downtime. That’s why it makes good sense to use a data-driven approach when scheduling shifts, so you can anticipate your shrinkage rates in advance, and alleviate challenges that appear as staffing shortages.

Calculating Call Center Shrinkage

Let’s take a look at this example. At ServiceFirst Call Center, day shift manager Finn oversees a team of ten reps. Rarely are they all present, with one or two outonn any given day. In his end-of-year report he is looking back over the data he’s collected and has calculated the following:

All data is per employee and is measured in total days per year.

External Shrinkage:

  • Holidays: 11*
  • PTO Days: 10
  • Other Absenteeism: 5

Internal Shrinkage:

  • Quarterly half-day team meetings: 2
  • Monthly rep one-hour coaching meetings: 1.5
  • Daily 30-minute lunch breaks: 16.3
  • Toilet Breaks: 4.3
  • Bi-Weekly 2-hour Training Sessions: 6.5
  • Review and Evaluation: 3

Total Shrinkage Days Per Employee Per Year: 59.6

Total Work Days Per Year: 261

Shrinkage Percentage (59.6/261) = 22.8%

* If your call center completely closes on holidays, you would not include them in the shrinkage days and simply remove them from the work days per year.

Call Center Shrinkage Case Study

Let’s say your call center provides outsourced call center services to mid-sized businesses like Carol’s Cookie Company. The winter holidays are coming and Carol tells you that she has just put a bunch of resources into a multi-channel advertising campaign and that she expects call volume to pick up quite a bit the last two weeks of November. Your center management team looks back on the records from Carol’s last similar marketing push and decides that they need to schedule about 75 hours of coverage during the coming two weeks to cover the anticipated uptick.

James manages the team that handles these kinds of clients at your center. He understands the importance of shrinkage and that the team has a shrinkage rate of about 25%. He considers the number of hours that team members historically take off as sick time or planned vacation time during those two weeks and calculates an anticipated shrinkage rate during that period of 30%. At 30%, he calculates that in order to cover 75 hours, he’d actually need to schedule about 108 hours. Instead of scheduling two additional staff, he schedules three full-time people and a part-time person to come in daily to cover phone time during lunch breaks.

James also wants to reduce the amount of shrinkage he can control in his department. He puts in place a “limited new training” rule during the peak holiday shopping weeks, allocating a half-hour period every two days for each team member to jump out of the call queue at an assigned given time to catch up on new processes, reminds his team to avoid personal calls and breaks that push past their 15-minute limit.

During the first three days after Carol’s ad campaign drops, James closely monitors real-time statistics, watching for unmet service level targets and average call times. He notes that the additional staff per shift have helped keep the average handle time down and without them there would have been some serious problems.

How to Reduce Call Center Shrinkage

The call center industry relies on efficiency, agent performance, and call volume to thrive. Using an outsourced call center that protects that company brand and ensures customer satisfaction is key. Shrinkage can make a call center much less efficient, create longer wait times, and decrease customer satisfaction. Regardless of the causes of shrinkage, there are a few steps that any call center can take to reduce it:

Calculate Shrinkage Regularly

Using the shrinkage formula above, management should measure shrinkage on a regular basis to increase call center efficiency. Shrinkage rates can change seasonally, especially during popular vacationing periods, cold and flu seasons, seasons of inclement weather, and other factors. Shrinkage can also vary from person to person or as workforce policies become stricter or more flexible, such as prohibiting personal calls, strict adherence to break schedules, and more efficient training methods.

Increase Forecast and Schedule Accuracy

When making the call center schedule, it is important to factor in as many external and internal factors as possible. The more breaks, after-call work, training sessions, team meetings, vacations, and holidays that are placed on the schedule, the more accurate it will be.

Monitor Schedule Adherence

Helping call center agents adhere to the schedule is a great way to reduce call center shrinkage. Creating monthly reports for team members helps them identify moments when they did not adhere to the schedule. Their manager can coach them to create a plan to hit more deliverables in the coming months. This also allows them to create a

Implement Workforce Management Tools

Workforce Management (WFM) tools and other call center software can help automate shrinkage metrics to make the rate more accurate and easier to calculate. Some WFM also features scheduling tools that allow agents to set their own schedules, effectively reducing shrinkage and increasing productivity.

Address Lateness and Absenteeism

When employees aren’t at work, organizational efficiency drops and the shrinkage percentage goes up. There are a number of things to try when people are chronically absent and late including goal setting, coaching, and performance improvement planning. If an employee continues to miss work repetitively, it’s not just the shrinkage percentage that is affected, it’s the overall company performance and it means corrective actions up to and including termination.

Monitor Extended Breaks

All employees deserve a little downtime, but extended breaks can increase your shrinkage rate and decrease your efficiency. Identifying reasons why employees might take extended breaks such as stress levels, long hours, nice weather, and personal calls can help you control call center shrinkage. Making team members aware that they and their co-workers rely on adherence to a strict break schedule to ensure customer reports show the coverage they were promised.

Keep Agents Competitive

Call center work can be exhausting, so it is important to provide incentives to keep employees motivated. Not only can reward programs and other incentives help with schedule adherence, but they also improve agent performance. This in turn improves the overall customer experience. Competition and rewards can also be helpful in reducing shrinkage by rewarding on-task performance but can result in added shrinkage if your reward programs include things like time off or extra breaks.

How to Find a Call Center Partner that Works Hard for You

Maybe you’ve run your own in-house call center operations for a while and know the pain points of dealing with call center shrinkage or have decided that call center services are important in order to grow your business. So, you’ve decided that outsourcing call center operation makes a lot of sense for you. When seeking a call center partner, the shrinkage rate should be something you should discuss along with other KPIs and metrics like service level targets, average wait times, etc.

TDSGS helps control call center shrinkage by getting you in touch with excellent call center services. Whether your business requires outbound or inbound call services, we help businesses just like yours improve customer service with tools like contact center software, tech support, back office services, and more. This drives efficiency and decreases shrinkage rates.

Schedule a call with us today to learn more about how TDSGS can assist you with choosing the best contact center for your business needs.

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