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Costing Attrition

By John Cockerill

In Colin Taylor’s recent article, “Resolving The Riddle Of Retention,” he speaks about the cost of attrition and the many factors that affect it. This article outlines how to do both a simple estimate of that cost and more complex calculations to undertake for a center.

First, let’s outline a simple estimate approach. The five base numbers, measurements, or elements needed are:

  1. Number of staff at the start of period being analysed. This is usually any 12 month period.
  2. Number of staff at the end of period being analysed.
  3. How many new people were hired for the center during period? This can usually be sourced from either the HR Department or the hiring manager.
  4. What is the number of staff authorised for the center at the beginning and end of the period? If there was an increase, it is important to note so that the new agents for that increase are not calculated as part of the attrition rate.
  5. What is the rough estimate of the cost to replace an agent? For this simple estimate use a rough cost of hiring, training and deployment as a plug number. The more complex example goes into detail on what and how to get a more accurate and comprehensive number for hiring, training, deployment, and production / quality costs.

With those numbers in hand, a brief calculation provides the attrition or turnover rate and its associated costs. The example is:

Untitled drawing

The example above shows a 25% turnover, which is in the fair range and costs the center $150,000. In Colin’s article he mentions that, “the average contact center attrition reported by ICMI was at 33% in 2017, up from 29% reported in 2016. Accepted averages are captive centers at 20% per annum and 100% per annum for outsourced centers.” At 33% average attrition, the costs for the center jump to $198,000 which is a significant cost for a 100-seat center.

Now, that analysis is with a rough number estimate (#7) for the cost to replace a single agent. Experience shows that centers often underestimate this number. So a more rigorous approach is to do a detailed review of the factors affecting the turnover and their associated direct and indirect costs to the organization.

There are four main areas that need reviewing in completing a detailed cost analysis. Those areas are:

  1. Recruiting and Hiring
  2. Training
  3. Deploying
  4. Production and Quality Loss

Costs for these areas are often viewed in isolation and so seem small and not important or worthy of review and refinement. When viewed as part of an overall process, the cumulative success and failures, and the associated cost, become significant contributors to the organization’s bottom line.

Recruiting and Hiring

To properly cost Recruiting and Hiring, it is important to know what it takes to get enough applications, including the cost of ads, recruiters, agencies, and online fees; from the applications to getting enough candidates for interviews; the costs and time for any tests and background checks; the percentage ghosting at any stage (candidates not showing up for interviews or tests); and the time it takes to onboard the successful candidate.

For instance, experience shows a ratio of 10 applications to 1 candidate is not uncommon. With 6 or 7 candidates required for every new hire and at least two interviews per candidate, this can quickly add up to many hours of interview time and effort. These ratios are often not known outside of the HR department or hiring manager, and so go unrecorded and unrecognized as being part of the costs associated with Recruiting and Hiring.

Training

Training costs vary widely based on the organization. While some training for call and contact centers can take only a few hours, others commonly take two, three or more weeks. Still others in speciality fields such as pharmaceutical firms take as long as six months before deploying new agents to the phone and front line.

For robust analysis of training costs, look at:

  • average class size;
  • course or training length, hours, days months;
  • who and what are involved in training;
  • trainers, supervisors, classroom and equipment use and costs;
  • day of course preparation and post case notes by trainer;
  • amortized costs of course development, deployment systems, maintenance and updating;
  • and finally, the graduation rate from class.

Two notes for consideration here: First a 100% graduation rate from class is not likely and if it is 100% that is a cause for concern and more analysis. One of the tasks for most trainers is to weed out any candidates who don’t exhibit the right stuff for the organization’s needs. Often trainers only view themselves as “those who train” and their job as getting the candidates through the course and to the floor as quickly as possible. Any dropouts or dismissals during the training period are viewed as a training failure. As a result trainers may not concern themselves with the quality of candidates other than to ensure that they pass the tests.

Secondly, consider the development and costing of the course and the associated materials. Most call center course are made up of three major parts: Product and or Service knowledge, Systems and Technology, and customer service soft skills and behaviours. While there are many variations these three cover the vast majority of training in all organizations. Each company has its own depth and differences by section. Some organizations are low change and require little in the way of updates. Other organizations have high overall change rates or some combination of high change by product or service or even policies and procedures. All these factors can affect the cost to develop, maintain, and update the course materials. They can also affect the amount of time the trainer needs to prepare for the course, including on a daily basis as well as for a new class preparation. These costs need to be factored in and costed for this analysis.

Deploying

Deploying, or as it is sometimes referred to as “nesting,” is where the newly-trained agents are deployed to the floor. A few organizations do this as part of the training. It is when the new agents start taking calls usually with a buddy to help them out, or with a supervisor looking after only 2 or 3 agents as they take their initial calls and get comfortable with the systems, callers, and overall procedures.

Costing for this is period takes into account the cost of the close supervision, the cost of the buddy agent, and the reduction into their productivity, as well as the reduced production rate and the cost of errors by the agent. There is also an increased cost of quality monitoring during this period so as to provide quick and timely feedback.

Usually this nesting period takes from one to three weeks before the agent is moved into a larger team with standard supervisor ratio.

Production and Quality Loss

As with the deploying period, over the next few weeks and months the new agent learns and improves, hopefully, to the point where everyone considers them at full productive capacity and value. How long this takes is often referred to as the “Speed to Green,” or the speed to competency.

Costing for this Speed to Green period means looking at the value of the decreased production for that agent, the costs of lost opportunity or revenue production, decrease of customer satisfaction, lower FCR (First Contact Resolution) rate, and quality monitoring scores.

All four areas of Recruiting and Hiring, Training, Deploying, and Production and Quality Loss have real value to the company and contribute to the cost of attrition. Each area has its own value or cost but only when they are all lined up and the effects of one process or area is added to the others does the overall cost of attrition stand out.

For instance, if the Recruiting and Hiring is poor and provides substandard candidates, then training is affected. If training does an adequate job but doesn’t weed out the weak members of the new class then the production floor and supervisors have to deal with them. Each step in the process adds costs and time, and adds up to a high cost of attrition once the issues are finally dealt with.

With a more rigorous investigation into the four areas a clearer view of Cost to Replace – Per Agent (#7) is possible. Experience shows that in most centers this number is usually greater than most organizations believe. It then provides an impetus to improve and reduce attrition by looking that the root causes.

 

Follow Taylor Reach and John Cockerill on Twitter at @Taylor_Reach and @johncockerill.

To find out more about how Taylor Reach can help your company with costing, attrition, agent retention, and training, CLICK HERE to schedule a free consultation.

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