By Colin Taylor
I was chatting earlier today with a conference organizer who wanted to get my opinion as to what the ‘hot’ buttons were regarding potential conference topics that they could offer. This was reminiscent of other similar calls I have fielded over the years and one of the top 3 topics I have always suggested is staff and agent retention. This was a ‘hot button’ topic twenty years ago and still is one now.
So how is it that the same issue that ‘dogged’ call centers two decades ago is still a ‘front burner’ issue today? I think there are a number of factors that contribute to this:
The nature of turnover and staff attrition is such that you are never done this process,
Successive regimes have built up and eroded successful programs that addressed this topic,
Regular and expected fluctuations in employment levels and labor availability ‘hid’ the problem for periods of time.
Addressing turnover and attrition is a never ending process. With labor costs representing approximately two-thirds of your center operating costs, it is a battle you need to wage and a battle you really want to win. In this article we address a number of mis-conceptions and truisms regarding staff attrition and turnover. We also present a number of actionable steps that you can take within your own center to address this issue.
One of the first challenges that most organizations experience when trying to improve agent retention is that they do not have a good understanding of the ‘real’ cost to the organization of attrition and staff turnover. Turnover impacts on centers in a number of ways;
The center Operating Budget,
Service quality delivered to customers,
While all of these are important it is the last one on this list that can do the most damage to a brand, a business and the contact center. So how do you mitigate attrition, so that while it will always be with us, it has a minimal impact on the four areas highlighted above? First we need to ensure that we are all talking about the same things, so lets define the terms that we will be employing in our examination of staff retention;
Attrition: a reduction in numbers size or strength
Turnover: change or movement of people in and out of an organization. The aggregate replacement of workers.
Churnover: change or movement of people/staff within an organization.
The first two of the above definitions are from Dictionary.com and the last one is of our own creation, but is in common usage in the call and contact center industry. Turnover represents a dichotomy in most centers; on the one hand it is bad, to be avoided and treated like the plague, yet at the same time it is method for introducing new blood and new ideas into the center. Regardless of the dichotomy turnover happens in all centers. It has been estimated that 5% of the active American workforce is unemployable (this percentage is likely similar in Canada and other developed nations) and yet prior to the most recent recession we saw some states reporting unemployment levels of under 3%. This suggests that at least 2% of the workforce working shouldn’t be…are any of them in your center?
It is important to measure turnover correctly. Many organizations cheat themselves by inaccurately measuring their turnover and ‘churnover’. To correctly calculate your turnover, take the total staff who left the call/contact center as a percentage of the total staff compliment. So if 50 staff left the center throughout the year and the center employs 50 staff, the turnover is 100%. Some Managers erroneously only examine the positions replaced, so for example might say that 25 staff who were in place at the beginning of the year are still there at the end of the year so only 25 positions were filled with new agents and therefore a 50% turnover level. This is an inaccurate result however. Other incorrect practices include not counting staff who left during the probationary period or who do not complete their training. Yet another method of artificially reducing the turnover is not including staff that move internally (churnover). It is important to accurately calculate your turnover, if we are to determine the ’real’ cost of turnover for your organization.
Impact of Productivity
Attrition/Turnover is a result of the Selection, Recruiting, Hiring, Training and Deployment process for new staff. Knowing where you experience turnover in this process can help to identify and then address ways and means to improve the affected process. With the cost of a new hire from selection, through hiring, training and deployment running from $5,000 (US) to $10,000 (US) it is of critical importance to understand where the process is dysfunctional and can be improved.
Agents in any center will move through a productivity continuum from their first day on the job. In many centers it will be six months or more before a new agent achieves the productivity of an experienced (6 month plus agent). So in short it will take 6 months for a new agent to attain the productivity of the agent they are replacing.
Now each center will be different as their calls/contacts and businesses are different, but this can explain why simply applying headcount metrics often yield inaccurate results in many centers. I would encourage everyone to map this curve for your own center. Identifying this curve will allow you to determine the ‘lost productivity cost’ associated with a new hire that should be a part of your cost of attrition calculation.
In the above model you can see that in Month 1 the new agent only has 50% the productivity of an experienced agent. If the cost for a new agent is $2000/month, then you will need to budget an addition $1000 in month 1 to deploy additional agent labor to maintain your service level. In Month 2 this cost declines to 40% and the incremental additional cost to hold your SL is $800, in Month 3 productivity is at 70% so the incremental productivity top up is at $600, Month 4 is $400 and Month 5 is $200. In month 6 the new agent performs as well as an experienced agent.
Calculating the Costs
This exercise hasn’t even included reduction in revenue generation (sales), cost of errors, cost of escalations and transfers etc. The incremental cost in this model is not insignificant, it totals $3,000 in additional labor expense required to maintain you service level, simply because 1 agent left. Now if 20 staff leave…you are quickly at $60,000 in incremental costs. How many of us have this incremental production maintenance cost in the operational budget?
The reality is that each organization is different and will have different costs depending upon their business and
more specifically their inputs; Agent rate, benefit load, recruiting costs, the impact on the center of ‘back filling’ the agent position- this is the agent productivity costs we just completed (to schedule an agent to cover the shift of the agent who has left or is in training). There is also an impact on the quality assurance team; new staff are, in most centers the recipients of far more monitors than veteran agents, this represents a cost. So let’s complete an exercise to identify the cost for your own centers…
1. First identify the starting agent hourly wage in your center.
2. Now add the recruiter, supervisory, Quality Assurance, and Contact Center Manager hourly rates
3. Identify the percentage of the hourly rate that reflects the cost of benefits offered. For example if the medical, dental, and all other employee benefits is $3.33 per agent hour and you pay agents $10 per hour then this is a 33% benefit load.
4. Next put in the number of hours your HR and/or recruiting staff will work on sourcing and hiring a new hire. This cost should be based on the following…# of interviews/hr and the # of interviews per hire.
5. Extrapolate the number of hours for agents to back fill the agent position, the lost productivity times the hourly costs
6. Multiply the recruiter rate by the recruiter hours and the same for the Supervisor, QA and CC Manager and lastly the Training costs (hours * agent hourly rate + trainer costs (hourly rate * hours)) – be sure to include trainer prep time, HR staff time to complete forms etc.
It is important to include all costs in this calculation such as Advertising or Posting costs; Interview costs- if there multiple interviews with multiple attendees, you must account for each of the attendees’ time for all of the interview meetings.
The Quality Assurance cost needs to be calculated. A center that completes 4 monitors per agent per month on average, may do 16 per month on ‘new’ agents will need to adjust their QA labour and customise to fit your centers practices. Remember to add the ‘back fill’ agent hours and rate. If you are replacing an advanced agent you may wish to increase the hourly rate.
For the training costs this table illustrates the process.
The variables associated with this calculation include the length of the training program, the amount of trainer preparation time required (this model includes 2 days) and the amount of Team Leader/Supervisory time required in support of the training required. In this actual client model the cost is more than $8000! Of course the larger the class size will reduce the costs by amortizing the trainer expense over a larger staff, but larger class sizes tend to produce poorer performers.
Turnover, churnover and some staff loss is inevitable. You must plan and budget for it.
Building a budget with zero attrition will never be correct and it will force you to be asking for more money very
early in the fiscal year.
– Include a defendable turnover estimate,
– Include the cost of back-fill, recruitment, training etc.
Start with your actual turnover rate for the most recent year, complete the same calculation for the two years previous. The average and/or result of this calculation becomes your baseline. If you are taking no measures to address or reduce your turnover, just employ this number. If you are making systemic changes then you will need to identify ‘conservative’ improvements and remove these from the rolled up costs. I must emphasize the importance of being conservative. In all budgeting it is better to be conservative than to try and pin down a number too precisely. Management would rather be pleasantly surprised by you coming in under budget, as opposed to asking for additional funds.
Impact on Wages
Any increase in ‘churn’ (attrition, turnover, churnover) will result in additional staff in the center. This new staff will bring in perceptions from outside of the center regarding wages paid etc. In addition the staff that remains will often feel that they should be paid more money if it appears to them that they are the experienced and veteran staff. Both these events create pressure to increase wages and compensation even though quality and productivity are declining.
The higher the turnover rate, the higher the pressure to increase wages within the center. You can resist this pressure of course, though this can actually increase turnover. In most centers with high turnover see wage increases higher than those with lower turnover. It can be a vicious cycle…Higher Turnover => Management pressure to reduce turnover =>the easy answer is to spend more money by granting raises=> raises applied across the board=> staff that feel disadvantaged and experience lower morale=>increased turnover. The key here is that ‘across the board raises’, selective and tactical rewarding of superior performers can be advantageous.
The addition of new staff will dilute both the production and quality. Productivity is diluted as new staff will be as proficient of the staff that left. Quality will decline as the new staff will make more mistakes as they learn.
Impact on Quality
New staff erodes service quality in almost all situations. Most centers strive to compensate for this by increasing the number of agents monitors. In previous calculation we identified and incorporated those increased costs. Knowing the cost certainly does help, by benchmarking the degree of service erosion, but unless the coaching is likewise ramped up, do not expect to see a significant improvement. Of course to increase the coaching and monitoring will require additional labor, which is trained and proficient in providing these services. Ask yourself if you have these additional resources? And if not where will you source these staff resources? Or who needs to know that service will erode during this period without additional resources?
A common solution has been to enlist supervisors and team leads to provide the additional QA resources. But what is the real cost of doing this? Reduced supervision, poor agent management and control: all of which reduces the operational effectiveness and efficiencies of the center. The quality issue is often best addressed by increased agent training and a slight increase monitoring. Of course if your quality monitoring is outsourced, your service provider should be able to increase the number of monitors they complete, either as a whole or only focused on new agents.
Impact on Morale
In a high turnover environment expect to have morale issues. It is human nature to feel worse when there are problems around us. As productivity and service quality decline there is often an increase in tardiness and absenteeism.
High turnover, attrition and a high change environment make people uncomfortable and nervous. This leads to morale issues. Staff will tend to keep their heads down if they are concerned over being fired. They will talk amongst themselves about the negative aspects of the organization, their boss and the company. This self focused dialogue can become a fire storm that feeds itself. As a leader you must interrupt this firestorm. Hold a staff meeting- review the situation, ask for their input. Be transparent if there have been layoffs or planned redundancies share this with the staff, including the timetable. If turnover is the problem, let the agents know that you are working to solve this. Show your agents that you care about them, about the company and about the products and services and customers you support. Ask for their input. If you are at the bottom, there is nowhere to go but up.
By recognizing the impacts of turnover, and churnover can have and identifying the costs to the organization you will have the first pieces of the puzzle in working to solve this challenge in your center.
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