Understanding Your Contact Center Costs: Attrition
By Colin Taylor
Understanding Your Contact Center Costs: Attrition
A recent report from Gartner referenced the cost to replace a frontline agent at $14,113. We have seen similar figures when working with clients. A major municipality that we have worked with, shared that their cost is just over $10,000. While this cost seems high, it is likely too low. When we look at the cost to replace an experienced agent we must include costs that arise in four major categories:
- Recruitment & Hiring costs
- Training costs
- Lost productivity costs
- Reduction in quality costs / Potential revenue (there is also potential to damage organization reputations but for now we are only including the internal costs).
Recruitment costs include the cost to place or post the position, human support to review applicants, the time it takes to administer any assessments or tests and the cost of the tests themselves, candidate interviews, background, and criminal checks, drug tests, etc. There are then the hiring costs, setting up a new employee into your systems, acquiring licenses, registering them in the benefits program, etc. This cost varies by organization, some employ more automation than others and some may complete this process largely internally while others outsource the entire process. Our research has shown that a reasonable estimate of this cost is $3,400. Your actual mileage or costs will vary and you should calculate these.
The second cost element that you need to look at is training. In this example, we will not deal with the cost to develop the training content as this investment needs to be viewed over the effective and useful life of the content. Rather we will examine only the cost to deliver the training: the agent wages over the course of the training, the trainer wages amortized over the number of staff being trained. The cost is then adjusted to reflect the attrition or staff turnover that occurs during the training.
Attrition is a topic unto itself, but in brief, this occurs when staff leaves the contact center for roles in another organization or for another role within the organization. We have written extensively on this topic and common reasons for staff leaving include a lack of engagement, dissatisfaction with the compensation or their immediate manager, a disconnect between what the role was expected to be and what they experience, a lack, real or perceived of a career path, adequate training or the proper tools to do their role. In the final analysis, the cost of attrition needs to be included in any cost of replacing a frontline staff member.
The training cost should include any nesting that takes place, this is often where new staff may realize the role is not for them or that they feel ill-equipped to do the role. Pro Tip is to expose applicants to the role in all its glory or tediousness before they are hired so that when they get to nesting it won’t be such a shock or a surprise. As part of nesting costs, we must also include the cost associated with supervisors or coaches that support the agents during nesting period.
Of course, when a new agent completes their training and nesting they are barely adequate. They will need time, attention (coaching), guidance, and support to progress up the learning curve before they can function at a similar level to the tenured agent that they are replacing. This process of maturation is often referred to as “speed to competency”, or “speed to green”. The time it takes for an agent to achieve ‘competency’ and perform as well as an experienced agent varies by organization and is a function of the training quality, the complexity of the operation and agent lead processes, and the ability of the systems and tools in place to support the agent and simplify complex workflows. In our experience, most centers would identify this “speed to competency” as 6-12 months, with some expecting it will take up to two years for a new agent to become competent.
It is exactly the variance between a tenured or experienced agent and a new agent that we examine next. We know that new agent calls will take longer. The new agent is unfamiliar with the tools and systems, they will need to concentrate on the systems to navigate successfully. This presents a less efficient agent. In our experience, a new agent is only 50% as productive as a tenured and experienced agent. If we accept that the contact volume will remain unchanged and we have a new agent that is only half as productive as the agent they replaced, then we can see that we will need additional agent labor hours to offset the productivity shortfall. There will be an improvement over time until the agent becomes competent, but that labor offset is one of the largest costs in this exercise
This productivity gap is further impacted by the amount of rework that is required to correct mistakes made by new agents. We expect new agents to make mistakes and we expect that they will make fewer mistakes as they progress towards competency. The variance between the error rate for new and experienced agents also requires additional labor to offset. At the same time, for the centers with sales opportunities, it is expected that a new agent generates less revenue opportunities and may miss buying signals and opportunities.
So let’s put all of this together. If we look at a hypothetical contact center, where the HR team recruits and hires new staff at $17.50 per hour. For The recruitment and hiring process, we will assume the cost to be $3,400 as we identified above.
With new agents hired at $17.50/hour with a burden cost of 20%, the hourly cost is $21. These new agents then enter a 10-day training with three peers. The training is conducted remotely so no physical space costs are included in this calculation. The only training cost is for the agent time, the trainer time/cost, is apportioned equally over the four attendees. As we know attrition is typically highest in the first six months of employment and in many centers in the first six weeks. If we assume 15% attrition during training we would end up with a training cost for each new agent of $2,539. One week of nesting occurs next with a dedicated supervisor ($30/hour burdened), overseeing 10 freshly minted agents. Once again the agent and Supervisor wages are incurred, though as the agent is able to process some contacts during nesting, we have assumed they operate at 25% of an average agent, a quarter of this agent labor cost is credited back. Once again we apply attrition and assume 5% of agents will depart. The result is a nesting cost of $914 for each agent.
So far, we have recruited, hired, trained, and nested the new staff at a cost of $6,853 per new agent.
The new agent is now embarking on their journey to competency or speed to green. In our hypothetical center, we expect that 1 year is required for a new agent to achieve competency and that at graduation from nesting they will be 50% as productive as an experienced agent and make more mistakes, and provide lower quality interactions with fully 25% of the contacts initially requiring correction or rework. We have assumed that both productivity and required rework will improve month after month on a straight line for one year until they are equal to an experienced agent. The labor cost to offset the productivity shortfall is $13,849, and the rework offset labor cost is $6,932. To these costs, we would once again add attrition at 15% over the balance of the year.
When these lost productivity and quality rework costs are added to our onboarding cost above we arrive at $30,751. The cost to replace an experienced agent earning $41,260 is fully 77% of the departed agent’s salary.
If we extrapolate this cost to a center of 200 agents with the same turnover rate (35% per annum), they will hire and onboard 70 agents per year at a cost of $2.15 million or $30,751 per agent. This is not an outlandish attrition rate and is significantly lower than many centers.
These costs are not inevitable. In our center above a reduction to 20% turnover, would save almost a million dollars in the year. Some attrition and turnover is to be expected and is healthy for the organization, but high rates of attrition are expensive and as center leaders, we have many levers that we can use to improve retention and reduce attrition, but that is the topic for my next post.
 “Why Service Reps Disengage and What You Can Do About It”,
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