The True Cost of Contact Center Agent Attrition
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The True Cost of Contact Center Agent Attrition

Contact centers are losing much more money than they think from employee turnover - a helpful benchmark of employee engagement. It’s hard to imagine that attrition, already widely recognized as the bane of the call center bottom line, could ever be underestimated. Yet, here we are. The problem isn’t that companies don’t take the concept seriously enough to take action. It’s that they consistently undervalue the true financial toll that attrition takes, starting from the point that an agent leaves the company to the point that the resulting empty seat is filled and fully productive. If these companies knew how much money they were losing right out from under their noses, there is no doubt they would try much harder to fix the problem.

Losing money due to employee turnover

Common attempts to keep employees happy like potlucks, dress-up days, and other center-sponsored events are nothing more than temporary band-aids on a much larger wound and aren’t truly engaging. More important, there is no controlled measurement to show that any of these internal initiatives are actually effective.  The first step to conquering attrition is understanding it, and the first step to understanding attrition is to keep reading. Let’s break down how these companies can take a fresh look at attrition, and actually take the necessary steps to address it without needing a desk lamp housing a magical call center genie.

In the interest of outlining a methodology for calculating a concrete operational dollar value per “attrit”, let’s take a look at each individual source of cost a contact center experiences when replacing a fully productive agent. First up: the hiring process. Often when speaking to call center executives, hiring and training costs are the only items they include in their tally of the costs of employee turnover. This is a bigger mistake than Colgate brand frozen dinners (yes, that actually happened). Still, it’s worth going over all the factors that should be accounted for.

Let’s say an employee, Biff, decides to quit after a full year with the company. Predictably, HR has to process him, revoke his access to the building, close out payroll, etc. Since HR does this so frequently in contact centers, they are pretty efficient at it. Still, you should count the total time and costs that HR dedicates to this process. This is your total separation cost (we’ll divide these annual costs at the end to make things easier).

Next up is sourcing the replacements. Perhaps you use a recruiter who charges a fixed fee. Or perhaps your recruiter charges a percentage of salary for the first six months. Or perhaps you source internally, through advertising, combing through applications, interviewing, background checks and the like. Whatever the method, figure out how much you’re spending on it in total (this includes your employees’ salaried time that is spent on this).

Now comes HR Processing Part 2: Electric Boogaloo. Each of these new hires needs to be added to your system, put on payroll, given a corporate ID and given security access. This includes any reporting to the state or employment bureaus and anything else that needs to be done to get each person into his or her first day of training. Using the same method as before, determine the total cost of this and add it to your running tally (so far we have separation, sourcing, and now hiring/processing the hires). This leads us to the best part of nearly every martial arts movie ever made: the training process. Feel free to start humming “Eye of the Tiger” or whatever substitute gets you pumped up to keep reading about attrition costs.

The cost to train new agents is a major source of legitimate variance in the cost of employee turnover. We find the average to be around three or four weeks of classroom training. Here you want to measure the marginal costs, which are the additional costs incurred each time you train someone new. Since you are always going to have some employee turnover, you don’t necessarily need to amortize the fixed costs from your basic training infrastructure, e.g. the space in your building reserved for holding a training class.

To tally the cost, first figure in the total bill to pay the instructors. This includes salaried and hourly employees who are taken away from other productive work and their benefits and payroll taxes. Next is the price of software and materials. If any of your training materials or technology is charged on a per user or per class basis, you should add that to the total tally as well. Adding together the above factors results in the total cost per class. Then see how many classes you hold annually and multiply your total cost per class by the number of classes to get the annual cost.

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Notice we haven’t even touched on a major factor here: these new hires receive a salary through the entire training process, many of whom never even end up taking a single call for the company. These wasted salary costs need to be factored in, and like before, you can do this by taking all the salary paid out during a training class, multiply it by the number of classes, and add this to your total annual cost ledger.

While the agents that made it through hiring and training courses are ready to begin taking calls, they are spared abrupt trial by fire through the “halfway house”, or nesting stage. Here we account for the fact that, usually for a week or two following training, agents begin answering calls at a grossly diminished rate with a lot of supervision and feedback. The contributors to attrition costs here are threefold.

First, we factor any teaching or support provided to the new agents during the nesting period by salaried employees. Second, we account for wasted salary due to the fact that new agents receive wages through this period, but are extremely unproductive and answer very few calls. Calculate this by figuring out how many calls per day an agent handles compared to when they are “fully baked,” which comes at the end of the productivity ramp in production. You’ll likely always have new agents who are in this stage, so try and find how much you’re losing in, say, a week, and multiply out to get the annual cost.

Hooray, you have made it to production! However, an eaglet does not become a majestic apex predator of the sky as soon as it leaves the nest, but must first inevitably faceplant into a few trees. This brings us to the productivity ramp.

During the first few months on the floor, agents aren’t very productive on average, but they tend to improve pretty significantly. At some point (often about six months), this ramp levels off, at which point we call them “fully baked.” This turns out to be very expensive. The more agents you have in the productivity ramp, the larger the workforce needed to cover all your calls. We call this “bulking up”.

More attrition means a less tenured workforce. Because a workforce is less productive during its productivity ramp, that means it can’t answer as many calls (or whatever other productivity metrics you use). For example, If you have 100 agents who each answer 100 calls a day, that’s 10,000 calls. However, if you have turnover such that 1 in every 10 agents at any given time is only answering an average of 70 calls a day (still on the productivity ramp), you’re no longer handling 10,000 calls a day - you’re only handling 9,700 calls per day. That means that in order to handle those 10,000 calls, you would need an additional 3 fully productive agents (and all their respective costs). A larger center with a high attrition rate may need enough extra agents such that they have more teams and thus, more supervisors. The extra supervisors’ salaries need to be accounted for as well.

The extra agents will also result in increased technology costs since you will need more licenses. Find the annual cost of this for your tally.

Note: Often BPOs can’t get enough employees to answer the phones, so they miss out on significant revenue from their clients, which is also quite painful.

Take a brief mental account of all the costs we have covered between the moment an agent quits and the moment an identically productive replacement sits in the vacated chair. It’s a lot to keep track of at first, but fortunately the calculations and concepts themselves are not inherently complex. You have your annual cost of attrition (which you can put into “cost per attrit” terms by dividing by the total annual number of attrits). So, you calculate how much attrition is really costing your center, now what? There are many proposed solutions to the problem, and all of them are promising you results in the form of ROI. That said, there are always external variables at play for each individual center, and you want to make sure such a program will actually have concrete success in yours.

This is the part where an A/B test descends from above as if from nowhere, dressed in all black and filled with an innate drive for justice and reason, to nullify the variables using its control group utility belt. That’s the great thing about Batm...er, A/B tests: the presence of a control group allows us to measure the actual effect of a selected program within a population. This is because identical variables will act on subjects both inside and outside of the control group, the only thing changing is the program. You will make sure that people with the same location, bosses, tenure, KPIs, teams, age, job functions etc. are tested. Half will receive the test (group A), half will not (group B). The gap between the two is the net effect of your program, software, hardware, or whatever it is you have implemented. Measuring whether things change after you roll something out tells you almost nothing because the changes could be due to a host of factors. Benchmarking with a similar center also tells you very little, because there are different local factors that drive outcomes for each center. The A/B will allow you to target, isolate, and measure. Without this, you are currently stumbling around in the dark (and spending sometimes tens of millions on it) with no reason to think it any what you are doing is actually impacting the bottom line.

With all of this information, it’s important that the responsibility of handling the attrition problem lies in the hands of the correct people. This isn’t something to skim over, say “makes sense”, and ship down to HR employees who don’t work with data to this degree and lack the necessary clout and budget to implement multi-million dollar changes. This is something to be championed by those in charge of operations, with help from finance/data science specialists. Given the massive impact that attrition has on call centers’ bottom line, it isn’t hard to justify the time needed to nail down a concrete dollar value for its true cost in your own center. After that, it’s only a matter of trial experimentation and implementation of a solution.  While you’re at it, there’s also a host of growth related benefits that your marketing team will receive. Happier more tenured agents reduce customer churn, improve net promoter scores, strengthen the company brand and help the company grow. Make alliances with your CMO for the opportunity for maximum impact.

Once you have counted the cost, developed the infrastructure to A/B test the impact of your interventions, and built the right alliances, you will be ready to finally tackle the employee attrition monster once and for all.



Topics: Metrics, People Management, Culture & Morale, Workforce Management

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