Workforce Optimization

A very senior and very smart workforce manager told me a great cautionary story about the importance of good strategic planning and the importance of accurate strategic planning tools. It seems that, at his large company, senior management made a decision to cut costs at their sales call centers by putting in place a rigid hiring freeze. They would reduce staff through attrition and put the money saved back into marketing programs.

I think we all know where this is headingthe hiring freeze just barely preceded the economy rebound and the new marketing efforts were very successful in generating many, many more calls than they had planned.

Alarm bells rang and the word went out to the center to start hiring ASAP. Because they couldn't hire fast enough, they had to cut the training time of new hires. Having so many marginally trained new hires drastically increased overall handle times, and the new employees were of a much poorer quality than the company wanted. Customer wait times were abysmal, and each lost call truly meant lost revenue.

They offered and sometimes forced overtime, and their occupancy rates were in the high nineties. Their experienced agents started to resign.

This strategic decision resulted in a mess for their contact centers, and it was almost a year before things got back to normal. The cost was significant. Other than the chaos this decision cost the contact centers, the money left on the table, through abandoned calls, was substantial.

What is the Lesson?

When considering the hiring freeze, the folks in workforce planning sent appropriate warnings about the possibility of the decision hurting business. Their problem was that they could not back the warnings with the appropriate analytics in time before the freeze took effect.

The lesson is simply this: strategic planning is very important, and having accurate and validated planning tools is critical for your operation and customer service.

Strategic planning failures are almost always felt at the tactical level. The decision isn't apparent until the chaos that results from the poor plans is felt by the operationand by the customers.

The elements of strategic planning are:

• Setting performance goals: Determining the mathematically optimal service goal, and how this goal should change over your planning horizon.
• Call volume and handle time forecasting: Determining the range of expected call volumes and handle times
• Hiring and termination planning: Determining when to hire and terminate staff, taking into consideration learning curves, attrition, seasonality, etc...
• Budget Planning: Attaching dollars to the hiring plans, and making investment decisions
• Performance forecasting: Determining the financial and operational performance that results in any given staff or budget plan
• What-if and sensitivity analysis: Answering key business questions and determining the impact of changes on your operational and financial performance

Our experience, in chatting with call center managers, is that strategic planning often gets the short shrift. We spend much more of our time trying to manage the chaos that results from our collective strategic planning mistakes, and not enough time analyzing the business to avoid those mistakes in the first place.

What is State-of-the-Art in Strategic Planning?

Strategic planning, just like workforce management, is greatly improved through the use of analytic tools. Just like when you moved to TotalView, you will see a tremendous lift in efficiency when you move to an integrated strategic planning tool.

All robust strategic planning tools must have these core components:

• Interval model of your contact center: A computer model that describes the relationship between performance drivers (e.g. available staff, call volume, and handle times), and performance (average speed of answer, service level, abandons, occupancy, revenue, etc...). It is key that this model accurately mimic the patience of your customers, and that the model's predictions be validated against actual contact center performance. Otherwise, it's garbage in...
• Planning worksheet: A system that describes all important performance drivers (Number of staff on payroll, new hire learning curve, employee attrition, global call volume, etc...) and that uses the interval model to determine hourly, daily, weekly, and monthly center performance.
• Hiring plan optimizers: In much the same way that you use TotalView to determine the optimal shift bid, you can develop similar algorithms that determine the optimal hiring plan, the optimal overtime plan, given your seasonality, your service goals, the learning curve of your agents, your revenue goals, etc...
• Sensitivity Analysis Tools: Once you have models of the contact center, you can use those models to determine the sensitivity of your center's performance to changes in the main performance drivers.
• Budget Reporting Engine: Budget plans require custom reports, and a complete strategic planning tool will allow you to create report templates and packages of important reports.
• Automatic Variance Analyses: While it is important to put together accurate plans, it is almost as important to report on why the plans are at variance with actual center performance. Think of this as "what just happened" analysis.

State-of-the-art in strategic planning requires that the method used to determine performance be robust enough and accurate enough to consistently predict performance. Sounds easy, huh?

Most of us try and accomplish this with our clunky Erlang-based spreadsheets. But if we're brave enough to go back and compare the performance expected to the performance produced, we'd likely be disappointed in the accuracy of the Erlang model.

There are other technologies that are much more accurate, like discrete-event simulation. Again, if the strategic planning tool does not offer validations of expected versus actual performance, it is not state-of-the-art.

What are Important Strategic Questions?

There are many important strategic questions that should be evaluated and re-evaluated often to ensure that much of the daily chaos is avoided. Questions like:

What service goal should we run? Rather than use an "industry standard" or another arbitrary goal, your business should analyze both the costs and benefits of running higher or lower service standards. There is no reason why a single standard is used for an entire year; as your profit margins change, your service standards may change too.

• How many centers should we have?
• What is the growth (hiring/termination) plan?
• What are the trade offs between service and cost?
• Should we purchase new technologies to improve service?
• What is the appropriate blend between inbound and outbound?
• What should our expense budget be?
• What is the value of an enterprise strategic planning solution?

While, in this discussion, we emphasized how robust strategic planning can help you do difficult what-ifs and avoid planning mistakes, there are many tangible, recurring benefits to purchasing an enterprise strategic planning system.

First, discrete-event simulation based strategic planning tools will allow you to staff over the medium and long term much more efficiently. At Bay Bridge, we have recently performed "apples to apples" comparisons between many of our client's current staff plans and those using CenterBridge, our strategic staff planning system. It was universal; spreadsheet-based planning tools all overstated staffing requirements by three to eight percent! For large centers, that is a lot of unneeded expense hidden in your plans.

Also, plans developed using rigorous analytic methods, like linear programming, return much more efficient hiring and termination plans than those developed by hand or with a spreadsheet. If you have seasonality in your call volumes and hiring plans, your plans will improve significantly with CenterBridge-developed "just in time" staffing.

Enterprise strategic planning tools take away much of the drudgery associated with spreadsheet planning and allow your planning analysts more time to do analysis, as opposed to tinkering with complicated spreadsheets.

Finally, tools like CenterBridge will give you a crystal ball to allow planning managers to take a much more active role in answering strategic decisions. It helps workforce managers become leaders in their organization.

Ric Kosiba, Ph.D. is the President of Bay Bridge Decision Technologies. For more information on the partnership between Bay Bridge and IEX Corporation, visit http://www.iex.com