[February 8, 2005]

Schedule Shrinkage Could Be Costing You a Fortune

BY CHARLES CIARLO

One of the functions of workforce management (WFM) is to monitor the degree of adherence to approved schedules. WFM tools can analyze the trends and nuances inherent in call center traffic loads, and managers can translate that into the perfect schedule. But if you don’t keep track of adherence, all that hard work is lost.

This article takes a look at how small amounts of non-adherence – increments of 20 minutes – can mount up throughout the day. Not only that, when you add up the impact of non-adherence, it exerts a severe toll in terms of reduced service. Further, it can be costing a fortune in lost revenues.

Keeping Track of Shrinkage

One of the most important concepts in adherence is shrinkage. Penny Reynolds of the Call Center School defines shrinkage as the time for which people are paid during which they are not available to handle calls.

There can be many reasons for this, some of which are valid. Paid breaks, paid time off and training time, for example, are a necessary part of the working environment and have to be taken into account when scheduling the required number of agents to meet call volumes.

But the truth is that most companies badly under-calculate the sheer volume of shrinkage that besets their call centers. This comes about due to a host of potentially hidden areas of shrinkage. Many managers keep their eye on several of these, but few are able to stay on top of all of them:

Most of us have been late for work on occasion and a few amongst us make it a habit. Talking to associates can also eat up time, particularly at the start or end of the day, and before and after breaks. Then there are personal calls originated or received during the day. There’s nothing wrong with losing a few minutes for an occasional emergency, but some individuals can chew up hours each day if you let them. Other areas of shrinkage are people leaving early, talking to HR, attending meetings, adding a few minutes to a scheduled break. The bottom line on shrinkage is the amount of minutes per day that agents are being paid to be on the phone when they are not actually sitting there working or available to receive calls.

What this means in the typical contact center is that there is a certain amount of shrinkage per CSR that happens off the radar screen. Even if it averages out at only 20 minutes per day, the cumulative effects can be staggering.

Let’s do some math to show the consequences of this insidious call center disease based on a loss of 20 minutes per day of undetected shrinkage due to agents not being available at scheduled hours:

In a 30 agent contact center, 20 minutes per agent equates to a grand total of 10 hours per day in shrinkage. Now what are the economic consequences of that loss? Say those agents are being paid $12 per hour plus benefits, equaling $15 per hour. That means you are losing $150 per day, $750 a week or $39,000 per year. That is more than the cost of one full time CSR per year in lost productivity. And according to some experts, the above figures are a gross underestimate of the actual losses.

But such amounts may only be the tip of the iceberg. What about lost sales? If the CSRs are selling, how much additional revenue are you failing to generate due to this level of shrinkage? Some firms will be able to quantify it. Say you can nail it down to $150 per hour in lost sales in the contact center above. That adds up to a staggering $390,000 annually that can be directly attributed to shrinkage.

Another way to look at it is in terms of customer service. This one, though, may be much harder to quantify.  How much is shrinkage costing you with regard to reduced service levels, slower responses and customer delays? If callers are kept waiting, they might hang up, go elsewhere, move their business to a competitor or just decide not to buy.

Shrinkage, then, can be a major factor in failing to meet service levels. And WFM software that tracks adherence is an excellent way to minimize shrinkage and thereby increase productivity. The key is the degree to which the application enables you to define, track and allow for agents being out of adherence.

Most workforce management applications allow you to have some buffer from the time when agent is supposed to go on break to when they actually take the break, as well as a buffer with regard to when they return. After all, you can’t set rigid schedules in a call center and expect 100% compliance. Calls may run longer, customers may require attention etc. One to five minute buffers may be needed to give agents time to end a call and sign off from their terminals. But it takes an exhaustive adherence tool to permit you to see all the out of adherence and to calculate the degree of shrinkage.

It is important here to differentiate between out of adherence due to such buffers and out of adherence that actually results in shrinkage. By setting that buffer correctly, you don’t waste time micromanaging every minor infraction.

Reporting tools within WMF also enable you to track the many nuances of shrinkage. But there is one caution that must be brought to the attention of call center managers. Don’t just spend time policing the infractions. Use WFM reports to detect agents doing things right. If you see agents with 95% or better adherence scores, make a big deal out of their ability to stick to the schedule and use that to emphasize to the others the importance of adherence. In fact, it may even be wise to tie bonuses in some way to adherence scores.

Charles Ciarlo is founder and CEO of Left Bank Solutions, a Workforce Optimization Software vendor based in Los Angeles. He began his contact center career in 1978 and has since led three successful call center companies, including the award-winning 800 Direct, Inc. Clients served include ATT, Sprint, Playboy Enterprises, Hallmark, Barnes & Noble, Hasbro, BOSE Corporation, Lucas Arts, Galoob Toys, and many others.

In 2001, Ciarlo named his own company Left Bank Solutions after the Left Bank of the Seine River in Paris, a haven for artists. Similarly, he named his signature product after the famous impressionist painter Monet. Ciarlo’s aim is to put the art back into workforce management, and to offer affordable world class workforce optimization solutions to contact centers of all sizes.