If your call center is being asked to tighten its belt these days, you’re not alone. Many businesses are feeling the effect of a slowed economy and all departments, including the call center, are being asked to make the most of resources.
Since about 75 percent of a call center’s operating costs are related to staffing, that is generally the first place the call center manager looks to reduce costs. It is all too common to think of layoffs and reduction in staff as a way to respond to the call from senior management to save money. But before you write up the pink slips, make sure you understand the implications of staff reductions.
Let’s assume that you’re a fairly small call center with fewer than 50 agent seats. (If you’re a larger center, you can view these numbers as representative of a specialized agent group within the bigger call center structure.) Most days, you’re meeting your service goal of 30 seconds. The snapshot below indicates the staffing picture with varying numbers of staff during an hour in which you’re getting 350 calls.

Staffing with 33 “bodies in chairs” would enable you to meet the service goal fairly consistently. A strategy to decrease staff numbers to reduce costs would impact service directly. The loss of one person would worsen delays from 30 seconds to 54 seconds. Eliminating another person would double the wait to 107 seconds! And reducing staffing levels by three would result in an average delay of 298 seconds. So those callers accustomed to waiting for only half a minute in queue would now be waiting nearly five minutes!

Unfortunately, service isn’t the only thing that suffers. With 33 staff in place to handle the call workload, agent occupancy (the measure of how busy staff are during the period of time they’re logged in and available) is in an acceptable range at 88 percent. Taking one body away raises occupancy levels to 91 percent; taking two away results in 94 percent occupancy; and taking three away means staff would be busy 97 percent of the time during the hour. In other words, there would be only three percent of the hour (180 seconds) of “breathing room” between calls. Such a high level of occupancy cannot be maintained for long. The likely result will be longer handle times, longer periods spent in after-call work to “catch their breath,” burnout and, ultimately, turnover.

There is another downside to consider from a cost perspective. The idea was to save money by eliminating staff. Assuming a wage rate of $20 per hour, then eliminating three staff would result in a savings of $60 for that hour.

However, if your center is paying the phone bill by providing toll-free service for callers, the reduction in staff might be outweighed by the increased telephone costs associated with the longer delay times. In this example, with 33 staff in place the average delay is 30 seconds per call. Multiply that by 350 calls per hour and that’s 10,500 seconds (or 175 minutes) of delay. If we apply a fully loaded telephone cost per minute to that usage of $.05 per minute, that’s $8.75 for the queue time.
If we reduce the numbers to 30 staff, remember our average delay increases to 298 seconds of delay per call. Multiply that by 350 calls and that’s 1,738 minutes of delay, priced at $.05 for a total of $86.90 for the queue time that hour. In other words, by eliminating three staff to save money, we’ve just increased our telephone bill by over $78 for that hour! So, to save $60 in wage costs by eliminating three positions, we’ve spent $78 more in telephone costs — not to mention the detrimental effect on service and occupancy.

This example doesn’t even take into account the likelihood of a longer call given the poorer-than-expected service levels. Customers would become irritated or abandon calls, staff would become overwhelmed with the extra work and telephone charges would likely increase even further.

The cost implications are even more dangerous in a revenue-producing center. If the value of a contact is $50, and agent salaries are $20 per hour, it is easy to see that putting another agent on the phone will pay for itself even if the agent answers only one call per hour that would otherwise have abandoned from the queue. But even if the value of the call is only $5, there is clearly a trade-off in determining the staffing level that will produce the highest net bottom line. The return on appropriate staffing must be argued against budget constraints.

So, from three different perspectives — the customer (service delays), the agent (higher occupancy) and senior management (higher telephone costs and abandoned calls) — you can see that a simple staff reduction may not save you any money. In fact, it may cost you much more in terms of poor service, productivity and morale, and send you in the opposite direction on your bottom line than what you intended.

Penny Reynolds is a Founding Partner of The Call Center School, a Nashville, Tennessee based consulting and education company. The company provides a wide range of educational offerings for call center professionals, including traditional
classroom courses, web-based seminars, and self-paced e-learning programs at the manager, supervisor, and front-line staff level. For more information, see www.thecallcenterschool.com
or call 615-812-8400.

[email protected].