By Penny Reynolds
One of the most difficult challenges faced by call center management today is how to retain qualified workers. In the call center operation, where over 70% of costs are related to staffing, turnover is a particularly troubling problem costing organizations millions of dollars per year. This article explores the cost of turnover to a call center, the reasons why turnover happens, and what front-line supervisors can do to improve retention dramatically.
Turnover Rate: Turnover is at an all-time high. In all types of jobs, workers aged 20-24 stay with an organization only 1.3 years on average (compared to 1.5 years just 15 years ago), and workers aged 25-34 stay 2.7 years (compared to 3.0 years in the 1980s) according the Bureau of Labor Statistics. Compared to these longevity numbers, call center workers who generally fall into this age group (ages 20-34) stay an average of just under a year, according to callcenterjobs.com.
While turnover is minimal in some industries and runs rampant in others, the overall turnover rate is about 40%. But let’s not get too wrapped up in benchmarking numbers. After all, if your turnover rate is 30%, you don’t win a prize because you’re 10% below the industry norm. Even though you’re ahead of the competition, 30% turnover is still terribly expensive and damaging to the organization in all sorts of non-monetary ways.
The cost of even low levels of turnover is substantial and should be tracked carefully in planning a retention strategy. There are two important numbers to understand in this turnover calculation. One is the statistical rate of turnover and the other is the actual cost of turnover to the call center and the organization as a whole. Both numbers should be calculated and tracked on a regular basis for trending purposes and business case justification for programs to assist with retention.
In calculating turnover rate, most organizations use an annualized rate to describe the proportion of staff that leaves. The formula for turnover is:
Number of Exiting Staff
Turnover = —————————————————-
Average Number of Staff During the Period
Applied to the numbers in the table below, the calculation would be 54 / 81.5 = 66%.
|Month||Exiting Staff||Avg Number of Staff|
This turnover rate should then be reviewed to analyze internal (employees leaving for other positions within the company) versus external (employees leaving the organization) turnover. Both are costly to the call center organization, but obviously some benefit exists to the organization if qualified people are leaving to fill other roles within the company.
This turnover rate should be calculated for the center, but should also be calculated for smaller defined groups as well. For example, turnover should be examined by call type, by location, and by team. In particular, calculating turnover rate by team may help pinpoint problems where employees are leaving due to supervisory issues and not because of compensation, job fit, or other factors.
Turnover Costs: There are many costs associated with call center staff turnover. Some of these are obvious, direct, measurable costs, while others are indirect costs to the organization. The measurable costs of turnover generally fall into the following categories:
- Recruiting Costs: The cost of print or other advertising, job fairs, and other promotions to attract qualified staff.
- Hiring Costs: The cost of the human resource department to process applications and screen employees, as well as call center staff time to interview candidates.
- Training Costs: The cost of training facilities, trainer time, and student training materials, both for initial and ongoing training.
- Supervision Costs: The cost of additional supervisory time to assist new staff in their early learning stages.
- Unproductive Paid Time: The cost of wages during the initial training period when staff are not yet available to process calls.
- Overtime Costs: The cost of paying overtime to existing staff to cover call workload during understaffed periods.
In addition to these “hard” dollar costs, there are additional costs to the organization, particularly if the call center is a revenue-producing operation. In these centers, the revenues lost during recruiting, training, and early ramp-up time can be considerable.
Consider the following example of a customer service center with 100 employees whose turnover rate is 25%. In this center, each person handles an average of 12 calls per hour (x 6 available hours = 72 calls per day) and one-fourth of these calls (18 calls) result in an up-sell opportunity with an average value of $10. It takes approximately two weeks to fill the position, three weeks to train new staff, and another full week on the phones for them to get fully up to speed to be able to effectively up-sell. Average entry wage rate is $12 per hour. The per person costs of turnover for this organization are as follows:
Recruiting Campaign to Hire 20 Employees = $ 4,000; $4000/20 = $ 200 per person
Hiring Cost = 12 HR/Call Center Staff Hours @ $20/hour = $ 240 per person
Training Cost = 3 weeks salary ($1440) + Training ($500) = $1,940 per person
Supervisory Time = 1st Month 15 hours @$15/hour $ 225 per person
Overtime Costs = 120 hours @ $15/hour $1,800 per person
Lost Revenue During Hiring (18 calls x 10 days x $10) = $1,800 per person
Lost Revenue During Training (18 calls x 15 days x $10) = $2,700 per person
Lost Revenue During Ramp Up (18 calls x 5 days x $10) = $ 900 per person
Total Cost of Turnover = $9,805 per person
At a cost of $9,805 per person, if 25 agents leave the call center, the total cost is nearly a quarter of a million dollars in hard dollar costs. Add to these costs the less tangible ones of customer dissatisfaction, damaged reputation, lost skills and knowledge, and low morale and the costs simply skyrocket.
It is important that the call center be able to quantify these various costs in order to accurately calculate the true cost of turnover to the organization. Even in centers that do not directly generate revenue, it is important to understand the “value” of a call to incorporate into these turnover cost calculations. The resulting costs can be used to justify retention programs that pay for themselves many times if they reduce turnover even a small amount.
Reasons for Turnover: There are many reasons why turnover is so high in the call center industry. Some of these reasons are under the control of the call center and are “fixable” while some must be chalked up as simply costs of doing business. One of call center management’s responsibilities is to consistently assess the reasons why people leave the center (and conversely, why they stay) so that problems in the center’s control can be addressed.
The main reasons for call center turnover fall into these four categories:
Compensation: Inadequate compensation is a reason often sited in agents’ exit interviews. This will be a common factor for call centers located in highly saturated call center labor markets such as Phoenix or Dallas where competition for qualified call center staff is high. Call centers should do periodic compensation benchmarking studies to ensure their wages are commensurate with the wages of nearby centers for the same type of work, particularly in highly competitive areas.
Job Fit: Many times the reason an individual leaves the center is simply due to a poor job fit. This type of turnover can be reduced significantly by defining and advertising the job accurately and doing proper screening and assessment on the front end to make sure the job is a good choice for the candidate and vice versa. More effort during the selection phase will pay for itself many times over in improving retention. Part of this screening process will assess whether or not the candidate is likely to be happy within the unique working conditions found in most call centers: solo work, confined space, repetitive tasks, constant monitoring, and inflexible work schedules.
Limited Job/Career Opportunities: Many individuals leave the call center due to limited possibilities for career growth or opportunities for advancement. Some organizations have multi-level job ladders with numerous levels of agent positions and multiple career paths to many areas. Unfortunately, others are severely limited in growth potential and see turnover as a result. In a survey conducted by callcentercareers.com, 27% of people that had left one call center job and were looking for another cited lack of promotional opportunities as their primary reason to leave. Re-defining job levels and looking for career advancement opportunities within the call center should be evaluated often.
Supervisory Problems: Assuming compensation is in a reasonable range and there is at least a reasonable affinity for call center work, the main reason agents leave the call center is due to ineffective supervision. For the most part, the adage “people don’t leave companies; they leave leaders” is certainly true in the call center environment. In the majority of cases, a supervisor can be either the greatest contributor to staff retention or the primary cause of turnover.
In the survey mentioned above, the following reasons were cited most often by staff exiting one call center and looking for other call center positions:
- 20% felt they were not recognized for their work.
- 18% felt bored and unchallenged by the job.
- 11% felt they did not receive enough training.
The reason that turnover rate should be calculated not just for the overall center, but by team as well, is because supervisors are in such direct control over retention for the people they supervise. The book, “Love Em or Lose Em” by Beverly Kaye and Sharon Jordan-Evans presents an A to Z guide of strategies for improving staff retention in all types of organizations. The general business strategies presented in their book can be adapted for use in the call center specifically. Some of these suggested strategies include the following, spelled out by “a supervisor’s job”:
A — Ask: Supervisors should regularly ask employees what things about the call center make them happy and what things would make them leave. These reasons will be different for different employees. Supervisors may want to keep a file of these responses and refer to them periodically to ensure that each employee’s needs are being met on a regular basis.
S — Scheme: Supervisors should have a scheme in place for each employee’s success. This should include a training plan, a performance improvement plan, and a career path plan that maps out several options based on each employee’s aptitudes and desires. Some career path options will be vertical moves upward while others may simply be enrichment opportunities.
U — Understand: Supervisors must take the time to listen to employee feedback and understand their staff’s concerns. Almost everyone can improve their listening skills and there are many exercises to help practice active listening and feedback to show concern and understanding of employee needs.
P — Passion: Supervisors should find a way to incorporate employees’ passions into their work life. They should ask what the staff loves to do and find a way to incorporate or support their interests. Examples might be a scrapbook party once a month that an employee leads, sports teams, support for children’s class projects, desktop publishing and writing skills, or a flexible schedule to support volunteer efforts.
E — Enrich: Supervisors should find ways to support growth within the call center environment so employees don’t have to leave for enrichment opportunities. This enrichment involves thinking creatively to find ways to rotate assignments, build teams, combine tasks, and support individual goals.
R — Reward: Supervisors must find ways to reward positive behaviors, since rewarded behavior is repeated behavior. These rewards should come often and be attached to specific behaviors soon after the actions happen. Some rewards should be private, while others should be a public recognition of a job well done.
V — Values: Supervisors need to serve as models for how employees should perform. Behaviors should be defined that support the company’s mission and value statements and supervisors should actively seek to demonstrate these behaviors in visible ways to serve as a model for their teams.
I — Information: Supervisors should share relevant information with the team and with individuals. There should be communication of company and call center news as well as industry news and events. These communications can take the form of a written newsletter, bulletin boards, emails, and face-to-fact communications. Information about individual job performance should be shared often.
S — Space: Supervisors should do what they can to make sure personal space is adequate and respected. Work environments are critical to an employee’s satisfaction with the job. Creating a pleasant work atmosphere, including an attractive physical workspace can be a factor in satisfaction and retention.
O — Opportunity: Supervisors need to look for opportunities for employees to succeed and grow. While much coaching tends to focus on what employees are doing wrong, supervisors should look for opportunities to catch employees doing something right and reward them for it. Likewise, supervisors should be on the lookout for growth and career enrichment opportunities for their staff.
R — Rules: Supervisors should understand the values and rules of the organization and help to communicate and demonstrate these rules to all employees. Defining and communicating standards of performance along with the consequences attached to them are critical to employees’ perceptions that the work environment is fair and consistent.
S — Spur: Supervisors should look for ways to encourage employees to learn and grow. Many call centers have both formal and informal mentoring programs in place where a supervisor or team lead serves as a model for the job to encourage and nurture employees as well as to teach them organizational realities.
J — Jester: Supervisors should look for ways to have fun on the job. Most call centers have a constant flow of games, contests, and activities. These efforts result in a more pleasurable work experience, a sense of teamwork, higher job satisfaction, and lower turnover.
O — Outside Concerns: Supervisors should get to know their employees and understand their outside lives and concerns away from the call center in order to be better able to support them in their jobs. More call centers today are going the extra mile to have a “family friendly” workplace, where family members (and even pets!) are recognized and welcome in the center.
B — Buck Stops Here: Supervisors should be aware of the significant role they play in employee turnover and should be held accountable for staff retention. They should be trained in supervisory and leadership techniques and skills in order to properly communicate, evaluate, coach, and support their staff for increased employee satisfaction and higher retention.
Retention Planning: Every call center should have a strategic plan for staff retention. With the cost of staff turnover so high and the effects of turnover so detrimental to the center, it is crucial that the elements of a retention plan be in place. Many call centers link their retention plan to compensation, with managers’ and supervisors’ bonuses based on acceptable levels of staff turnover.
It is important to utilize exit interviews to determine the reasons agents leave the center and to interview long-term employees to find out the reasons they stay and are happy on the job. Call centers should not just assume that turnover is inevitable. Instead, they should strive to fix all the elements under their control in order to retain valuable people and resources.
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, call 615-812-8400.
[From Connection Magazine – Jul/Aug 2004]