The Incredible Shrinking Call Center

By Peter L DeHaan

April 11, 2007

In retail, the term "shrinkage" euphemistically refers to stock which "disappears" before it can be sold.  It is a product that the retailer bought, but can't sell because it is has been stolen or lost.  Shrinkage hurts everyone in the form of higher consumer prices and lower company profits.  This affects jobs and threatens the business's future viability.  Some retail operations take a surprisingly relaxed position about shrinkage, viewing it as an inevitable cost of doing business; whereas others see it as the theft, taking aggressive steps to eliminate or at least reduce it.

Shrinkage in the retail environment has an analogous application to the call center, where inventory is human capital.  Shrinkage in a call center is agents who are being paid but not processing calls.  This could be manifested by agents who are not at their stations, not logged in, not "in rotation", or who employ some "trick" to effectively block calls.

Similar to retail, some call centers take a surprisingly relaxed position about agent shrinkage, viewing it as inevitable.  Their response is to intentionally over-staff.  This only serves to cover the problem, not resolve the underlying cause.  In reality, call enter shrinkage is stealing – stealing time.  Call center shrinkage likewise hurts everyone: a lower service level offered to the caller, reduced profits and increased costs, decreased morale, and even less compensation available for the agents.

There are three concepts that help track, explain, and understand agent shrinkage: adherence, availability, and occupancy.

Adherence: Adherence is a measurement of the time agents are scheduled to work compared to the time they actually work.  Why is adherence important?  Quite simply, it is because the schedule was developed to match the traffic projection and when the schedule is not fully worked, the result is understaffing.  In an ideal situation, staff should adhere 100% to their schedules.  In reality, this is not the case.

Adherence can be best tracked by dividing logged in time to scheduled time.  Most call center managers are shocked the first time they look at this.  It can represent a huge unnecessary cost to the call center, as well as contribute to lower service levels.

Several factors can account for differences between the schedule and the time worked.  The first area is scheduled breaks, lunches, and training.  This is the only acceptable contributor to adherence discrepancy.  Depending on the length of breaks, the best resulting adherence will be around 90%.  Forty-five minutes of breaks in an eight-hour shift will result in an adherence of 90.6 % (7.25 hours / 8 hours).  The second consideration is absences, late arrivals, and early departures.  Unless these openings are filled, the result is a disparity between the schedule and the fulfillment of that schedule.  If this missed work is paid time off, such as paid sick time, then there is both a dollar cost and service impact.  The third area is unscheduled breaks or any other distraction that causes agents to leave their positions.  When factoring all of these items together, it is not uncommon for call centers to have adherence rates around 75%, although well-run centers will be in the low 90s.

Availability: Availability measures how much of that time agents are ready (that is, available) to answer calls.  It can be easily calculated by dividing time available (also called, "on time," "in rotation," or "ready") by logged in time.  Although the ideal goal of 100% availability is achievable (that is, ready to process calls all of the time agents are logged in), 98% to 99% is more realistic.  Agent availability is strictly within the control of agents.  It is determined by each agent's willingness to keep his or her station in a state of readiness to be assigned calls. 

Occupancy: Occupancy is the amount of time agents spend talking to callers compared to the time they are turned on or are available.  One hundred percent occupancy means that agents are talking to callers the entire time they are logged in.  It also means that there are calls continuously in queue, waiting to be assigned as soon as an agent completes a call.  The resulting efficiency is great, but callers can end up waiting in queue for several minutes.  Therefore, 100% occupancy does not produce quality service and can lead to agent burnout and fatigue.

To calculate occupancy, divide the total agent time (that is, talk time plus wrap-up time) by agent "on" time.  Interestingly, ideal occupancy rates vary greatly with the size of the call center.  Smaller centers can only achieve a low occupancy rate (perhaps around 25%) while maintaining an acceptable service level.  Conversely, large call centers can realize a much higher occupancy rate (90% and higher) and still maintain that same service level. 

Call centers with poor adherence, availability, and occupancy rates, can literally spend twice as much in labor to produce the same service level as a comparably sized and well run call center.  If you haven't already done so, I challenge you to run your adherence, availability, and occupancy numbers – and then take steps to improve them.  Don't let agent shrinkage lead to profitability shrinkage!