How To Calculate Shrinkage In A Contact Center?

Prashanth Kancherla

Jan 18, 2024 | 12 mins read

Assume you have 100 agents in a call center to manage the call load. Now, do you know if all 100 agents are ready to help customers at a certain time? Call center shrinkage is defined as the gap between the number of agents available to accept calls and the number of agents on break, attending meetings/training, completing After Call Work (ACW), out ill, and so on.

Did you consider this factor while deciding on the headcount for your call center? Staffing a call center entails much more than simply assigning an agent to each phone, and shrinkage is an important component in determining how many agents you will need to serve your clients.

Let’s look at what shrinkage is, how to calculate it, and how it affects your call center’s efficiency and effectiveness.

What Is Call Center Shrinkage?

Call center shrinkage is a workforce management (WFM) metric used to optimize resource allocation. In other words, call center shrinkage represents the time when agents are working but are not available for customer interactions due to breaks, meetings, training, and other activities. Shrinkage can be planned or unexpected, depending on internal and external causes.

  • Planned shrinkage is predictable and easy to account for. Examples include agents attending training classes or one-on-one meetings.
  • Unexpected shrinkage occurs when an employee is absent due to illness, arrives late, or spends longer breaks than expected.
  • Dinner breaks, training sessions, scheduled meetings, and work completed between calls are all examples of internal factors that contribute to shrinking.
  • External shrinkage elements that contribute to your shrinkage roars include absenteeism, holidays, vacation and sick days, tardiness, and departing early.

Now, what is shrinkage in BPO? It is the inverse of occupancy rate, which is the percentage of time your agents spend on customer calls. This implies it refers to—you got it—the amount of time your representatives do not spend on client calls. You don’t want any shrinkage.

However, remember that shrinking cannot be avoided. But, it can be managed appropriately to keep the shrinking rate to a minimum. The average shrinkage rate in the call center industry is between 30 and 35 percent. While this may appear to be a high number, keep in mind that staff require planned downtime to provide optimal service.

So, how do you monitor and manage shrinkage in your call center? Shrinkage can be a significant cause of failure to reach service-level targets. Call centers that factor shrinkage factors into their forecasting and scheduling often achieve improved service levels while incurring cheaper operating expenses. They frequently do this by incorporating all call-related operations into the forecast and schedule planning process.

Types Of Shrinkage

There are various possible causes of call center downsizing. Employees’ inability to handle consumer calls can generally be classed as:

1. Internal Shrinkage (In-Center Shrinkage): This happens when personnel are preoccupied with other tasks and unable to assist consumers. This is a common occurrence at the office.

2. External Shrinkage (Out-of-Center Shrinkage): This occurs when an agent is unable to work due to personal reasons. It occurs primarily as a result of an employee’s inability or unwillingness to seek personal comfort.

Why is Tracking Shrinkage Important In Call Centers?

Shrinkage, like other call center metrics and KPIs (Key Performance Indicators), is an important measure that call center managers should routinely track for two reasons:

Ensures efficient customer service

When the shrinkage rate is high, and there aren’t enough available agents to take client calls, callers will have to wait longer on hold, resulting in more angry customers who can’t get through to a support agent and have their concerns resolved quickly. 

As a result, call centers may see longer average handle times, higher call abandonment rates, and reduced customer satisfaction (CSAT). That is why it is critical to monitor and properly manage shrinkage to provide timely support and a consistent customer care experience while achieving your SLAs.

Improves call center efficiency

Measurement of shrinkage is a critical component of call center labor management and optimization. Managers may better calculate the number of call center reps needed to handle inbound and outgoing calls and meet performance targets by tracking shrinkage rates. They can also discover issues that influence and increase shrinkage and solve them promptly to improve contact center operations and performance. 

Furthermore, a high shrinkage rate can put too much strain on agents, leading to higher burnout and poorer production.

A few other reasons why shrinkage is important in call centers are:

  • Resource Planning: Shrinkage data helps in accurate workforce management and resource planning. By accounting for periods when agents are not available, call centers can determine the optimal staffing levels required to meet service level goals and maintain customer satisfaction.
  • Performance Evaluation: Shrinkage data can be used to evaluate and refine operational processes. By identifying patterns in unplanned shrinkage, such as absenteeism, call centers can implement strategies to address underlying issues, improve attendance, and enhance overall operational efficiency.

This takes us to our second essential question: how can you calculate call center shrinkage?

Call Center Shrinkage Formula in BPO

You can calculate call center shrinkage using two metrics:

  • Time
  • Number of call center agents

Let’s look at the shrinkage formula in BPO for both of them!

Calculate Call Center Shrinkage By Time

Use this calculation to calculate call center shrinkage over time:

(Total hours of external shrinkage + Total hours of internal shrinkage)/Total hours available ×100%

So, assume the external and internal shrinking hours are 6 and 8, and the call center representative works 12 hours each day. The shrinkage percentage is:

[(3+3)/12] × 100% = 50%

Calculate Call Center Shrinkage By The Number Of Agents

To compute call center shrinkage by number of agents, use the following equation:

(Number of call center agents needed to take calls) / (Number of agents available to answer calls) × 100%

For example, 40 call center agents are required to meet the service level target, but there are only 20 available. The shrinking percentage will be:

(40/20 × 100%)= 200%

Shrinkage Factors

Some reasons for shrinkage are under your control and can be easily handled with proper organization. That’s easy. Other circumstances, however, may necessitate a closer examination of your current processes and the implementation of more significant adjustments.

In the days of conventional contact centers, shrinkage was impossible to manage. Today, sophisticated cloud call center software solutions make this much easier. 

Furthermore, having the correct tools allows you to identify possible problems in real time and act on them as they arise. Most contact centers confront two key shrinking reasons.

External shrinking variables

Sick time 

 You cannot avoid employee sick time either. But you can mitigate its effects. One technique is to book with a buffer (for example, scheduling three extra agents for a busy week if you anticipate using two agents typically) if possible so that you are not caught off guard if someone calls in sick at the last minute. Consider flex scheduling, which allows you to pivot and alter your resources on the go during those off days.

Lateness

Lateness among employees is another difficult figure to monitor. (However, having work-from-home agents can be quite beneficial because they do not have to commute.) Some incidents are unavoidable one-time occurrences (emergency personal calls, bicycle punctures, busses being held up, etc.); nevertheless, when there is a trend, you have a problem. Some employees simply require assistance in better organizing their workdays. Another important measure to monitor is schedule adherence.

Absenteeism 

Absenteeism is distinct from sick days; it refers to employees who frequently call in sick. There may be reasonable justifications for this, and it is beneficial if you have established rapport and trust with your staff. This one is a little trickier because there are so many varied reasons for absenteeism. In most circumstances, you can only do your best to be compassionate and provide your agents with the resources and skills they need to accomplish their work effectively.

Holidays and vacations 

It is up to you to handle this one effectively, and you have no excuses! Why? Since holidays are pretty much the same every year, you can completely plan for these peak times. With careful planning, you may allow your employees to take vacation when necessary while keeping your contact center adequately resourced.

Paid Time-Off 

These are closely tied to sick days, and while they are not precisely the same, PTO is still a component that we must adapt our schedules to accommodate when agents are off. My agents are generally excellent and will find someone to cover for them when they are on leave. Don’t underestimate this one—it may not appear to be a major concern if your agents don’t seem to take much time off, but if you ever need to evaluate why an agent didn’t get as many or the same number of calls as everyone else, there could be a valid reason: PTO.

Internal shrinking variables

Scheduled breaks 

Employees cannot devote their entire time to on-call work. That is impossible, and even if it were, it would be detrimental to mental health. Humans require downtime. To prevent shrinkage while still giving your agents time to breathe, arrange your breaks carefully and include buffers where longer breaks are required. Again, use the analytics in your call center software to select planned breaks during times of low call activity.

Training sessions 

Training is one of the most crucial aspects of any business. That being said, you must still strategically arrange your training sessions—you want enough time to do coaching and allow for staff feedback while not overspending time. You can utilize a variety of systems that provide live on-call assistance to your agents – they are learning on the job and developing muscle memory to answer recurring, difficult inquiries. Finally, this means less extra time spent on training, which is beneficial!

Team Meetings

Team meetings must be both effective and efficient. Always. If you have a lot of meetings, try to keep them on track and don’t let them go over time. Consider using a stand-up format or a team sharing.

Other reasons that may affect schedule adherence include participation in business events such as farewell parties, as well as other unscheduled activities such as going to the restroom, answering personal calls, or unexpected employee departure due to an emergency.

How To Calculate the Number of Staff Required Using Shrinkage?

Calculating the number of staff required using shrinkage involves considering the potential unavailability of agents due to various factors. Here’s a detailed guide to help you:

1. Determine the desired number of agents to meet service level goals, let’s say 100.

 2. Identify the percentage of time agents are unavailable (shrinkage), for example, 30%.

3. Use the shrinkage formula: Total Agents Needed = (Desired Agents / (1 – Shrinkage Percentage))

4. In the given example: Total Agents Needed = (100 / (1 – 0.30)) = 143

This adjusted figure (143 agents) accounts for the shrinkage, ensuring you have a buffer to meet service level goals even when some agents are unavailable.

12 Effective Ways to Manage Call Center Shrinkage

Almost all contact center solutions now offer functionality for workforce management tools. The software automates the shrinkage monitoring process, making it simpler and more effective than the old spreadsheet method. WFM software allows you to schedule agents and even allow them to define their timetables within a specific boundary. A few WFM solutions include skill-based routing, which can assist agents in performing their tasks more effectively.

A few other ways you can manage your call center shrinkage solutions are:

Track shrinkage on a granular level

The amount of shrinking varies based on the day and hour. If you provide paid lunch breaks, shrinkage may be highest between 12 and 2 p.m. Make sure to factor these variances into your personnel calculations. This guarantees that you have adequate coverage for the predicted call volume throughout the day.

Consider seasonal variations

Shrinkage rates vary with season. Consider this while arranging to assist in managing shrinkage. Employees, for example, frequently use vacation time during school breaks and public holidays. With this in mind, avoid scheduling any additional activities that could lead to shrinking, like training, during this time.

Look for problem areas

When calculating shrinkage, be careful to divide the figure into groups. Analyzing what is causing shrinkage allows you to concentrate your reduction efforts on the areas you can influence. There is little you can do regarding breaks, holidays, and training. However, you can control agents who take too many unscheduled breaks, are late, or do not show up for shifts.

Calculate shrinkage for individual departments

Calculate shrinkage for each department wherever possible. This is because teams can have varying levels, and managers can only schedule properly if they understand the figure that applies to their team. If a manager schedules based on a 33% call center shrinkage rate, but their team shrinkage rate is 38%, they will be understaffed.

Reconsider meetings and training

You require meetings, training, and coaching in any contact center. If you think you’re spending too much time on these things, reconsider if they’re required. You may discover that scheduled meetings routinely run beyond time. Alternatively, you may determine that a personalized coaching plan is a more effective training strategy than a blanket curriculum distributed to all agents.

Use workforce tracking software

Identifying the cause of shrinkage is likely the most difficult aspect of addressing it. Some firms are willing to make assumptions about where time goes. However, you can use labor tracking tools to acquire an exact estimate. This program displays to you what agents spend their time on at the individual level. Use the data from these programs to implement fixes.

Adopt an omnichannel philosophy

Omnichannel is different from multichannel because all your communication channels “talk to each other.” When you share information on one channel, it instantly syncs with the others.

For example, if a client live-chats with you and later contacts you, can your agents view all of their conversations across channels in one place? 

Some clients contact you through several channels depending on the device they are using and what is most convenient for them. If you do not have an omnichannel approach, your team will have to spend more time checking in with one another to determine who has previously spoken with a specific consumer and what was discussed.

Use Cross-training Strategies

Having trained agents who can take over when someone calls in sick or takes a break is crucial to meeting team and corporate SLAs. 

Therefore, cross-training your agents is necessary. Whether you run an inbound or outbound call center, your team should be able to manage a wide range of calls to ensure that shrinkage causes as little downtime as possible. 

Invest in continual coaching and learning opportunities to help your team improve its abilities. Improved abilities lead to faster issue resolution, reduced call handling time, and round-the-clock agent availability.

Offer Rewards

Lack of appreciation in the workplace can be a big demotivator for agents, contributing to higher call center shrinkage and attrition rates. Given the demanding nature of the call center work, it is critical to recognize and reward agents when they display outstanding performance or even for their day-to-day tasks. This can assist promote engagement, motivation, and job satisfaction while also making agents increasingly competitive and productive.

 Call center managers can reward their employees in a variety of ways. These include leaderboard recognition, weekly team meetings to celebrate successes, team-based incentives, and personalized prizes.

Monitor schedule adherence

Agents that adhere to business policies and their schedules are said to be exhibiting adherence. Keeping a careful eye on compliance enables you to quickly resolve problems. Agents who routinely miss deadlines can benefit from coaching and criticism to help them adhere to their timetables more closely. 

As a result, shrinkage is decreased since agents are guaranteed to be where they are supposed to be on time.

Lower your inbound call volume

By offering self-service support alternatives, you can naturally limit the volume of calls that come in and require the assistance of human agents, which is one method to minimize shrinkage in a call center. 

According to a Higher Logic survey, 84% of customers claim they attempt to resolve support issues on their own before contacting customer care.

Callers may be able to obtain basic information or carry out straightforward tasks via an IVR (Interactive Voice Response) self-service menu without having to speak with a live representative. You can also build an extensive knowledge base or use chatbots. It will lessen the strain on your agents by enabling callers to handle problems around the clock independently.

Properly address absenteeism

Absenteeism, or Absence Rate, is a widespread issue in call centers that reduces productivity. It refers to when agents are absent from their office, usually without warning, making them unable to handle client interactions. Similarly, call avoidance poses a productivity hurdle. It refers to all of the tactics that call center agents use in the job to avoid receiving client calls.

Absenteeism and call avoidance both contribute to call center shrinkage and can occur for a variety of reasons, including increased workplace stress and burnout, a negative call center setting, an absence of motivation and engagement, poor culture, insufficient management support, poor relationships among team members, and so on. All of this leads to dissatisfaction with the job. Managers can reduce shrinkage by recognizing and effectively addressing the fundamental causes of absenteeism and call avoidance.

Addressing Agent Shrinkage with Ozonetel’s Comprehensive Solutions

Ozonetel’s unified CX platform can help you effectively address the issue of agent shrinkage be it an office or a remote environment. Here’s how it can help.

Agent Supervision

Ozonetel eliminates the need for over-the-shoulder supervision by providing advanced features like call barge-in, whisper, snoop, and conference. Screen barge-in allows managers to monitor remote and large teams in real-time effectively countering the impact of agent shrinkage.

Performance Evaluation

Access over 70 call center monitoring reports for a comprehensive view of operations. Analyze various metrics and agent performance, ensuring a clear understanding of both the big picture and detailed information.

Easy Scalability

Effortlessly scale the number of agents based on seasonal demands, countering the effects of agent shrinkage. . With flexible billing, pay only for the resources used, making it a cost-effective solution for managing fluctuating customer service requirements.

Advanced Routing

Utilize advanced routing to efficiently handle varying call volumes. With Ozonetel, ensure the right workforce is in place to address fluctuations throughout the year.

Customer-centric Self-Service

Leverage Ozonetel’s self-service IVR to automate a significant portion of incoming calls, reducing the need for agent intervention and mitigating the impact of agent shrinkage.. This approach has led to a remarkable 58% reduction in abandon rates, ensuring a more efficient customer experience. 

By implementing these solutions, Ozonetel empowers businesses to navigate and overcome challenges associated with agent shrinkage, ensuring a seamless and efficient customer experience

Conclusion

The rate of shrinkage at a call center fluctuates regularly, requiring decision-makers to measure, review, and lower the shrinkage rate. Shrinking management must be sustained by establishing a one-month shrinkage provision and comparing the projected results to the actual findings. In addition, they must determine the underlying causes of shrinkage and take the required steps to reduce shrinking to 35%.

Overall, call center efficiency and productivity have a direct impact on call center shrinkage. However, the rate fluctuates on occasion. To improve the client experience and meet service objectives, managers must assess and monitor the rate regularly. You must continue to pursue a strong strategy emphasizing the regular reduction of internal and external shrinking hours.

Ready to take control of your call transfer
experience for better CX outcomes?

Prashanth Kancherla

Chief Product Officer, Ozonetel Communications

Over the past decade, Prashanth has worked with 3000+ customer experience and contact center leaders...

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