How to Measure and Reduce Your Call Center’s Shrinkage

call center shrinkage

Call center shrinkage is a KPI (Key Performance Indicator) that measures agent productivity. It refers to the time for which agents are paid to handle calls, but they are unavailable to do it. 

Understanding and controlling shrinkage can help you improve your call center performance and grow your business.

But how do you control it?

In this article, we’ll discuss how to calculate and control shrinkage in your call center. We’ll also explore the reasons why shrinkage varies in call centers.

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Let’s get started.

What is Call Center Shrinkage?

Call center shrinkage is the amount of time during which agents are paid to handle customer interactions but don’t due to other engagements.

For example, let’s say an agent gets paid to work from 8 AM to 1 PM (5 hours). But they attended a meeting from 9 AM to 10 AM, which prevented them from answering calls. The call center shrinkage here is 1 hour. 

Now, shrinkage has several other definitions, which all imply the same.

You can define it as:

  • Any scheduled or unscheduled activity that holds agents back from performing their duties.
  • The difference between the number of agents employed and those available to work.
  • Factors that keep call center agents from being productive during working hours.

Based on the factors contributing to shrinkage, it can belong to one of two categories:

1. External shrinkage

External shrinkage includes elements outside of the call center that causes shrinkage. 

Some external factors are:

  • Sick time.
  • Holidays.
  • Public holidays.
  • Paid breaks.
  • Absenteeism.
  • Lateness.

2. Internal Shrinkage

Internal shrinkage includes the call center elements that cause shrinkage, such as:

  • Team meeting.
  • Coaching.
  • One-on-one meetings.
  • System downtime.
  • Breaks.
  • Attrition.

Additionally, shrinkage can also be classified into planned and unplanned shrinkage depending on whether its cause was scheduled or unscheduled.

How to Calculate Call Center Shrinkage 

You can calculate call center shrinkage using two formulae:

1. Based on the Number of Agents

Shrinkage = Number of agents needed to take callsNumber of agents available to take calls100

For example, let’s say the number of agents needed to achieve the service level target (number of calls attended within a predetermined threshold) is 20. But the number of agents who are available at the time is only 10. 

Then, the call center shrinkage is (20/10) x 100 = 200%.

You can find the actual number of agents required to meet the target using this shrinkage percentage.

2. Based on Time

Shrinkage=Total hours of external shrinkage + Total hours of internal shrinkageTotal hours available100

For example, let’s say the total hours of external and internal shrinkage are 2 and 1, respectively, and the agent works for 6 hours a day. 

Here, the shrinkage percentage will be [((2+1)/6) x 100] = 50%.

This shows that the agent isn’t productive during 50% of their paid time.

Which formula should you use?

You can use the first shrinkage formula to determine your base staff requirement to meet business goals. And the second one to find out how productive an agent is. 

While the first formula can help build a capacity plan based on shrinkage, it won’t increase the call center efficiency. 

The second formula can help you identify the factors affecting an agent’s performance, according to which you can take appropriate actions to eliminate them and boost call center productivity. 

That’s why shrinkage calculation in terms of time (hours or minutes per day) is more beneficial.

Additionally, you can calculate shrinkage in terms of time directly affecting agent utilization or the ratio of agent’s work done to their capacity. 

How?

Shrinkage is closely related to utilization. While shrinkage is the percent of unproductive time, utilization is the percentage of productive time. Adding these two should give you 100.

For example, if a call center’s utilization is 75%, its shrinkage will be 25% (100% – 75%).

Want to know more about agent utilization?

Read our in-depth article on agent utilization.

Nowadays, calculating shrinkage has become easy and efficient thanks to software. 

They use call center metrics, like call volume, service level targets, and average handle time, that directly affect shrinkage. By using software, you can reduce errors caused by manual calculations.

How to Control Call Center Shrinkage 

call center management

Excessive shrinkage means that you’re paying agents for the time they haven’t worked, which can lead to a huge loss over time.

The shrinkage rate also shows how unproductive your agents are, so you must reduce it. 

Let’s look at a few ways you can control call center shrinkage:

1. Measure Shrinkage Regularly

Call center shrinkage should be tracked frequently so that you can determine the factors that cause it. 

However, you’ll have to closely observe the shrinkage data and your agents’ activities to identify the factors. Anything that keeps agents away from attending or making calls contributes to shrinkage.

Additionally, measuring shrinkage can help you with capacity planning to attend to the most number of customer calls.  

2. Manage Workforce Efficiently

Poor workforce management (the process of managing agents to maximize call center performance) is a major cause of shrinkage. 

Scheduling agents properly is crucial as they may end up being disengaged if the call volume is low.

For example, let’s say you assigned 30 agents for a night shift, which usually has a low call volume. As there’s less work to do, your agents could pass the time doing non-work-related activities and still get paid for it, causing shrinkage.

That’s why you should strategically schedule fewer agents during hours with low call volume. This way, your agents will be active during their work, reducing shrinkage.

3. Hire Part-time Agents

Part-time staffing is the hiring of agents to support you during your call center’s busiest hours.  

This strategy can be of immense help during peak hours when you need an extra hand to ensure that the maximum number of customer calls are answered.

Without part-time hiring, you may have to hire full-time agents to fill your staffing requirements — increasing the overall labor cost. This can also lead to low agent occupancy (the percentage of time agents spend on customer interactions while they’re logged in) and high shrinkage when the call volume is normal or low. 

Additionally, the internal shrinkage rate of part-time agents is likely to be lower. 

Why?

Long meetings or training sessions are less likely to be held during peak hours — when part-time agents usually work. As a result, they can avoid these major shrinkage-causing internal factors. This can also help them have high utilization rates.

You can also temporarily shift agents from other departments to meet the staffing requirement like they do in a contact center.

A contact center agent is usually trained to handle customer interactions via live chat, social media, email, etc. Due to such training, you can transfer them from one department to the next according to the staffing demands. 

4. Address Absenteeism

Absenteeism is an external shrinkage factor that a call center manager can attempt to control. 

Since it’s usually caused by low job satisfaction, you can make the necessary changes in workplace policies and the environment to decrease it.

To reduce absenteeism, you can identify agents who don’t show up regularly to work and enquire about the reason for their absence. Then, you can take appropriate action to manage the cause if it’s within the work environment. 

Controlling or eliminating the cause of their absenteeism can improve their attendance and encourage them to work productively, decreasing shrinkage.

5. Monitor Schedule Adherence

Like absenteeism, tardiness is another cause of shrinkage. 

A tardy employee can miss incoming calls and still be paid for the time they were absent.

To ensure such agents follow the schedule accurately, you have to:

  • Talk to them about the issue and identify the cause. 
  • Allot a realistic amount of time for lunch breaks.
  • Consult agents before scheduling shifts.
  • Warn them if they’re repeatedly tardy.
  • Ask them to consider the traffic while they plan their day.

You can also implement a break policy that clarifies restroom breaks, attending personal calls, etc., allowing your agents some time to relax during their intervals while ensuring they resume work on time.

6.  Offer Incentives 

The hectic nature of call center work can tire your agents and tempt them to skip shifts or join work late. In such situations, they may need some motivation to work productively.

Make agents competitive by offering appropriate rewards for punctuality like:

  • Free vacation coupons.
  • Paid leaves.
  • Permission to work remotely for a fixed number of days.
  • Bonuses.

These incentives can motivate agents to find ways to reduce their unproductive time, controlling shrinkage. 

7. Use the Right Software

Call center software can make controlling shrinkage convenient. They can help you track absenteeism, check call center schedule adherence, and monitor agents. 

Let’s look at some popular software that you can use to control shrinkage:

A. Workforce Management Solutions

You can use workforce management software to schedule agents according to your business needs. Some of these tools can also schedule shifts based on call volume reducing the wait times, increasing customer satisfaction, and reducing shrinkage.

B. Customer Relationship Management (CRM) Software

CRM software gives your agents the history and other information of the customer when the call connects instantly — improving customer experience. 

This software can prevent your agents from being unproductive during calls, increasing their productivity and consequently reducing your call center shrinkage rates.

C. Performance Management Software

Performance management tools will help you track the performance of your agents during working hours. Using performance management software like Time Doctor, you can know which agents aren’t working up to their potential.

What is Time Doctor?

Time Doctor is employee productivity and performance management software used by small businesses like Thrive Market as well as major companies like Ericsson.

The tool has several agent monitoring features that can help you detect when agents are unproductive. 

With Time Doctor, you can also:

Time Doctor also has a productivity rating feature that lets you rate the websites and applications agents use — based on how relevant it’s to their work.

The productivity classifications are:

  • Productive
  • Unproductive
  • Neutral
  • Unrated

You can use the tracked data to calculate billable hours and pay for the actual time they take to complete tasks and reduce shrinkage.

Why Call Center Shrinkage Can Vary

Sometimes, companies experience high and low shrinkage rates across a day and year.

Across the day, you’ll notice that the shrinkage can be high from 9 AM to 11 AM and 2 PM to 3 PM, leading to reduced customer satisfaction levels. That’s because most meetings usually get scheduled during this time of the day, leaving agents unavailable to attend calls.

Now, across the year, shrinkage tends to shoot up during summer and winter holidays and festivals. 

School holidays can increase the domestic workload of agents with kids, causing tardiness, absenteeism, or stress, which can decrease staff productivity and increase employee attrition rate.

And finally, it’s important to note that even though a low shrinkage rate is preferred, you should prevent it from reducing beyond a limit.

Low shrinkage is the result of insufficient coaching programs, team meetings, or breaks. While the shortage of internal shrinkage factors like training can increase the number of answered customer calls, it can decrease the quality of customer service. 

You need to ensure that your call center shrinkage isn’t too high or low. The call center industry standard for shrinkage is 30% to 35% — which is neither too low nor too high. 

Wrapping Up

Call center shrinkage can vary across your firm, from one department to another. That’s why you shouldn’t set the same shrinkage target for all or compare them with each other.

However, you need to regularly calculate shrinkage to check agent productivity and ensure that you aren’t paying them extra. You can use the two shrinkage formulas we mentioned here.

This will help you control shrinkage and regulate the performance of your call center. You can also use the tips we covered in the article to manage shrinkage effectively.

 
Try Time Doctor

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