What is call center shrinkage?

At any point in time, do you know how many of your agents are available to take calls vs how many are away on a break? The difference between those two is call center shrinkage. Read on to know how to calculate and manage shrinkage.

 

Let’s say you have 100 agents in your call center to handle the call volume. At a particular point in time, do you know if all 100 agents are available to attend to customers? The difference between the number of agents available to take calls versus the number of agents on a break, attending meetings/training, doing After Call Work (ACW), out sick, etc., is call center shrinkage. 

Did you take this factor into account when you decided on the headcount of your call center? Staffing your call center is much more than assigning an agent to each phone, and shrinkage is one factor that plays a vital role in how many agents you’d require to attend to your customers. 

Let’s see what shrinkage is, how to calculate it, and how it impacts your call center’s efficiency and performance. 

Definition of call center shrinkage

Call center shrinkage is the number of agents actively attending to customers divided by the number of agents who are unavailable at that point in time.  

It refers to the time for which you pay agents to serve customers versus the actual time they spend doing so. The difference between the two is shrinkage. It lets you measure how much time agents spend doing something other than helping customers. There are several alternative definitions across the industry that are similar. They explain call center shrinkage as:

  • Anything that renders an agent unable to attend to customers, like the performance of any scheduled/unscheduled performance activities
  • The elements that take your agents away from being productive
  • The difference between the number of agents employed and the number of agents available at a given time to attend to customers. 

While the definition may vary from one organization to another, you can measure it in terms of the number of employees or the number of hours lost. It is widely used as a planning factor to estimate how many agents to hire. The factors that contribute to shrinkage broadly fall under two categories.

What constitutes call center shrinkage

There are two main components that makeup call center shrinkage. They are:

External factorsInternal factors
HolidaysPaid breaks (eg: Lunch)
VacationTeam meetings
AbsenteeismOne-on-one meetings
Leaving earlyCoaching/Training sessions
Coming lateSystem downtime

While Internal and External are the two standard categories, call center planners sometimes also look at it as planned and unplanned shrinkage.

You can control a few of the above factors, while other factors like paid breaks, meetings, etc., can only be managed. Factors like absenteeism may arise due to unhappy employees and you can minimize/eliminate them by addressing the root causes of your employees’ grievances. You cannot control/eliminate breaks, holidays, and vacations, but you can monitor them to ensure that employees adhere to the proposed guidelines. 

How to calculate shrinkage percentage in a call center 

There are two formulae available to calculate shrinkage – one to calculate staffing requirement and the other to measure individual agents’ performance. Let’s look at both.

In terms of the number of agents:

Call center shrinkage calculation formula: 

call center shrinkage calculation formula

Example:

Let’s say you need 100 agents to handle your call volume in one hour to meet your service level targets. If at any point of time during the 1 hour, 30 agents are not available to take calls due to the factors mentioned above, then shrinkage will be

Shrinkage = (100/70) x 100 = 142.8

According to the above scenario, you have a shrinkage of 30%, so you’d need to hire 30% more agents (or, in this case, 30 more agents) to meet your SLAs. But these 30 additional agents will themselves have a shrinkage of 30%, which means you’d require nine more agents. This will go on and on. This is one important reason why it is necessary to use the shrinkage formula to calculate your staffing needs, and not just compute it based on the shrinkage percentage.

So as per the above calculation, after taking the overall shrinkage into account, you’d need 143 agents to meet your SLAs during the one hour. 

Use this formula when you need to calculate the number of agents required. It’ll help give you the ideal buffer you need when planning to run any campaigns that might require extra staff. 

In terms of hours:

Use this formula when you want to calculate call center shrinkage for an individual agent’s performance:

call center shrinkage calculation formula for agent

 

What is an acceptable shrinkage percentage in a call center?

The above-discussed formulae may make you wonder, what percentage of call center shrinkage is considered normal? Of course, the answer will vary from one industry to another, but the most accepted figure stands between 30 and 35% for the call center industry. 

The shrinkage percentage is typically calculated across 12 months. Let’s see how you can calculate shrinkage step by step. 

How to calculate shrinkage in your call center

Bob leads a team of 12 agents in a call center. On any particular day, he might have an agent who’s gone on a vacation, another agent who’s out sick, and maybe another one who’s not shown up for work yet. Among those who have shown up to work, one is on a break and the others are at work. So now you have 8 agents who are actually attending to customers. So how do you calculate the shrinkage of those 4 agents that are unavailable?

Here’s a model call center shrinkage calculator that would help you go about the process. 

To calculate the overhead/shrinkage for your call center, you’d need the following details handy:

  • Number of hours for a full-time equivalent (FTE)
  • Total vacation days/year
  • Total sick days/year
  • Total statutory holidays
  • Total absent days
  • Total other days off

The below calculation is based on:

  • Total working days = 261 
  • Total working hours per week = 40
  • Total number of agents = 100
  In days/year
External shrinkageVacation24
Public holidays8
Sickness8
Absenteeism6
Internal shrinkageTeam meetings1.5
One-on-one meetings1
Paid breaks10.8
Toilet breaks4.3
Training sessions5
Coaching7
Evaluation2
Team engagement sessions2.8
System downtime1.5
Others10.4
Total83.3

The total shrinkage, in this case, will be 31.9%

How shrinkage impacts call center efficiency

A high shrinkage rate is an indicator of low performance. When agents are not available to attend to customers, it will ultimately lead to longer wait and hold times, resulting in reduced satisfaction. Though shrinkage is not a performance metric, managers sometimes use it to determine if the overall customer satisfaction can be improved. High shrinkage rates could put undue pressure on other agents causing a dip in overall productivity.

Calculating shrinkage also helps managers decide the required number of agents to handle incoming/outgoing calls. Managers take shrinkage into account to meet predefined service goals. Managers must regularly monitor and track this metric to meet staffing requirements and to ensure the overall call center efficiency.

How to control shrinkage in the call center

You can track call center shrinkage either manually or using a cloud-based call center software. This helps in identifying when and where it is happening and how to reduce shrinkage in your call center. However, it is essential to remember that certain causes of shrinkage cannot be controlled or eliminated. 

Statistically, most meetings are conducted between morning and afternoon, so you may find that shrinkage is maximum during that period. Weather also plays a role in shrinkage; for example, during winters, you may find that agents may wish to spend more time under the sun and may extend their break. You can plan the office space and layout accordingly to overcome this. There can also be some departments/teams that have high shrinkage. Analyzing this data can give you insights into which processes need improvement. 

By identifying triggers that make employees extend their breaks, you can make improvements to help employees adhere to the call center schedule. 

Aside from these measures, you can also make use of the latest technology to keep your shrinkage rates to a minimum. These will help you keep in place a robust strategy to reduce and monitor shrinkage rates regularly. 

1. Make use of Workforce Management (WFM) tools

Most contact center software these days comes with WFM capabilities. Making use of software can automate the shrinkage monitoring process, and it’s much easier and more efficient than using the conventional spreadsheet approach. Using WFM tools, you can schedule agents and even let them set their schedules within a defined boundary. There are a few WFM solutions that offer skill-based routing, which can enhance the agent’s work experience.

2. Measure shrinkage continuously

Shrinkage monitoring must be more of a continuous process rather than making it an annual/monthly exercise. Shrinkage is a factor that contributes to the overall efficiency of your call center, so you cannot boost performance without maintaining a near-constant shrinkage rate. This is possible only if you measure it continuously; new-age call center solutions help you achieve that. You can measure shrinkage based on different criteria like call volume, service level targets, and average handle time. Variations in these metrics affect shrinkage directly, so by monitoring fluctuations, you can identify the factors that impact shrinkage. 

3. Measure shrinkage in hours rather than in percentage

The shrinkage value is mostly computed in percentage to determine what % of extra staff you’d need to meet the current shrinkage. While this could be helpful when it comes to capacity planning, it’s of little importance operationally. When your motive is to reduce shrinkage to improve call center efficiency, it would be better to express it in hours/minutes per day. This helps you find and minimize causes that increase shrinkage, and hence help agents serve customers better rather than taking longer breaks. 

4. Address absenteeism

Absenteeism is one component of shrinkage that you can control. Managers can identify agents who take leaves frequently and address the cause. Managers should have frequent one-on-ones with agents to understand their issues and grievances. Absenteeism usually stems from dissatisfaction with the job they’re doing, so you can address this by giving them inputs on how to overcome them.

5. Keep your agents competitive

Dealing with repetitive queries from customers could wear your agents out, so it’s essential to keep them motivated. In addition to providing training and coaching, you can institute a rewards program that will recognize them for their hard work. Offering incentives is another way to keep them competitive. Call center solutions these days also come with gamification options, which will increase employee engagement and achievement. Rewards on the accomplishment of a goal may include recognition on leaderboards, badges, or physical gifts like trophies.

Way forward for your call center

Each department/ team in your organization may have different shrinkage rates, and thus it is essential not to flatline it across your organization. Make shrinkage management an ongoing process by creating a forecast for a month in advance and comparing it with the actual results. Find out the root causes of shrinkage factors that can be controlled like absenteeism, longer breaks, etc., and take measures to address them. By making this a continuous process, you can ensure to keep the shrinkage rate below 35%, which is the industry standard.

If shrinkage is not monitored, it could affect the overall operational efficiency of your call center. Ensure to keep in place a robust strategy that will help you monitor and reduce the shrinkage hours across your call center regularly. Make use of manual methods and enlist the latest technology to minimize shrinkage across your organization.

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About Freshcaller

Freshcaller is a modern-day reimagining of our everyday phone system for customer support, sales, IT, and HR teams. With Freshcaller’s cloud-based architecture, it brings together the best of legacy features like IVR and advanced capabilities like Smart Escalations, Call Routing, Custom Call Center Analytics to help you set up a state-of-the-art business call center. Freshcaller offers phone numbers in 90+ countries, requires zero phone hardware, and is extremely easy to use.

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Illustrations by Mahalakshmi Anantharaman.