Costing Attrition

In Colin Taylor’s recent article, “Resolving The Riddle Of Retention,” he speaks about the cost of attrition and the many factors that affect it. This article outlines how to do both a simple estimate of that cost and more complex calculations to undertake for a center.

First, let’s outline a simple estimate approach. The five base numbers, measurements, or elements needed are:

1. Number of staff at the start of period being analysed. This is usually any 12 month period.
2. Number of staff at the end of period being analysed.
3. How many new people were hired for the center during period? This can usually be sourced from either the HR Department or the hiring manager.
4. What is the number of staff authorised for the center at the beginning and end of the period? If there was an increase, it is important to note so that the new agents for that increase are not calculated as part of the attrition rate.
5. What is the rough estimate of the cost to replace an agent? For this simple estimate use a rough cost of hiring, training and deployment as a plug number. The more complex example goes into detail on what and how to get a more accurate and comprehensive number for hiring, training, deployment, and production / quality costs.

With those numbers in hand, a brief calculation provides the attrition or turnover rate and its associated costs. The example is:

The example above shows a 25% turnover, which is in the fair range and costs the center $150,000. In Colin’s article he mentions that, “the average contact center attrition reported by ICMI was at 33% in 2017, up from 29% reported in 2016. Accepted averages are captive centers at 20% per annum and 100% per annum for outsourced centers.” At 33% average attrition, the costs for the center jump to $198,000 which is a significant cost for a 100-seat center.

Now, that analysis is with a rough number estimate (#7) for the cost to replace a single agent. Experience shows that centers often underestimate this number. So a more rigorous approach is to do a detailed review of the factors affecting the turnover and their associated direct and indirect costs to the organization.

There are four main areas that need reviewing in completing a detailed cost analysis. Those areas are:

1. Recruiting and Hiring
2. Training
3. Deploying
4. Production and Quality Loss

Costs for these areas are often viewed in isolation and so seem small and not important or worthy of review and refinement. When viewed as part of an overall process, the cumulative success and failures, and the associated cost, become significant contributors to the organization’s bottom line.

Recruiting and Hiring

To properly cost Recruiting and Hiring, it is important to know what it takes to get enough applications, including the cost of ads, recruiters, agencies, and online fees; from the applications to getting enough candidates for interviews; the costs and time for any tests and background checks; the percentage ghosting at any stage (candidates not showing up for interviews or tests); and the time it takes to onboard the successful candidate.

For instance, experience shows a ratio of 10 applications to 1 candidate is not uncommon. With 6 or 7 candidates required for every new hire and at least two interviews per candidate, this can quickly add up to many hours of interview time and effort. These ratios are often not known outside of the HR department or hiring manager, and so go unrecorded and unrecognized as being part of the costs associated with Recruiting and Hiring.

Training

Training costs vary widely based on the organization. While some training for call and contact centers can take only a few hours, others commonly take two, three or more weeks. Still others in speciality fields such as pharmaceutical firms take as long as six months before deploying new agents to the phone and front line.

For robust analysis of training costs, look at:

• average class size;
• course or training length, hours, days months;
• who and what are involved in training;
• trainers, supervisors, classroom and equipment use and costs;
• day of course preparation and post case notes by trainer;
• amortized costs of course development, deployment systems, maintenance and updating;
• and finally, the graduation rate from class.

Two notes for consideration here:…

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