Labor accounts for between 65% and 75% of the ongoing costs of running a contact center. But employee turnover is so high in the call center industry that much of that money is spent on repeated efforts to hire and train people who aren’t right in the first place, and/or are managed ineffectively, resulting in high turnover.
Contact center organizations have come to accept that a recurring percentage of their workforce will have to be replaced every year. Those replacements will have to be found, assessed and trained. And then the cycle will repeat again, as a percentage of those new hires will in turn leave.
The average turnover is about 35% in the call center industry, which means – in three years, an entire contact center agent pool will have been turned over. Who will then remember the policies, mistakes and best practices that make up the intellectual capital of an organization?
True costs of agent turnover
The direct cost to hire and train a new call center agent is about $6000 per agent. The indirect costs associated with attrition include:
- Cost of lost productivity during the ramp up period of a new agent
- Cost of increased re-work and overheads to accommodate performance gaps of new agents
- Cost of reduced performance prior to leaving
- Costs associated with compromised quality of customer service, resulting in reduced customer satisfaction, lost upsell/cross-sell opportunities, customer churn, etc
Considering all of these factors, the Total or True Cost of agent turnover can be as high as $15,000 – $20,000 per turnover. The industry average annual salary for a new call center agent is about $28,000 in the US.
To put this in perspective, consider these facts:
- The Total Cost per agent turnover is as high as 60-70% of the annual salary of a new agent
- For a call center organization with 200 agents, the Total Cost of agent turnover is over $1.2 million annually. For a large organization with 5000 agents, that Cost is over $30 million.
- This would be the budget committed to the shredder at planning time. That’s an enormous amount of money to treat as a fixed cost, unavailable for new technologies, agent development, or other initiatives to improve customer satisfaction or reduce operational expenditures.
Costs of this magnitude generally mandate sweeping changes to effect performance improvements in any organization. Why then do contact center organizations tolerate such high costs as the status quo?
Few contact center managers ask themselves at the beginning of each planning cycle how they are going to dramatically reduce turnover in the coming year. Instead, they start from the basic assumption that what they have been doing in the past is a blueprint for what they will be doing in the future. While most contact centers can live with this kind of turnover, the truth is that the status quo has been entrenched for so long that many managers don’t realize that it can be changed.
What can then be done to solve this problem?
Breaking down the silos
Most contact centers focus on improving the efficiency of agents as they work through specific transactional processes. Technology is used to adapt to the status quo by working around the problem, acknowledging in effect that there is little that can be done about the human element.
Traditionally, contact centers treat each part of the agent development process as islands — hiring and recruiting is handled separately from training, which is separate from performance evaluation and coaching, which is separate from career-pathing and retention. Tackling turnover and improving the performance of a contact center requires breaking down the walls between these competency silos.
Contact center managers don’t pay nearly as much attention as they ought to the hiring process. The status quo of accepting structural turnover fosters a sense of the labor force as transient. The hiring and onboarding process is the most siloed phase of the agent lifecycle in a typical call center environment. Human resources departments can be very organized about the process of hiring people for contact center work, but their process is separate from what the contact center needs to assure that those people will prosper in their jobs.
Traditional recruitment looks at a person’s skill-base as a snapshot—it doesn’t really tell you how that person will progress over time, or whether that person will grow in the job, adapt to changing circumstances and most importantly, enjoy the work enough to want to keep doing it.
When contact centers pay more attention to the entry point, and to the wide net that is cast when looking for personnel, they can make some impressive changes in operations. Improving the process requires contact center managers to work closely in tandem with their HR colleagues. It also requires better integration of the initial ramp-up process with the ongoing evaluation of agent performance.
To that end, linking hiring systems with coaching and training, and the metrics from all of those systems with the incentive and performance management systems will bring about significant performance improvements. Industry research has shown that this approach can bring down agent turnover to 10-20% for organizations implementing these practices.
By understanding and addressing the entire performance lifecycle of their contact center agents, companies can reduce their recruitment costs, reduce turnover and make smarter investments in technology and training, thus improving operating efficiency and delivering better customer service.
Republished from frost.com
Linda has been with Inova since 1996 in Sales and Project Managers roles. After earning a BA in Economics at James Madison University, she chose Charlottesville, VA to make her home and raise a family. Linda can be reached at email@example.com.