What is Call Center Shrinkage and How to reduce it?

You had everything sorted. The forecast came close, call volume and handling times turned out as foreseen. But still, you failed to cater to all the customers’ calls on a service level.

Do you ever wonder why your call center is lacking rhythm despite having enough employees at its disposal? That’s probably because you are overlooking Call Center Shrinkage, an important call center key performance indicator (KPI).

The most important factor for a call center workforce management is to monitor and reduce shrinkage. Typically, almost 30% – 35% level of shrinkage is acceptable in call centers.

The Definition: What is Call Center Shrinkage?

Shrinkage refers to a metric in workforce management, signifying the time when agents are paid but unavailable to manage interactions. When this metric is used in a call center environment, it is known as call center shrinkage. 

If an agent has called in sick or is on a bathroom break and is unable to handle customer interactions, it can be considered a shrinkage.

Call centers must consider this factor in their forecasts for proper workforce management. If you expect 20 employees to call in sick next Wednesday, you should manage 20 extra employees to cover the demand. Therefore, shrinkage and forecasting go hand in hand to establish a smooth workflow.

What is shrinkage in BPO? Shrinkage in BPO refers to a condition where employees are unable to handle customer interaction due to meetings, lunchtime, breaks, team huddles, etc. can lead to shrinkage in the Business process outsourcing.

Types of Shrinkages in Call Centers

There can be several reasons for the call center shrinkage that happens in the call center industry. The employees’ unavailability to handle the customer calls can broadly be classified as:

1. Internal Shrinkage (In-center Shrinkage) 

Internal shrinkage occurs when employees are occupied with other duties and cannot help customers. This kind of situation usually happens in the office environment. Some of the causes of internal shrinkage factors are:

Causes of Internal Shrinkage

• Service outage and System downtime
• Training, coaching, and seminars
• Team and one-to-one meetings
• Scheduled and unscheduled breaks
• Time spent helping other departments
• Special project works

2. External Shrinkage (Out-of-center Shrinkage)

An external shrinkage is caused by an agent who cannot work for personal reasons. It happens mostly due to an employee’s indisposition or disengagement to find personal comfort. Some of the causes of  external shrinkage factors are:

Causes of External Shrinkage 

• Sickness
• Holiday
• Public holidays
• Paid breaks (if applicable)
• Absenteeism
• Lateness (or tardiness)

3. Planned Shrinkage

A planned shrinkage occurs when a company has employees unavailable at a certain time because the date or time has been known or planned. The management is already aware of this kind of absenteeism. And planning to handle the customers’ calls is made accordingly.

 Causes of Planned Shrinkage

• Pre-informed leaves
• Team Meetings
• Breaks (Lunch, Tea, coffee, smoke breaks, etc.)
• Training sessions

4. Unplanned Shrinkage

Unplanned shrinkage occurs when the scheduled employees are unavailable to handle customer interactions due to unexpected and unforeseen events. This kind of shrinkage can often be a problem as no plans or strategies are made beforehand to cover unavailable agents.

Causes of Unplanned Shrinkage

• Longer Breaks
• Unscheduled absences
• Non-Adherence
• Unexpected internal system issue

Why is the calculation of shrinkage important?

The calculation of shrinkage is important for call center managers because it helps in setting realistic goals and targets for agents, addressing agent performance, and also forecast staffing needs.

The call center shrinkage formula can be used to calculate the shrinkage of a particular call center industry. At first, decide your base requirements of staff for common call volume at a point during the day or shifts.

From the calculation, you need to estimate the normal percentage of agents who are unable to handle call during the break. The amount may be different but the it usually ranges between 10% and 40%. With this number, divide your base agents need by the derived number of workers you want to schedule.

Suppose you have 100 call center agents on the evening shift with a 30% call center shrinkage rate.. To calculate the number of agents in call center you need to schedule, you would divide 100 by (1 minus 0.3), which equals 142.86. This means that you need to schedule 143 agents to ensure that you have enough agents to cover the phone calls, even if 30% of them are unavailable. By calculating the shrinkage, you can control the call center shrinkage percentage of an organization.

Now, lets move to the next question: how to calculate shrinkage in call center?

How to calculate shrinkage in a call center?

When you calculate shrinkage, you can gain an insight into how efficiently your team handles customer calls. A shrinkage calculation also helps plan staffing to compensate for the work that is hampered by the absence of employees. There are two ways to do it.

In terms of the number of agents

The shrinkage is calculated based on the total number of agents required for the job vs. the total agents currently available.

So for a period of time, if 200 agents are required to handle the calls but only 160 are available, the shrinkage will be (200/160*100%), i.e., 125%. That means you’ll have to increase your staffing arrangement by 25% to handle the job and also reduce the call center shrinkage rate. By identifying the shrinkage you can control shrinkage percentage of an organization.

In terms of the number of hours

The employee can’t handle calls throughout office hours, no matter how efficient they are. It is human nature for employees to need breaks frequently. There can be a need for lunch, a bathroom break, a cup of coffee, or even a cigarette. It is not uncommon for employees to become unable to complete tasks due to meetings, seminars, and training. 

We can also calculate shrinkage by considering such hours not utilized for handling customer interactions. It can be calculated by using the following formula:

For example, let’s say the designated working hours for an employee is 45 hours per week. Suppose the employee spends 12 hours per week on lunch, training, and meetings (internal shrinkage). Similarly, his coming late, longer breaks, etc., constitutes 3 hours of shrinkage per week. Then by using the above formula, shrinkage will be: ((12+3)/45) x 100 = 33.33%.

How is call center efficiency impacted by Shrinkage?

A steep rate of shrinkage represents a low performance in a call center business. Call agents are inadequate to assist customers which results in higher waiting and holding times, may derive low customer satisfaction. Shrinkage is mostly used by managers to see if overall client satisfaction can be enhanced.

Shrinkage may impact the efficiency of a call center in various ways like it may increase the operating cost of a call center, disrupts the call flow due to a smaller number of call agents available, and also increases the workload to the remaining call agents.

So, calculating the shrinkage helps to determine what number of agents are needed for handling the calls. Managers are responsible for tracking and controlling the metrics day by day to maintain the overall performance in the call center. 

How to minimize call center shrinkage?

Shrinkage is one of the key performance indicators in a call center. A high shrinkage rate is often a sign of low performance. When call center agents are not available for extended periods of time, call volumes are low, hold times are long, and call volume drops.

This can lower the satisfaction level amongst the customers. Call centers must reduce shrinkage in order to improve their efficiency and customer satisfaction. You can minimize it by following these tips.

1. Use of Workforce Management (WFM) Tools

It can be tedious to manage shrinkage and prepare spreadsheets manually. It takes a lot of time in data entry and monitoring and analyzing them. Workforce management (WFM) tools are useful for monitoring a workforce more efficiently. The majority of call center software these days features an in-built WFM feature. 

You can schedule the tasks for your agents with WFM tools. It also lets the employees set their own schedules. Encourage your call center agents to stick to the schedule, and you’ll be able to reduce shrinkage to a certain degree.

2. Measure Shrinkage Continuously

It is easy to overlook several aspects of shrinkage when calculating and monitoring it over a long period of time. Therefore, it is necessary to measure shrinkage continuously in order to identify how it is affected by factors. 

If you want to pinpoint the cause of shrinkage in your contact center operations, choose the shortest possible time window. Measure shrinkage regularly on that selected interval by considering several criteria like call volume, average handle time, and service target levels.

You can identify the causes of changes in these metrics by monitoring them regularly. You can fix the problem once you identify the reasons so that shrinkage stays constant. 

3. Monitor and Address Absenteeism

One of the major reasons for shrinkage is absenteeism. Identifying the frequently absent employees and the reasons behind it is crucial to reduce call center shrinkage. Once you know the reasons, you can address the employees’ issues and grievances for their regular presence. 

4. Reward Employees with Minimum Hours of Shrinkage

An employee’s effort is more likely to result in higher productivity if it is acknowledged and rewarded. The employees will perform better if there is special treatment and reward for those with the lowest shrinkage hours.

It also creates competition among the employees. Call center efficiency improves as more employees dedicate themselves to reducing shrinkage.

5. Track and Enhance Schedule Adherence

Monitoring and enhancing schedule adherence help to minimize the shrinkage in a call center company. It helps in tracking and organizing the extent to which a call center agents adhere to their allocated work schedules.

You can use different automated tracking tools to monitor the agent schedules including start and end time, break, target achieved in a day, and other scheduled activities.

👉 You May Also Like: What is Call Center Workforce Management (WFM)

Breaking the habit

Shrinkage adversely affects the efficiency of a call center. It not only degrades customer satisfaction but also tarnishes the business reputation in the long run. So if left ignored, it can bring catastrophic consequences to your call center. 

The key to preventing shrinkage is to calculate and monitor shrinkages regularly. There are several tools and software available for calculating shrinkage. You can do it by considering numerous factors like call volume, average handle time, amount of time, and service level. But using this kind of third-party software can often be a hassle. It requires manual steps to calculate and keep track of the shrinkage. 

You can consider dedicated call center software or contact center software to make things a lot less complicated and eliminate manual steps. These types of software also offer call center data and analytics in addition to their useful call handling and management features.

Best Call Center Software is…..

You might consider KrispCall’s call center software to accomplish that. You can enjoy a hassle-free call center experience, thanks to its handy features. It has features such as Automatic Call Distribution (ACD), Interactive Voice Response (IVR), skill-based routing, etc., to ensure efficient agency utilization.  

KrispCall also lets you set a ring strategy to engage your idle agents. It also has a dedicated dashboard to showcase useful analytics. The call center’s every detail comes into the spotlight. It may be worthwhile to reduce shrinkage and improve the efficiency of the call center.

KrispCall’s subscription packages start from $15/month, making it one of the least expensive call center software & contact center software on the market.

Arun Chaudhary

Arun is SEO Analyst at KrispCall. He has written in extensively in the field of cloud telephony and call center solutions.