What Does ‘Shrinkage’ Mean For BPO Agents?

Handling The Largest Call Center In The Philippines By Shrinkage Management

One of the most essential parts of call center-specific workforce management is monitoring and reducing Shrinkage. 

But what is call center Shrinkage?

Call center shrinkage refers to the time agents are paid to answer calls and serve customers versus when they spend doing so. It tells you how much time agents spend doing something other than helping customers.

There are several other definitions too similar to the one above in concept: 

• Shrinkage is the unscheduled or scheduled activities that prevent employees from doing their duties right. 
• Shrinkage is the element that takes your customer service agents away from being productive and serving their customers right. 
• Shrinkage is the difference between the number of staff employed, budget-wise, and staff available to take responsibility for the primary tasks for which they have been used.

While the definition of call center shrinkage can vary from one company to another, the reasons behind the event happening are classified into two primal parts. 

Here’s an example of a contact center services Philippines shrinkage calculator that would help you understand more. 

Bob leads a team of 12 agents in a call center. 

On any particular day, Bob might have an agent on vacation. Another agent who’s out sick. 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 eight gents who are attending to customers. So how do you calculate the Shrinkage of those four gents that are unavailable?

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
• Entire sick days/year
• Total statutory holidays
• Total absent days
• Total other days off

The calculation is based on:

• Total working days = 261 
• Total working hours per week = 40
• Total number of agents = 100

Now that we have looked into the elements that constitute the call center shrinkage number let us move to the section where we look into the calculation part of the Shrinkage. 

There are two ways to calculate the call center shrinkage value.

While calculating Shrinkage, managers must consider both external and internal sources. Likewise, they must focus on in-center and out-of-center components while implementing a plan to reduce call center shrinkage.

The manager cannot calculate Shrinkage without collecting information about the amount per agent over 12 months. The average shrinkage rate for the call center industry ranges from 30% to 35%.

The manager needs to explore ways to reduce call center shrinkage if the shrinkage percentage exceeds 35%. However, they must remember that the shrinkage rate changes across the day or year. Hence, they need to measure and monitor regularly.

The total Shrinkage, in this case, will be 31.9%.

How Shrinkage impacts the efficiency of BPO companies in Metro Manila

A high shrinkage rate is an indicator of low performance. When agents are unavailable 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 whether 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 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 overall call center efficiency.

Managers cannot boost call center productivity and efficiency without reducing the shrinkage rate. They must maintain a robust strategy to reduce the shrinkage rate regularly. 

The strategy must focus on implementing a dozen commonly used best practices for reducing the Shrinkage of in-house call centers in the Philippines.

Measure Shrinkage Rate Continuously

No manager can boost call center performance without monitoring the shrinkage rate regularly. The new-age call center solutions enable managers to measure and monitor Shrinkage based on various criteria – call volume, service level, and average call handling time. They even make it easier for managers to monitor fluctuations in call center shrinkage and identify the factors increasing them.

Track and Improve Schedule Adherence

The cloud-based contact center solutions enable managers to monitor and assess agent productivity based on real-time data. The managers can use the dashboard provided by the cloud-hosted call center solutions to check schedule adherence by generating reports. The managers can quickly reduce Shrinkage in the call center by generating reports and sharing the words with agents regularly.

Keep in Mind Unproductive Time

As noted earlier, Shrinkage can be caused due to both internal and external components. The managers can reduce the shrinkage rate by considering some parts while forecasting or planning schedules. For instance, managers must consider essential elements like breaks, meetings, training, coaching, and after-call work time while planning call center schedules.

Monitor and Address Absenteeism

Absenteeism is one of the controllable components of call center shrinkage. The managers can quickly identify the agents who remain absent frequently. They must specify the root causes of frequent or chronic absences.

The managers must also discuss with the agents to determine the measures required to minimize absenteeism. They can even implement a strategy to boost agent productivity by reducing absenteeism.

Keep Agents Competitive

The managers can quickly reduce Shrinkage in the call center by keeping agents competitive. In addition to providing coaching and assistance to agents, they need to reward the agents with minimum hours of Shrinkage.

The incentive program will motivate agents to explore ways to reduce hours of Shrinkage. However, the manager must remember that specific causes of call center shrinkage cannot be controlled or eliminated.

Start With the Finish

These questions must be thoroughly discussed to ensure the alignment of assumptions between the business and the workforce management team. Spending time upfront to agree on reasonable expectations will ensure that business requirements align with workforce management forecasting methodology.

Divide and Conquer

Shrinkage components in the contact center industry in the Philippines typically occupy two top-level categories of in-office and out-of-office. The former consists of team meetings, one-on-ones, training, employee development exercises, and breaks; the latter refers to PTO, vacation time, FMLA, and planned or unplanned absenteeism. Categorizing your call center shrinkage components to include a secondary level will improve actionable understanding of the opportunity.

Collaborate On What’s Controllable

After categorizing your shrinkage components, collaborate with the business on controllable shrinkage assumptions. Often, controllable elements refer to employee development exercises. Every company may have unique requirements attainable through forecasting, scheduling, and transparent communication.

Prepare For What Is Not

You can’t control the weather or the flu that hits your staff each January like clockwork. But you can evaluate trends and proactively arrange to account for repeatable situations in your capacity plans, adjusting at the moment with as much lead time as possible for non-repeatable issues. Most contact centers utilizing workforce management implement three practices:

• Long-term capacity planning
• Short-term forecasting
• Real-time adjustments based on daily ebb and flow

The same goes for Shrinkage. Rather than drive unthinkingly toward an ideal future state, forgo “vacuum planning” and merge seasonal information, historical data, business insights, and real-time trends with actionable game plans to drive a proactive call center shrinkage plan and facilitate positive outcomes.

Get Competitive

People respond positively to evaluation and act on what they’re being measured. That said, the more the workforce management team discusses measures and highlights shrinkage variability transparently with the business, the more positive adjustments you’ll notice as the workforce calibrates toward your feedback. 

Discussing call center shrinkage data on a site-to-site level fosters best-practice sharing across your locations, focused on reducing variability and improving overall results. This transparency also creates a fun air of competition within the sites.

Establish a Baseline & Create a Capacity Plan

Once you’ve evaluated your trends and obtained business requirements, you can establish a baseline shrinkage percentage to incorporate into your capacity plan. Hiring for work plus Shrinkage reduces your risk of understaffing and ensures that you have sufficient resources to balance your employee and customer needs.

Forecast, Review, Refine, & Repeat

Shrinkage management for the Philippines’ most prominent call center company is continuous. To implement long-term best practices, you’ll need to constantly review actuals vs. trends, adjust, refine, forecast, and highlight your rationale to the business. Ultimately, your process might look like this:

1. Create a monthly shrinkage forecast for twelve months (or any agreed-upon timespan) based on trends, business requirements, and insights.
2. At the month’s end, compare your observed results with the original forecast.
3. Where appropriate, determine the root cause of variance between your forecast and your results, including a review of variability across locations and teams.
4. Modify your forecast based on current reality and trends to make your next month’s forecast as accurate as possible.
5. Share the forecast with the business, highlighting the impact of the change to FTEs/costs, and facilitate discussions to reduce variability and obtain the desired performance.
6. Keep the process going: with each component and time frame mastered, increase your level of granularity and continue refining. Each iteration will improve your forecast accuracy, employee satisfaction, and productivity.

Make shrinkage management a call center experience Philippines

As mentioned earlier, the shrinkage rate in BPO Manila Philippines changes occasionally. The decision-makers need to measure, review, and minimize shrinkage rates regularly. 

The managers must continue shrinkage management by creating monthly shrinkage forecasts and comparing the estimates with actual results. Also, they need to identify the root causes of Shrinkage and take the measure required to restrict the shrinkage rate to 35%.

Overall, call center shrinkage directly impacts the efficiency and productivity of BPO workers in the Philippines. But the rate keeps changing from time to time. The managers must regularly measure and monitor the momentum to boost customer experience and meet service goals. 

They need to implement a robust strategy that emphasizes reducing internal and external shrinkage hours regularly.

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