Reducing Call Center Staff May Cost You Money

Jun 09, 2010 11:31 PM  By

Many businesses have felt the effect of a slowed economy in the past few years. All departments, including the call center, have been asked to tighten their belts and make the most of resources.

Since about 75% of call center’s operating costs are related to staffing, that is generally the first place the call center manager might look to reduce costs. It is all too common to think of layoffs and reduction in staff as a way to respond to the call from senior management to tighten belts.

But before you write up the pink slips, make sure you understand the implications of staff reductions.

Let’s assume that you’re a fairly small call center with fewer than 50 agent seats. (If you’re a larger center, you can view these numbers as representative of a specialized agent group within the bigger call center structure.)

Most days you’re meeting your service goal of 30 seconds. The snapshot below indicates the staffing picture with varying numbers of staff during an hour in which you’re getting 350 calls.

Staffing with 33 “bodies in chairs” would enable you to meet the service goal fairly consistently. A strategy to decrease staff numbers to reduce costs would affect service directly.

The loss of one person would worsen delays from an average speed of answer (ASA) 30 seconds to 54 seconds. Eliminating another person would double the wait 107 seconds. And reducing staffing levels by three would result in an average delay of 298 seconds. So those callers accustomed to waiting for only half a minute in queue would now be waiting nearly 5 minutes!

And service isn’t the only thing that suffers. With 33 staff in place to handle the call workload, agent occupancy (the measure of how busy staff are during the period of time they’re logged in and available) is in an acceptable range at 88%.

Taking one body away raises occupancy levels to 91%; taking two away results in 94% occupancy; and taking three away means staff would be busy 97% of the time during the hour. In other words, there would be only 3% of the hour (108 seconds) of “breathing room” between calls.

Such a high level of occupancy can’t be maintained for long. The likely result will be longer handle times, longer periods spent in after-call work to “catch their breath,” burnout and turnover.

There’s another downside to consider from a cost perspective. The idea was to save money by eliminating staff. Assuming a wage rate of $20 per hour, eliminating three staff would result in a savings of $60 for that hour.

But if your center is paying the phone bill by providing a toll-free service for callers, the reduction in staff might be outweighed by the increased telephone costs associated with the longer delay times. In this example, with 33 staff in place the average delay is 30 seconds per call.

Multiply that by 350 calls per hour, and that’s 10,500 seconds (or 175 minutes) of delay. If we apply a fully loaded telephone cost per minute to that usage of $.06 per minute, that’s $10.50 for the queue time.

If we reduce the numbers to 30 staff, remember our average delay increases to 298 seconds of delay per call. Multiply that by 350 calls and that’s 1738 minutes of delay, priced at $.06 for a total of $104.30 for the queue time that hour.

In other words, by eliminating three staff to save money, we’ve just increased our telephone bill by $93.80 for that hour! And this doesn’t even take into account the likelihood of a longer call given the poorer than expected service levels. Telephone charges would likely increase even further.

The cost implications are even more dangerous in a revenue-producing center. If the value of a contact is $50, and agent salaries are $20 per hour, it is easy to see that putting another agent on the phone will pay for itself—even if the agent only answers one call per hour that would otherwise have abandoned from the queue. But even if the value of the call is only $5, there is clearly a trade-off in determining the staffing level that will produce the highest net bottom line. The return on appropriate staffing must be argued against budget constraints.

So from three different perspectives—the customer (service delays), the agent (higher occupancy), and senior management (higher telephone costs and abandoned calls) — you can see that a simple staff reduction may not save you any money. In fact, it may cost you much more in terms of poor service, productivity, morale, and just the opposite direction on your bottom line than what you intended.

Penny Reynolds is a cofounder/senior partner of The Call Center School, a company specializing in the professional development of call center personnel from frontline agents to call center executives.