How to Calculate Contact Centre Shrinkage


Below, we present our definitive method to calculate shrinkage, alongside a formula endorsed by industry experts and information on how to apply shrinkage to the call centre.

If you ask 12 contact centre planners for what is included in a shrinkage calculation you will probably get over 10 different answers.

So to help provide a definitive answer we have asked a number of leading planners for their advice and here we reflect a consensus view on the best way to calculate shrinkage.

Definition

Shrinkage is a measurement of anything that takes an agent away from their ability to take customer contacts.

There are a number of alternative definitions that are broadly similar in concept:

  • Shrinkage is any scheduled and/or unscheduled optimisation/activities prohibiting employees from performing their duties.
  • Shrinkage is the list of things that take your agents away from being productive, i.e. serving customers.
  • Shrinkage is the difference between the total number of staff you employ (budget) and those available to undertake the primary tasks (work) for which they are employed.

What is call centre shrinkage?

Shrinkage is a measure used in contact centre planning as a sort of “fudge factor” that allows for the difference between the number of staff that a forecasting system (or Erlang calculator) says is required and the practical considerations of how many employees are available at a particular time.

For example – if an Erlang calculator says that you require 70 agents for a half-hour interval, and you have a shrinkage of 30%, you will probably need to have a staff of 100 agents to cover the demand.

It tends to be used as an overall planning factor rather than as a tracking metric measured over time.

What is included in the shrinkage figure

There are two main components of shrinkage – External Shrinkage and Internal Shrinkage

1. External Shrinkage (out-of-centre shrinkage)

  • Sickness (either run rate or desired level)
  •  Holiday
  •  Public holidays
  •  Paid breaks (if applicable)
  •  Absenteeism
  •  Lateness (or tardiness)

2. Internal Shrinkage (in-centre shrinkage)

  • Team meetings
  • Coaching
  • Training
  • One to ones
  • System downtime
  • Unplanned facility breaks
  • Time spent helping other departments
  • Special projects (e.g. time spent fixing broken processes)

Some contact centre planners tend to look at the Contact Centre Shrinkage metric in terms of Planned Shrinkage and Unplanned Shrinkage.

The formula for shrinkage

The contact centre shrinkage formula is:

Shrinkage
Shrinkage is normally expressed across a complete 12-month period.

Worked example of a shrinkage calculation

Based on
Working days per year: 260
Working hours per week: 37.5

Hours/Week Days/Year Shrinkage Days Percentage
External Shrinkage
Annual Leave 24 24 9.2%
Public Holidays 8 8 3.1%
Sickness 8 8 3.1%
Absenteeism/ Lateness 1 1.4 0.5%
Internal Shrinkage
Training 5 5.0 1.9%
Coaching 5 6.9 2.7%
Quality Sessions 2 2.8 1.1%
Team Meetings 4 5.5 2.1%
One to Ones 1 1.4 0.5%
Paid Breaks 5 6.9 2.7%
Toilet Breaks 2.5 3.5 1.3%
System Problems 1 1.4 0.5%
Other Activities 7 9.7 3.7%
Shrinkage Days Percentage
Total 84.5 32.5%

Download our Call Centre Shrinkage Calculator in a handy excel format, so you can find out the exact shrinkage percentage of your call centre, just like in the example above.

How to apply shrinkage

Shrinkage is the reduction of staff from a theoretical level if a full-time equivalent was able to work all year.

Staff Required = Staff Demand / ((100 – Percent Shrinkage)/100)

For example – if an Erlang calculator says that you require 70 agents for a half-hour interval, and you have a shrinkage of 30%, you will probably need to have a staff of 100 agents to cover the demand.

Staff required = 70 / ((100 – 30)/100) = 70 / (1 – 0.3) =70/ 0.7 = 100 staff

Watch out for the shrinkage trap

Please don’t fall into the trap of adding a percentage shrinkage to the agent requirement, i.e. 70 agents in an interval plus 30% shrinkage (70+30%) = 91. If you do this, you will be short! The correct calculation is to convert the 30% to 0.3 and calculate 70/(1-0.3) = 100.

What is an average shrinkage figure for the industry?

Most contact centre professionals seem to agree that shrinkage seems normally to come out between 30 and 35%.

Dimension Data in their Global Benchmarking Report give an average shrinkage figure of 35%.

Shrinkage vs Utilisation

Shrinkage is another way of expressing what used to be called Utilisation.

Utilisation is simply the number of hours that employees are available to work on their primary task (measured hours), divided by the total paid hours.

So a Shrinkage Figure of 30% equates to a Utilisation figure of 70%.

Shrinkage + Utilisation = 100%

Some companies try to drive up utilisation as a way to become more efficient, but that’s bad in the long run – training is usually the first to go.

Shrinkage does vary over time

Shrinkage does tend to vary across the day and across the year, so you need to measure contact centre shrinkage regularly – don’t use a one-size-fits-all approach.

Across the year, shrinkage tends to be highest across the summer months (particularly over the school summer holidays) and also around Christmas. (This is made worse if the leave/vacation year ends at the end of December.)

Across the day, you may find that shrinkage is highest between 9.00 am and 11.00am and between 14.00 and 15.00, as this is when most team or company meetings tend to be arranged.

Care over use of shrinkage

Our community also has provided some words of warning over the use of shrinkage metrics:

  • Part-time staffing

You also need to be careful to consider the impact of part-time staffing if you boil it down to just a percentage. For example, an hour 1-2-1 is a much higher percentage of a person’s day when they only work 4 hours. The balance here may be between the flexibility they afford in covering peak hours, or increased ESAT, vs. the impact on costs to run the business.

– Thanks to Robert Tuck

  • Express shrinkage in hours not a percent

The value of shrinkage is often commuted as a percentage of staff. However, this is because of how it is applied within capacity plans and it means little operationally, so it needs to be expressed as hours/mins per day/week/month. As mentioned, the percentage of overall time is usually commuted per FTE, but the part-time mix does change this value, as does any seasonality for absence.

– Thanks to Keith Stapleton

  • Low shrinkage may be a false economy

The shrinkage KPI, as ever, is less important than the trend and the strategic intent. For example, very low shrinkage (and therefore high productivity) is a very efficient KPI, but if it comes at the cost of reducing training or coaching then it is probably a false economy.

– Thanks to Dougie Cameron

  • Adopt a 2-stage process

I have always adopted a simple methodology: include all items that mean people are not available to serve customers. Doing anything less is simply kidding yourself and will lead to resource shortfalls. I also adopt a 2-stage calculation process: out-of-centre shrinkage and then in-centre shrinkage, with the latter being calculated on the outcome of the former. This gives a far more accurate number as the in-centre elements can only have an impact if they are actually there.

– Thanks to Gary Saddler

Special thanks to the following people who helped to produce the information for this article.

Peter Anderton, Robert Tuck, Phillip Catterall, Richard Powell, Aurelijus Simelevicius, Christel Everaert, Keith Stapleton, Xolani Siphungu, Angela Katimbang, Dougie Cameron, Gary Saddler, Carrie-Anne Dillon, Tracy Macey, Dan Cuthbert, Georgia Poole, Peter Elliot and Matthew Eccles.

Click here to download our Call Centre Erlang Staffing Calculator – including Shrinkage, to find out how many staff should be in your call centre at a given time.

Published On: 17th Aug 2016 - Last modified: 22nd Mar 2017
Read more about - Customer Service Strategy , , ,


11 Comments
  1. This was a great overview of shrinkage, thank you!

    Lucy 18 Aug at 11:44 am
  2. Very good !

    Allan 18 Aug at 6:51 pm
  3. Just wondering if you guys have posted any calculation to calculate the call center capacity – how many agents do I need to have in the Call Center, let’s say, if the work is 45 hours per week and 2 days off, with the historical data for the past 8 months – interval is every hour !

    QUTAIBAH 18 Aug at 6:55 pm
  4. Qutibah

    I think what you would need is our call centre Erlang calculator. If you can break dow the call volume to the half hour you can then work out the number of staff.
    https://www.callcentrehelper.com/erlang-c-calculator-2473.htm

    Jonty Pearce 19 Aug at 3:16 pm
  5. I dont get how you guys get the days for Absenteesism/ lateness?
    Absenteeism/ Lateness is one hour a week, there is 52.143 weeks in a year, so there is 52.143 hours a year, that divided by 24hours is 2.17 shrinkage days. Your answer is 1.4days. Can you explain? Sorry if this is too obvious.

    Jason 12 Sep at 6:32 am
  6. Yea, I don’t understand the calculation either. Although I don’t understand why you’d divide by 24 hours as no one will work all day every day.

    The way I’d figure it out is:

    Lateness = 1hr/week or 0.2 per day
    Days worked = 260 – 24 – 8 – 8 = 220
    Lateness hours per year = 220 * 0.2 = 44
    Lateness days per year = 5.87

    Jamie 13 Nov at 6:38 pm
  7. Hi jason
    I think u need to remove the off days from your cslculation as they memotioned it’s 260 working days so 260/7=37.14 week. Means 37.14hours which mean 37.14/24=1.54 days is the lateness shrinkage
    Qutaibah

    Qutaibah 25 Jan at 7:26 pm
  8. Hi, I have a question please.

    Shall we include in the shrinkage calculation leave such as bereavement leave, volunteer leave and long service leave?

    My colleague and I had a discussion about this and in her opinion we should not include those as it is very unlikely that all the agents will use those type of leaves. However I believe that they should be counted for in some sort of % at least as there might be several agents who will use those type of leaves during the year which will impact the availability.

    Fran 9 Feb at 10:19 pm
  9. Hi Fran. I would probably go with you on this and include bereavement leave, volunteer leave and long service leave in the calculation. It all depends though if you recruit extra people to cover this period. If you do this, then you may be double counting.

    Jonty Pearce 2 Mar at 1:50 pm
  10. Love this article. Very helpful

    Ramona 29 Mar at 9:47 pm
  11. Good stuff… thank you!

    PK 9 Aug at 10:14 pm
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