Agent Attrition

How to Measure the Costs of Agent Attrition: Inebriated Executives

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Ron Davis, Founder, CEO: Tenacity

Call Center Managers Rarely Know the Actual Cost of Employee Attrition

As the CEO of a company that helps contact centers reduce employee turnover, I have a lot of conversations with executives about the cost of attrition. Their estimates are as random and dangerous as a game of drunk darts.

A Data Driven Industry?

I find this especially amazing, because year after year these leaders fill out surveys saying that agent turnover is their #1 problem. But after decades of hand wringing, they have no idea what it costs them. For an industry dedicated to painstaking measurement of employee performance, this is surprising. And for an industry suffering with razor thin margins whose biggest preventable costs come from agent turnover, it’s inexcusable.

It’s true that many of these senior managers think they know what it costs when employees leave. Perhaps they read an interesting article about agent retention online, or a consultant gave them a rule of thumb. Maybe they were a bit more ambitious and got someone from the finance team to try and model the cost of agent attrition in a particular call center four or five years ago. Or the executive herself sat down and did some back of the envelope calculations to figure out the hiring and training costs, and figured she had a pretty good grip on the total price of agent turnover. If only they knew.

In most cases, when I dig a little deeper, I learn that these call center bosses have very little idea of the actual, hard, measurable, bottom line costs of losing their employees. And unfortunately, just like in real drunk darts, ignoring your biggest money sink is a hazardous way to spend your time.

Off by 400%

As an example, we recently spoke with a very senior executive about employee retention at his North American contact centers. His thousands of agents go through six weeks of training and two weeks of heavily supervised calls afterward, and then have a nearly eight-month learning curve before becoming fully productive. He said the average cost per attrit is around $3,000. After asking a few more questions, it became obvious that the real, hard, measurable, tangible cost to his bottom line was a bit more than four times as much.

Why is Measurement So Poor?

The reason for this variance is twofold. The first is that the industry has no widely held best practices for measuring the cost of employee turnover, and none of the thought leaders seem to have dedicated enough mindshare to change the way the industry thinks. And fixing this requires more than careful intellectual work – it requires leadership. Unless someone drives the industry forward to embrace standard forms of measurement, the drunk dart “measurements” will continue.

The other reason is incentives. If 5% of your employees quit each month, and there is no standardized definition of the cost of attrition, would you rather report to your boss that this costs $3,000 per person, or $12,000? Mark Twain said there are “lies, damned lies, and statistics.” Clearly, he had never seen a financial model designed by the person whose performance would be judged by its outputs.

Want to fix attrition? Start by getting honest with yourself about its costs.