The Hidden Costs of High Attrition

Attrition, or employee turnover, is a major concern for call centers and contact centers, as it can (and DOES) significantly impact both their financial performance and their ability to provide high-quality customer service.

When attrition boils over

While the various triggers for attrition can vary greatly from case by case, industry to industry there is a common ground – the cost to the employer in the long run. Since 2021, we have been in what has been coined “The Great Resignation” – most visible in professional services, manufacturing and retail. And while the wave of resignations has seemed to slow down, we are still seeing higher-than-average numbers. According to the Jan 2022 Bureau of Labor Statistics news release, more than 4.2 million people quit their jobs this past November.

As for what drives the mass exiting isn’t just pay and benefits (even though these rank at the top). Other top drivers that frequently appear on surveys are lack of career development opportunities, lack of employee engagement or reception of employee feedback, no clear business goals or direction, poor company culture, or conflict with coworkers or management.

When employees start to leave and a trend starts, the hit to the morale and culture is great, but for the numbers side of things, let’s go over a real-world example to show the impact as follows:

First off, we must consider the various base costs associated with employee turnover to compute the total costs of 100% annualized attrition for a 100-seat call center with an average wage of $15.00.

Here are some of the expenses that we need to take into account:

Recruitment Costs:

  • These are the costs associated with finding and hiring new employees, typically including advertising job openings, reviewing resumes, conducting interviews, and processing background checks.
    • Let’s assume that it costs $2,000 to recruit and hire a new employee.
    • With 100 employees leaving, we would need to hire 100 new employees so the total recruitment cost would be $2,000 x 100 = $200,000.

Training Costs:

  • These are the costs associated with training new employees to perform their job duties, including the cost of the trainer’s time, the cost of training materials, and the cost of any necessary equipment or software.
  • This can range greatly from program to program and can also vary widely in the time needed to complete. – You may lose a person in X days, but it takes way more than that to backfill a properly trained replacement.
    • impact : Let’s assume that it costs $3,000 to train a new employee.
    • Therefore, with 100 new employees, the total training cost would be $3,000 x 100 = $300,000.

Lost Productivity Costs:

  • These are the costs associated with lost productivity while a vacant position or a new employee is being trained.
  • This can include the loss of revenue due to missed sales opportunities or the need to pay overtime to other employees to cover the workload. – when you have no one in the seat, you can’t have any customer interactions.
    • impact: Let’s assume that it takes two weeks to find and train a new employee. During that time, the company lost an average of $1,500 per week in missed sales opportunities and overtime pay to cover the workload.
    • The total lost productivity cost would be 2 x $1,500 x 100 = $300,000. The lost productivity costs can be higher if there is a longer timeline for the proficiency of a new agent. – ie it takes 90 days for an agent to match the productivity of the entire group.

Separation Costs:

  • Also known as the costs associated with an employee’s departure, including severance pay, unemployment benefits, and the cost of processing the employee’s exit from the company.
  • While they may not have a severance package, you still have various other expenses while they are out.
    • An assumption can be that each employee who leaves is entitled to 2 weeks of severance pay and that the total cost of processing the employee’s exit is $500.
    • The total separation cost would be: (2 weeks x $15.00 per hour x 100 employees) + ($500 x 100 employees) = $30,500.

Onboarding Costs:

  • Costs associated with getting new employees up to speed, including introducing new hires to the company’s culture, policies, and procedures separate from the actual training program.
    • Impact: Say that it costs $1,500 to onboard a new employee. –
    • With 100 new employees, the total onboarding cost would be: $1,500 x 100 = $150,000
  • Assuming that we have 100 employees at an average wage of $15.00 per hour and an attrition rate of 100%, we can estimate the total costs of turnover
    • The total estimated cost of turnover: In this example we get a total cost of turnover of $980,500, for just one year, with 100 seats!

Also, in addition to these known costs, there may be hidden costs associated with high attrition rates that are not immediately apparent, including:

  1. Reduced Customer Satisfaction: High employee turnover can result in inconsistency in service quality, which can impact customer satisfaction and retention.
  2. Lower Employee Morale: High attrition rates can create a hostile workplace environment, lowering employee morale and engagement.
  3. Impact on Company Reputation: A high attrition rate can also impact the company’s reputation, making it more challenging to attract and retain top talent in the future.
  4. Loss of Institutional/Tribal Knowledge: When experienced employees leave, they take valuable institutional knowledge that can be difficult to replace. This can lead to gaps in knowledge and expertise, impacting the service quality the center provides.

In summary,

A 100%+ annualized attrition rate a contact center or call center can have significant known and also hidden costs, including recruitment and training expenses, reduced productivity, lost revenue, reduced customer satisfaction, lower employee morale, impact on company reputation, and loss of institutional knowledge. It is crucial for call center managers to develop effective strategies to retain their employees and reduce attrition rates to avoid these negative impacts.

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