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Octavious
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While turnover is a fact of life in any organization, turnover rates differ greatly from one organization to the next. For example, some call centers operate with annual rates of less than 5%, while others see rates of well over 50% percent. (According to ICMI research, many call centers are in the 15% to 30% range.) An important first step in managing turnover is to calculate your annualized turnover accurately, so that you have a consistent basis for comparison and trending.
There are two figures you'll need in order to calculate annualized turnover - the number of agents exiting during each month, and the average number of staff during those months. (The average number of agents on staff during the month is often calculated by taking an average of the counts at the end of each week of the month; alternatively, you can take an average of the trained staff count at the beginning and end of the month.)
The formula ICMI recommends for calculating turnover is as follows:
Turnover = (number of agents exiting the job average number of agents during the period) x (12 number of months in the period)
For example, let's say your data is as in the following chart:
Using the formula, your annualized turnover rate comes out to just under 29%:
(20 104) x (12 8) = 28.8%
While knowing your overall turnover rate is valuable, we recommend breaking it down further, into internal/external and voluntary/involuntary categories. Internal turnover refers to employees that leave the call center but stay within the organization; external turnover refers to employees that leave the organization entirely. Voluntary turnover is when employees decide to leave, while involuntary separation occurs when management makes the decision to end employment (e.g., through layoffs or firing).
In the example we just used, the 29% annualized turnover rate might be categorized as follows:
TURNOVER COSTS AND BENEFITS
Turnover can bring both costs and benefits to the call center. Costs are often broadly categorized as follows:
* Recruiting and hiring costs, which may include the cost of advertising for new positions, the cost and time involved in interviews and background checks, any costs associated with search firms or placement agencies, and, potentially, relocation costs.
* Training and orientation costs, which include the direct cost of training, the cost of overall lower productivity from newer employees, and the cost of overtime if current employees must help cover hours.
* In commercial organizations the most severe costs can be those associated with poor customer service - lost sales, reduced loyalty and outright defections to competitors.
Turnover can also yield benefits. For example, if employees leave for other positions within the organization, the call center gains experienced advocates in other departments. Turnover may also reduce structural costs (assuming new employees are brought in at lower pay scales) and create the means for the call center to bring in new employees with needed skills and fresh insights.
The causes and costs/benefits will vary by type of turnover. For example, voluntary external turnover is more of a detriment to the organization than planned internal turnover. Do enough analysis to be able to estimate the relative impact of each type of turnover.
IDENTIFYING THE CAUSES OF TURNOVER
To manage turnover, you must understand what causes it. Common ways to identify causes include:
* Conduct a job and salary analysis vis--vis market conditions.
* Conduct group meetings with agents to discuss environmental factors, such as stress, management style, workload, etc.
* Review the orientation program to ensure jobs are being accurately represented to new employees
* Analyze exit interviews.
* Conduct regular employee satisfaction surveys.
Specific causes can vary widely (see the sidebar below), and identifying the top five to seven things driving turnover will be a huge step towards creating an appropriate prevention strategy.
RETENTION STRATEGIES
While there is no single formula for agent retention that is appropriate for all call centers, there are plenty of tried and true strategies that will greatly enhance the chances of retaining your agents and ensuring they perform at their best. Some of the most common areas of focus include:
Improve hiring and job fit. Hiring candidates based on the right job qualifications and behavioral competencies will improve your chances for a better job fit. If turnover rates are high, revisiting the hiring process should be the first step in improving retention.
Improve competitive pay and benefits. Ensure that jobs in the call center are internally and externally equitable. Even if you're budgets are tight, don't count this strategy out - it might be more practical and less expensive than meets the eye if you've really analyzed and identified the true costs of turnover.
Ensure that agents receive timely coaching and feedback. Encouraging the positive aspects of the agent's performance, modeling desired actions/behaviors and working with them to create feasible action plans that will enable them to achieve objectives are essential steps.
Provide opportunities for ongoing skill and career development. Agents who see their position as dynamic and evolving are more likely to remain committed to the call center. Create a skills-based pay program and, if possible, a compelling career path in the call center to encourage agents to continually expand their knowledge and capabilities.
Provide as much flexibility in work schedules as possible. Call center scheduling takes creativity and communication since both workload requirements and agent requirements must be accommodated as much as possible.
Improve supervisor training. It's often said that agents don't leave companies - they leave their supervisors. Taking steps to ensure that your supervisors have the skills and knowledge necessary to be the best managers possible can improve retention dramatically.
Provide recognition. According to much of the research on turnover, just saying thanks for a job well done goes a long way towards job satisfaction. This can be formal, e.g., through newsletters and announcements, and informal through everyday conversations.
These suggestions represent the proverbial tip of the iceberg. Other strategies can range from implementing a telecommuting program, to establishing a mentoring program, designing better incentive plans and improving facilities design.
FINDING THE RIGHT BALANCE
A certain amount of turnover is inevitable and acceptable - your challenge is to determine just what that acceptable level is. To do so, it's important to understand the full cost of turnover and compare it to the costs associated with staff retention programs. The key is to find the right balance: you don't want to spend more money retaining staff than it costs to replace them, but you also don't want to spend more money replacing staff than it costs to keep them.
Among the practical criteria to consider when seeking the right balance are:
* The maximum amount the company is willing to pay for these positions.
* Availability of a skilled labor pool to fill agent vacancies.
* The cost (money and time) of effectively training new-hires.
* The relative costs of lower quality and productivity when turnover increases.
* Organizational values and culture. In sum, there is much that can be done to address turnover and improve retention. Don't leave it to chance.
Total Number of Resigns per month (Whether voluntary or forced) divided by (Total Number of employees at the beginning of the month plus total number of new joinees minus total number of resignations) multiplied by 100.
Calculating Attrition
If calculating in monetary terms, it includes the following:
Costs Due to a Person Leaving
1. Calculate the cost of the person(s) who fills in while the position is vacant. Calculate the cost of lost productivity at a minimum of 50% of the person's compensation and benefits cost for each week the position is vacant, even if there are people performing the work. Calculate the lost productivity at 100% if the position is completely vacant for any period of time.
2. Calculate the cost of conducting an exit interview to include the time of the person conducting the interview, the time of the person leaving, the administrative costs of stopping payroll, benefit deductions, benefit enrollments.
3. Calculate the cost of the manager who has to understand what work remains, and how to cover that work until a replacement is found.
4. Calculate the cost of training your company has invested in this employee who is leaving.
5. Calculate the impact on departmental productivity because the person is leaving. Who will pick up the work, whose work will suffer, what departmental deadlines will not be met or delivered late.
6. Calculate the cost of lost knowledge, skills and contacts that the person who is leaving is taking with them out of your door. Use a formula of 50% of the person's annual salary for one year of service, increasing each year of service by 10%.
7. Subtract the cost of the person who is leaving for the amount of time the position is vacant.
Recruitment Costs
1. The cost of advertisements; agency costs; employee referral costs; internet posting costs.
2. The cost of the internal recruiter's time to understand the position requirements, develop and implement a sourcing strategy, review candidates backgrounds, prepare for interviews, conduct interviews, prepare candidate assessments, conduct reference checks, make the employment offer and notify unsuccessful candidates. This can range from a minimum of 30 hours to over 100 hours per position.
3. Calculate the cost of the various candidate pre-employment tests to help assess a candidates' skills, abilities, aptitude, attitude, values and behaviors.
Training Costs
1. Calculate the cost of orientation in terms of the new person's salary and the cost of the person who conducts the orientation. Also include the cost of orientation materials.
2. Calculate the cost of departmental training as the actual development and delivery cost plus the cost of the salary of the new employee. Note that the cost will be significantly higher for some positions such as sales representatives and call center agents who require 4 - 6 weeks or more of classroom training.
3. Calculate the cost of the person(s) who conduct the training.
4. Calculate the cost of various training materials needed including company or product manuals, computer or other technology equipment used in the delivery of training.
Lost Productivity Costs
As the new employee is learning the new job, the company policies and practices, etc. they are not fully productive. Use the following guidelines to calculate the cost of this lost productivity:
1. Upon completion of whatever training is provided, the employee is contributing at a 25% productivity level for the first 2 - 4 weeks. The cost therefore is 75% of the new employees full salary during that timeperiod.
2. During weeks 5 - 12, the employee is contributing at a 50% productivity level. The cost is therefore 50% of full salary during that timeperiod.
3. During weeks 13 - 20, the employee is contributing at a 75% productivity level. The cost is therefore 25% of full salary during that timeperiod.
4. Calculate the cost of mistakes the new employee makes during this elongated indoctrination period.
New Hire Costs
1. Calculate the cost of bring the new person on board including the cost to put the person on the payroll, establish computer and security passwords and identification cards, telephone hookups, cost of establishing email accounts, or leasing other equipment such as cell phones, automobiles.
2. Calculate the cost of a manager's time spent developing trust and building confidence in the new employee's work.
Lost Sales Costs
1. Calculate the revenue per employee by dividing total company revenue by the average number of employees in a given year. Whether an employee contributes directly or indirectly to the generation of revenue, their purpose is to provide some defined set of responsibilities that are necessary to the generation of revenue. Calculate the lost revenue by multiplying the number of weeks the position is vacant by the average weekly revenue per employee.
Conclusion: It is clear that there are massive costs associated with attrition or turnover and, while some of these are not visible to the management reporting or budget system, they are none the less real. The 'rule of thumb' appears to be very inaccurate indeed and, while it depends upon the category of staff, it is probably better to estimate around 80% of salary as a truer rule of thumb - and this will be on the conservative side.
What does this mean? Well it means that if a company has 100 people doing a certain job paid 25,000 and that turnover or attrition is running at 10%, the cost of attrition is:
(Total staff x attrition rate %) x (annual salary x 80%)
* 100 staff at 10% attrition means 10 people leave and are replaced each year.
* A replacement cost of 80% of a salary of 25,000 means the cost of each replacement is 20,000.
* The cost of turnover is therefore 10 x 20,000 or 200,000 a year.
* The oncost to the overall salary bill is 8%.
(Saving 8% of salary costs would make the average HR manager a hero.)
From India, Mumbai
575Hope below information helps members here in
Thank You
Octavious
For various links to my posts, kindly visit the links provide herein below
Major HR Links
While turnover is a fact of life in any organization, turnover rates differ greatly from one organization to the next. For example, some call centers operate with annual rates of less than 5%, while others see rates of well over 50% percent. (According to ICMI research, many call centers are in the 15% to 30% range.) An important first step in managing turnover is to calculate your annualized turnover accurately, so that you have a consistent basis for comparison and trending.
There are two figures you'll need in order to calculate annualized turnover - the number of agents exiting during each month, and the average number of staff during those months. (The average number of agents on staff during the month is often calculated by taking an average of the counts at the end of each week of the month; alternatively, you can take an average of the trained staff count at the beginning and end of the month.)
The formula ICMI recommends for calculating turnover is as follows:
Turnover = (number of agents exiting the job average number of agents during the period) x (12 number of months in the period)
For example, let's say your data is as in the following chart:
Using the formula, your annualized turnover rate comes out to just under 29%:
(20 104) x (12 8) = 28.8%
While knowing your overall turnover rate is valuable, we recommend breaking it down further, into internal/external and voluntary/involuntary categories. Internal turnover refers to employees that leave the call center but stay within the organization; external turnover refers to employees that leave the organization entirely. Voluntary turnover is when employees decide to leave, while involuntary separation occurs when management makes the decision to end employment (e.g., through layoffs or firing).
In the example we just used, the 29% annualized turnover rate might be categorized as follows:
TURNOVER COSTS AND BENEFITS
Turnover can bring both costs and benefits to the call center. Costs are often broadly categorized as follows:
* Recruiting and hiring costs, which may include the cost of advertising for new positions, the cost and time involved in interviews and background checks, any costs associated with search firms or placement agencies, and, potentially, relocation costs.
* Training and orientation costs, which include the direct cost of training, the cost of overall lower productivity from newer employees, and the cost of overtime if current employees must help cover hours.
* In commercial organizations the most severe costs can be those associated with poor customer service - lost sales, reduced loyalty and outright defections to competitors.
Turnover can also yield benefits. For example, if employees leave for other positions within the organization, the call center gains experienced advocates in other departments. Turnover may also reduce structural costs (assuming new employees are brought in at lower pay scales) and create the means for the call center to bring in new employees with needed skills and fresh insights.
The causes and costs/benefits will vary by type of turnover. For example, voluntary external turnover is more of a detriment to the organization than planned internal turnover. Do enough analysis to be able to estimate the relative impact of each type of turnover.
IDENTIFYING THE CAUSES OF TURNOVER
To manage turnover, you must understand what causes it. Common ways to identify causes include:
* Conduct a job and salary analysis vis--vis market conditions.
* Conduct group meetings with agents to discuss environmental factors, such as stress, management style, workload, etc.
* Review the orientation program to ensure jobs are being accurately represented to new employees
* Analyze exit interviews.
* Conduct regular employee satisfaction surveys.
Specific causes can vary widely (see the sidebar below), and identifying the top five to seven things driving turnover will be a huge step towards creating an appropriate prevention strategy.
RETENTION STRATEGIES
While there is no single formula for agent retention that is appropriate for all call centers, there are plenty of tried and true strategies that will greatly enhance the chances of retaining your agents and ensuring they perform at their best. Some of the most common areas of focus include:
Improve hiring and job fit. Hiring candidates based on the right job qualifications and behavioral competencies will improve your chances for a better job fit. If turnover rates are high, revisiting the hiring process should be the first step in improving retention.
Improve competitive pay and benefits. Ensure that jobs in the call center are internally and externally equitable. Even if you're budgets are tight, don't count this strategy out - it might be more practical and less expensive than meets the eye if you've really analyzed and identified the true costs of turnover.
Ensure that agents receive timely coaching and feedback. Encouraging the positive aspects of the agent's performance, modeling desired actions/behaviors and working with them to create feasible action plans that will enable them to achieve objectives are essential steps.
Provide opportunities for ongoing skill and career development. Agents who see their position as dynamic and evolving are more likely to remain committed to the call center. Create a skills-based pay program and, if possible, a compelling career path in the call center to encourage agents to continually expand their knowledge and capabilities.
Provide as much flexibility in work schedules as possible. Call center scheduling takes creativity and communication since both workload requirements and agent requirements must be accommodated as much as possible.
Improve supervisor training. It's often said that agents don't leave companies - they leave their supervisors. Taking steps to ensure that your supervisors have the skills and knowledge necessary to be the best managers possible can improve retention dramatically.
Provide recognition. According to much of the research on turnover, just saying thanks for a job well done goes a long way towards job satisfaction. This can be formal, e.g., through newsletters and announcements, and informal through everyday conversations.
These suggestions represent the proverbial tip of the iceberg. Other strategies can range from implementing a telecommuting program, to establishing a mentoring program, designing better incentive plans and improving facilities design.
FINDING THE RIGHT BALANCE
A certain amount of turnover is inevitable and acceptable - your challenge is to determine just what that acceptable level is. To do so, it's important to understand the full cost of turnover and compare it to the costs associated with staff retention programs. The key is to find the right balance: you don't want to spend more money retaining staff than it costs to replace them, but you also don't want to spend more money replacing staff than it costs to keep them.
Among the practical criteria to consider when seeking the right balance are:
* The maximum amount the company is willing to pay for these positions.
* Availability of a skilled labor pool to fill agent vacancies.
* The cost (money and time) of effectively training new-hires.
* The relative costs of lower quality and productivity when turnover increases.
* Organizational values and culture. In sum, there is much that can be done to address turnover and improve retention. Don't leave it to chance.
Total Number of Resigns per month (Whether voluntary or forced) divided by (Total Number of employees at the beginning of the month plus total number of new joinees minus total number of resignations) multiplied by 100.
Calculating Attrition
If calculating in monetary terms, it includes the following:
Costs Due to a Person Leaving
1. Calculate the cost of the person(s) who fills in while the position is vacant. Calculate the cost of lost productivity at a minimum of 50% of the person's compensation and benefits cost for each week the position is vacant, even if there are people performing the work. Calculate the lost productivity at 100% if the position is completely vacant for any period of time.
2. Calculate the cost of conducting an exit interview to include the time of the person conducting the interview, the time of the person leaving, the administrative costs of stopping payroll, benefit deductions, benefit enrollments.
3. Calculate the cost of the manager who has to understand what work remains, and how to cover that work until a replacement is found.
4. Calculate the cost of training your company has invested in this employee who is leaving.
5. Calculate the impact on departmental productivity because the person is leaving. Who will pick up the work, whose work will suffer, what departmental deadlines will not be met or delivered late.
6. Calculate the cost of lost knowledge, skills and contacts that the person who is leaving is taking with them out of your door. Use a formula of 50% of the person's annual salary for one year of service, increasing each year of service by 10%.
7. Subtract the cost of the person who is leaving for the amount of time the position is vacant.
Recruitment Costs
1. The cost of advertisements; agency costs; employee referral costs; internet posting costs.
2. The cost of the internal recruiter's time to understand the position requirements, develop and implement a sourcing strategy, review candidates backgrounds, prepare for interviews, conduct interviews, prepare candidate assessments, conduct reference checks, make the employment offer and notify unsuccessful candidates. This can range from a minimum of 30 hours to over 100 hours per position.
3. Calculate the cost of the various candidate pre-employment tests to help assess a candidates' skills, abilities, aptitude, attitude, values and behaviors.
Training Costs
1. Calculate the cost of orientation in terms of the new person's salary and the cost of the person who conducts the orientation. Also include the cost of orientation materials.
2. Calculate the cost of departmental training as the actual development and delivery cost plus the cost of the salary of the new employee. Note that the cost will be significantly higher for some positions such as sales representatives and call center agents who require 4 - 6 weeks or more of classroom training.
3. Calculate the cost of the person(s) who conduct the training.
4. Calculate the cost of various training materials needed including company or product manuals, computer or other technology equipment used in the delivery of training.
Lost Productivity Costs
As the new employee is learning the new job, the company policies and practices, etc. they are not fully productive. Use the following guidelines to calculate the cost of this lost productivity:
1. Upon completion of whatever training is provided, the employee is contributing at a 25% productivity level for the first 2 - 4 weeks. The cost therefore is 75% of the new employees full salary during that timeperiod.
2. During weeks 5 - 12, the employee is contributing at a 50% productivity level. The cost is therefore 50% of full salary during that timeperiod.
3. During weeks 13 - 20, the employee is contributing at a 75% productivity level. The cost is therefore 25% of full salary during that timeperiod.
4. Calculate the cost of mistakes the new employee makes during this elongated indoctrination period.
New Hire Costs
1. Calculate the cost of bring the new person on board including the cost to put the person on the payroll, establish computer and security passwords and identification cards, telephone hookups, cost of establishing email accounts, or leasing other equipment such as cell phones, automobiles.
2. Calculate the cost of a manager's time spent developing trust and building confidence in the new employee's work.
Lost Sales Costs
1. Calculate the revenue per employee by dividing total company revenue by the average number of employees in a given year. Whether an employee contributes directly or indirectly to the generation of revenue, their purpose is to provide some defined set of responsibilities that are necessary to the generation of revenue. Calculate the lost revenue by multiplying the number of weeks the position is vacant by the average weekly revenue per employee.
Conclusion: It is clear that there are massive costs associated with attrition or turnover and, while some of these are not visible to the management reporting or budget system, they are none the less real. The 'rule of thumb' appears to be very inaccurate indeed and, while it depends upon the category of staff, it is probably better to estimate around 80% of salary as a truer rule of thumb - and this will be on the conservative side.
What does this mean? Well it means that if a company has 100 people doing a certain job paid 25,000 and that turnover or attrition is running at 10%, the cost of attrition is:
(Total staff x attrition rate %) x (annual salary x 80%)
* 100 staff at 10% attrition means 10 people leave and are replaced each year.
* A replacement cost of 80% of a salary of 25,000 means the cost of each replacement is 20,000.
* The cost of turnover is therefore 10 x 20,000 or 200,000 a year.
* The oncost to the overall salary bill is 8%.
(Saving 8% of salary costs would make the average HR manager a hero.)
From India, Mumbai
Hi,
This is a very useful post. But I have a doubt here. I didn't get whether you multiply or divide the first part of the turnover equation.
Turnover = (number of agents exiting thejob(is it multiplied or divided??) average number of agents during the period) x (12 number of months in the period)
I am not sure if I have to assume that the first part of the equation is the part of the monthly attrtion calculation.. I may sound dumb... I am unable to figure that & hence asking. :)
Regards
From India, Bangalore
This is a very useful post. But I have a doubt here. I didn't get whether you multiply or divide the first part of the turnover equation.
Turnover = (number of agents exiting thejob(is it multiplied or divided??) average number of agents during the period) x (12 number of months in the period)
I am not sure if I have to assume that the first part of the equation is the part of the monthly attrtion calculation.. I may sound dumb... I am unable to figure that & hence asking. :)
Regards
From India, Bangalore
This indeed is a very helpful information however if i need to calculate the attrition% how do i do that?
what i use now is:
(number of attrition)/((Opening HC of the month)+(Closing HC of the month))/2
*** HC = Productive Headcount.
*** Promotion or Long leaves will not be included in this calculation.
Can someone tell me whether this is a correct one to use or it requires modification?
Thanks :)
From India, Pune
what i use now is:
(number of attrition)/((Opening HC of the month)+(Closing HC of the month))/2
*** HC = Productive Headcount.
*** Promotion or Long leaves will not be included in this calculation.
Can someone tell me whether this is a correct one to use or it requires modification?
Thanks :)
From India, Pune
I was searching the net and came across below motioned formula, but even I am not sure if this on is correct.
Confused:confused:
Please some one help
opening count: 100
New joinees: 50
Attrition: 20
Closing headcount:100+50-20=130
Attrition percentage=20x100/130= 15.38%
From India, New Delhi
Confused:confused:
Please some one help
opening count: 100
New joinees: 50
Attrition: 20
Closing headcount:100+50-20=130
Attrition percentage=20x100/130= 15.38%
From India, New Delhi
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