Here is a definitive method on how to calculate shrinkage – including the shrinkage formula and a free shrinkage calculator – as endorsed by industry experts, alongside information on how to apply shrinkage to the call centre. Note, this insight can also be applied to how to calculate shrinkage in a BPO.
What is Contact Centre Shrinkage?
Call centre shrinkage is a measure used in 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.
Shrinkage is any scheduled and/or unscheduled optimization/activities prohibiting employees from performing their duties.
How to Calculate Contact Centre Shrinkage
The Shrinkage Formula for BPO/Contact Centre
The ‘shrinkage formula’ (also known as ‘shrinkage calculation’) is as follows:
Shrinkage (%) = (Total Hours of External Shrinkage + Total Hours of Internal Shrinkage ) ÷ Total Hours Available × 100
Note, this is the shrinkage formula that can be used in Excel.
Shrinkage is normally expressed across a complete 12-month period.
Download our free Shrinkage calculator here.
What Is Included in the Shrinkage Figure?
There are two main components of shrinkage – external shrinkage and internal shrinkage, as explained below:
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.
For more of the basics on call centre shrinkage, read our article: 2 Minutes on… Shrinkage
How to Calculate a Shrinkage Percentage – With Example
Here is a worked example of the call centre 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% | ||
To calculate shrinkage in your contact centre, just like we have in the example above, download our handy Call Centre Shrinkage Calculator in an Excel format.
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) × 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) × 100 = 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.
Find out how to avoid other WFM traps like this in our article: 7 Deadly Sins of WFM
What Is an Average Shrinkage Figure for the Industry?
Most contact centre professionals seem to agree that shrinkage normally comes out between 30 and 35%.
In their Global Benchmarking Report Dimension Data give an average shrinkage figure of 35%.
Shrinkage vs Utilization
Shrinkage is another way of expressing what used to be called Utilization.
Utilization 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 Utilization figure of 70%.
For more information on utilization and the contact centre, read our article: How to Calculate Utilization
Shrinkage + Utilization = 100%
Some companies try to drive up utilization as a way to become more efficient, but that’s bad in the long run, as training is usually the first to go.
To learn why training is important even when understaffed, read our article: 12 Reasons You Shouldn’t Skip Training in a Short-Staffed Call Centre
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.
How to Control Shrinkage
Our community has also provided some words of warning over the use of call centre shrinkage.
Here is some key advice for controlling shrinkage in any contact centre, BPO or otherwise.
Part-Time Staffing
If you boil it down to just a percentage, you need to be careful to consider the impact of part-time staffing.
For example, an hour one-to-one is a much higher percentage of a person’s day when they only work four 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.
Contributed by: 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 calculated per FTE, but the part-time mix does change this value, as does any seasonality for absence.
Contributed by: Keith Stapleton
For more advice like this on improving shrinkage, read our article: Top Tips for Improving Contact Centre Shrinkage
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
Know Your Other Staffing Metrics
Don’t make the mistake of thinking that shrinkage and service level are the only metrics that you need when making call centre staffing calculations.
The best possible staffing calculations will also consider occupancy rates and average patience.
Thanks to Bob
Click here to use our Call Centre Staffing Erlang Calculator to find out how many staff should be in your call centre at a given time.
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.
Find out how to calculate other important contact centre metrics by reading our articles:
- How to Calculate Contact Centre Service Level
- How to Measure Call Abandon Rate
- How to Calculate Contact Centre Spin
Author: Jonty Pearce
Reviewed by: Hannah Swankie
Published On: 16th Jun 2023 - Last modified: 28th Oct 2024
Read more about - Workforce Planning, Dougie Cameron, Downloads, Editor's Picks, Erlang Calculations, Gary Saddler, How to Calculate, Keith Stapleton, Printable, Robert Tuck, Shrinkage
This was a great overview of shrinkage, thank you!
Very good !
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 !
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
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.
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
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
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.
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.
Love this article. Very helpful
Good stuff… thank you!
Hi Jamson & Qutaibah
I believe that the calculation is as follows:
Absenteeism/ Lateness = 1Hr/week,
While the total working weeks per year for a single agent is (260-24-8-8)/7 = 220/7 = 31.43 Weeks
So, there are (31.43 Absenteeism/Lateness) Hours/year.
31.43/24 Hrs. = 1.31 Days/Year
Hany
I’m not quite sure I understand the hourly calculation. How do you only get 9.7 days of shrinkage per year if you have 7 hours of Other Activities per week? Shouldn’t the days be closer to 45, since that’s almost a whole day per week?
I agree with most, except the Utilization formula and the categorization. Coming from a Finance and Industrial Engineering perspective, I can understand why the “spend” utilization is configured as above, as reps are as expensive to payroll when occupied as when idle, but Utilization is typically the USE of resource, thus would be calculated as Occupied time/payroll schedule time, not Availability time/payroll schedule time.
Secondly, I find that dividing Shrinkage into Productive vs Unproductive works better. Productive being training, 1:1’s, coaching, team meetings, backoffice inventories, those things that produce outcomes and/or investments in our resources. Unproductive would be both the internal (nonwork aux codes, unsched Brk aux, System aux, etc) and external (tardy, absent, PTO, etc). This approach provides better guidance to controllable vs uncontrollable shrinkage control initiatives as well.
Just my 2 cents…
I know the standard is to apply shrink to requirement, then staff up to this requirement. I’ve been trying to understand the benefit of adding shrinkage to the requirement rather than creating a “raw” requirement and applying shrinkage to the scheduled heads for planning. I can see that they give different numbers, but I’m not sure which is correct or “better” for planning.
Excellent view of Shrinkage ! Thanks a lot for this sharing ! 🙂
Thomas – You need to do it to both. Adding shrinkage to the requirement tells you how many people you will need to staff, to NET out a butts in seats requirement. Think of it like a goal. Where as, applying it to existing staff, tells you how much you will NET/need from the pool you have. Two difference representations.
REQ = What do I need vs what do I need loaded.
Scheduled Heads = what do I have vs what will I NET out after shrinkage or need w/ shrinkage.
In presentations, I would opt for one avenue vs both for reflecting shrinkage. It will create a level of confusion when comparing the numbers.
In regards to which approach is better is really a preference discussion.
-A