Replacing workers is expensive.
PeopleMatter, a workforce solution provider, reports hourly-worker attrition levels of 49%. Their study concludes that the per person dollar cost of this turnover – even for low-wage, service oriented roles – is $4,969. Starting and restarting efforts to recruit and train new workers is costly. The negative effects of these processes are compounded as both the new employees and their managers or trainers are taken away from primary responsibilities.
A similar study from the US Contact Center Decision Makers’ Guide reports the average annual turnover rate for a Customer Service Representative as 29%, with voluntary quit rates representing 60% of this turnover. Sector breakdown paints an even more dramatic picture: from a high of 53% for third party TeleServices providers, to 21% in the Financial Services sector. All of these rates are significant and stand in stark contrast to the all-industry U.S. average of 17.8%.
QATC, a knowledge and research sharing hub for call center professionals quantifies the financial bleed created by attrition. Their work with Deloitte cites even bleaker financial outcomes for call or contact centers, suggesting that it takes $12,000 to replace the average non-professional or frontline person. A management level employee may cost three times that.
The cycle of unwanted attrition and role replacement is inarguably costly – and for call centers, nothing erodes margins as efficiently and unnecessarily.
Given that attrition is as common and costly as research suggests, why highlight what is already long-known?
Because companies generally acknowledge the financial implications of attrition, but underestimate the significance. As well, they often fail to recognize that the financial component is just one variable in the impact calculation. So severe are the others that ignoring them may put business lines in peril.
Consider the organizational impact that instability and issues with continuity and service delivery created by the constant inflow of new hires has. Left unaddressed, these all but guarantee poorer customer experiences, high operating costs, lower quality, stunted leadership development and a disengaged workforce. The result for many centers: a vicious, self-perpetuating cycle of turnover, expense and culture decay.
The majority of the U.S. workforce (51%) is not engaged, according to Gallup's State of the American Workplace report. This group is marked by indifference toward their job. Herein lies the risk for employers, as these individuals can tilt the balance of attrition and resulting financial and organization health. This “show me” group is looking to be inspired and moves the cultural, productivity and service paradigm – good or bad – when engaged.
While attrition dims the potential of contact or call centers worldwide, it is helpful to understand that attrition is not the problem. Attrition is symptomatic.
For centers embroiled in years of this cycle, this reality is hard to fathom.
In Furstperson’s research, attrition is found to be a byproduct of other center and labor pool issues. While fixes are not easy, recognizing the driving forces is a critical first step down the path to solutions. Reducing attrition (and similar, non-attrition behaviors like absenteeism and tardiness) and actually improving factors that create healthy workplace, move the at-risk workers toward engagement and lower bottom-line impacts.
As Forbes writes, “[...] evaluating the statistical relationship between turnover and financial outcomes doesn’t require a PhD.” Most challenging is understanding the root causes of attrition and identifying doable reduction opportunities.
Over the next two weeks, we will be building on The Attrition Series and how companies can transform existing cultures of worker attrition.
These posts will move from highlighting the seriousness of attrition, to reviewing contributing factors and conclude with perspective on how to take make gains in retention and performance – while still meeting recruiting targets.
What do you think? Leave a comment, and make sure you check out the rest of our series on Reducing Attrition!
Topics: Call Centers