• Recruitment Costs: These are the costs associated with finding and hiring new employees, including advertising job openings, reviewing resumes, conducting interviews, and processing background checks.
• 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.
• 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.
• Separation Costs: These are the costs associated with the departure of an employee, including severance pay, unemployment benefits, and the cost of processing the employee’s exit from the company.
• Onboarding Costs: These are the costs associated with getting new employees up to speed, including the cost of introducing new hires to the company’s culture, policies, and procedures.

Here’s an example:

If 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 as follows:

• Recruitment Costs: 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: Let’s assume that it costs $3,000 to train a new employee. With 100 new employees, the total training cost would be $3,000 x 100 = $300,000.
• Lost Productivity Costs: 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. (i.e. it takes 90 days for an agent to match the productivity of the entire group.
• Separation Costs: Let’s assume 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: Let’s assume 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.

Adding up all these costs, we get a total cost of turnover of $980,500.

What if I outsource?

We can hear the objection, “I outsource and don’t pay for attrition costs, this is the burden of the vendor.” While we have outlined the hard costs, there may be hidden costs associated with high attrition rates that are not immediately apparent that are impacting your business, including:

• Reduced Customer Satisfaction: High employee turnover can result in inconsistency in service quality, which can impact customer satisfaction and retention.
• Lower Employee Morale: High attrition rates can create a hostile workplace environment, lowering employee morale and engagement.
• 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.
• 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 for a contact center or call center can have significant hard and 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. Even if you outsource and aren’t subject to many of the hard costs, we can assure you the hidden costs are greatly impacting your business. It is crucial for call center managers to develop effective strategies to retain their employees and reduce attrition rates to avoid these negative impacts.

We have included a simple, free, Excel tool you can use to calculate your cost of turnover.

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