The Burden of Attrition

28 July, 2022



Identifying the true costs of agent turnover

By Jason Sterns, VP of Business Development

Fine print would make it easier.

If there was some fine print in a contract, then it would be easier to determine the true costs of employee attrition. But there is no fine print or even an appendix in a BPO contract to warn you of the hidden costs of high attrition at your contact center. Historically, tracking attrition rates has been a vague category in contact centers with imprecise or conflicting metrics contributing to an unclear line of sight of real attrition numbers.   

Ironically the true cost of contact center attrition can be identified in one number – the hourly agent rate a contact center quotes in its proposal. All too frequently, the final decision rests on the lower cost.

But is it really lower in the long run?

Let’s examine two contact centers – one that is asking for a $11 investment per agent per hour. The second option would be $14/hour.

To begin, when an agent walks, the attrition costs can be identified in several categories:

  • Advertising
    • Traditional and online advertisements add up when you are constantly looking for eligible candidates. 
  • Recruitment
    • Culling through resumes, attending job fairs and scheduling/conducting interviews takes time and resources.
  • Hiring
    • Background checks, more interviews and offer letters.
  • Training
    • Dedicated equipment and contact center facilities/training rooms.  
  • Training materials
    • Manuals, catalogs and background materials produced by the client or the contact center have to be updated and replaced constantly.
  • Training staff
    • Experienced staff from the client or the contact center need to prepare agents for the road ahead. 
  • Supervision
    • Close-quarter mentoring and coaching are necessary before agents can hit their full potential.

These are the ‘hard’ costs all contact centers have to manage when addressing attrition but these also have a wide range. For instance, Keith Ferrazzi of the Harvard Business Review calculates the total organizational costs of employee turnover range between 100% and 300% of the exiting employee’s salary. That is a wild swing of 200%.

His research on attrition further identifies the cost of replacing an agent is somewhere between $10,000 and $20,000 per agent. That can hit your bottom line pretty hard.

But there is a reasonable argument that the lower upfront investment of $11/hour increases all your hard costs downstream when agents become disaffected, disinterested and eventually disappear.

A client should ask why would a contact center ask for a $14/hour premium when it can be done for $11? It comes down to a series of emerging concepts that help reduce the long-term costs of your contact center.

A mid-sized or boutique firm pegging a $14/hour rate could be using the extra money to invest in its people and processes. These investments aren’t intangible; quite the opposite. They can be clearly quantified and reduce agent attrition and your long-term costs. 

Hidden Costs

  • Employee engagement
    • Staff and programs that places employee participation (engagement) at a premium. Programs could include surveys to gauge employee sentiment at specified intervals or during milestone events (i.e., work anniversaries) or employee events such as town halls. These could also be creative events where employees get to know one another in a social or relaxed atmosphere.        
  • Skills development
    • Online courses and self-learning can go beyond job-specific duties and responsibilities – even though that is a benefit of professional skills development. The skills can also extend to managing personal finances or stress. These types of programs focus on the individual and considers them more than just a one-dimensional employee.
  • Career Progression
    • This is a key area of investment for the contact center. By offering a clear career path for agents to progress through the ranks, to local management, the center is doing two things: 1) ensuring it has a stable of trained and readily available supervisors and managers who can lead other agents, and; 2) providing a career and not just a job. In many nearshore and offshore markets, contact center positions offer steady employment that many emerging economies are struggling to provide.

It’s also important to consider the ‘intangible’ impact attrition has on your contact center. Consider the impact employee turnover has on morale in your workplace. Agents see a constant churn of colleagues rotating in the workstations around them and they have to wonder about their chosen workplace. Plus, with constant attrition, the added workload on remaining agents and supervisors put adds additional stress.

Eventually, your customer relationships will suffer. The team composition of your program eventually falls apart and your brand will suffer because customer service will suffer. There is a direct correlation between low attrition and strong CSAT numbers. When your team is happy, your customers are happy.

In addition to actual attrition, there is also an underlying issue of ‘unengaged’ agents – these are an estimated 31% of agents and managers who are scanning websites and social media looking for another job. Your loyalty and retention will suffer when you ignore the impact an engaged employee base can have on your attrition and ultimately your brand.    

Finally, when you lose a trained and productive agent, you lose the ‘tribal’ or ‘institutional’ knowledge they have gained about your company’s procedures and also your client’s products and services. Sometimes the lower-cost investment isn’t the best long-term strategy for your brand.