I consistently hear from contact center professionals that attrition in 2019 is higher than ever, and many new-hire classes intended to accommodate seasonal ramps fall short of recruiting goals.
But agent attrition has always been a burden on a company’s bottom line. When turnover runs rampant in the contact center, institutional knowledge is lost, productivity drops, the quality of service decreases, and employee engagement and morale go down. The impact also has a snowball effect resulting in high call abandon rates, customer dissatisfaction, and lost revenue.
The list of causes attributed to agent attrition includes the usual suspects — non-challenging or repetitive work, few career-growth opportunities, lack of recognition, excessive pressure to meet KPIs, and job dissatisfaction.
Those have always been causal factors, however, and do not explain why attrition is such a hot topic of discussion among contact center executives today. Instead, the reasons are three-fold:
1. Low U.S. Unemployment Rate
The historically low U.S. unemployment rate, currently 3.5 percent, is having a detrimental effect on employee retention, especially among low wage, entry-level positions like those found in contact centers. In those cases, turnover rates spike as competition for labor increases.
The reason is that a tight labor market provides fewer choices for employers while increasing opportunities for workers. Employees have a broader range of potential new employers to choose from, and the companies they leave behind are faced with a diminished range of replacement candidates as well as the need to invest more time and effort to identify successful recruits.
2. Rising Minimum Wage
Another issue affecting U.S.-based contact centers is the rising minimum wage. Several states are shooting for $12 per hour in 2020.
The general rule (for U.S. work) is to take the raw wage to the employee and double it to get a fully-loaded cost, so $12 per hour now becomes $24. Low unemployment rates put even more pressure on businesses to raise wages to retain employees.
3. Market Saturation
Market saturation rates are another factor that can significantly impact the performance and profitability of call centers due to employee attrition, wage inflation, and competition for labor. According to Site Selection Group (PDF), many otherwise desirable cities in the U.S. have reached or exceeded a healthy saturation rate.
The True Cost of Agent Attrition
Contact center industry professionals know that contact center turnover is expensive. The United States Bureau of Labor Statistics (PDF) recently posted the following national averages: workers aged 20-24 stay with an organization only 1.1 years (compared to 1.5 years just 15 years ago), and workers aged 25-34 stay 2.7 years (compared to over three years in the 1980s).
Research conducted by Quality Assurance & Training Connection (QATC) found that the average annual turnover rate for agents in U.S. contact centers ranges between 30 and 45 percent, more than double the average for all occupations — and some sectors show attrition rates in the triple digits.
The average cost to replace an agent in the U.S. is $8,780, according to TalentKeepers. When you multiply that by the high numbers of agents who leave their jobs within the first two years, the costs become astronomical.
Direct vs. Indirect Costs
We all know the direct costs of replacing highly-performing agents — advertising, screening, interviewing, onboarding, and training — but what is harder to factor are the indirect costs, which are equally important.
These are represented by lost productivity, loss of expertise and knowledge, the financial value of time used to find and hire the replacement employee, and the negative impact on colleagues and customers when a valuable employee leaves.
Think also of the effect on the customer. What is the difference, for example, in customer experience from a customer talking to a veteran agent as opposed to one that has just left nesting? There is a difference, but it’s not always easy to estimate.
One Cost-effective Solution
But there is a cost-effective solution: Diversification through outsourcing part of your contact center needs to an offshore or nearshore provider in an unsaturated market.
The benefits are several:
- Companies can create a market in terms of wages. Instead of coming into an area that is already defined, they can set the rate;
- Less saturation means fewer opportunities for contact center jobs exist. When a company enters a market, it opens up more opportunities for employment;
- Contact center sector growth in an unsaturated market can have a positive effect on the region’s economy.
Agent attrition is a critical problem among U.S. contact centers due to low unemployment rates, higher wages, and market saturation in many key locations.
The costs associated with recruiting, hiring, training, and onboarding new agents plus the indirect costs, such as lost productivity and the financial value of the time needed to replace an employee, can eat away at a company’s bottom line.
Contact center diversification in unsaturated markets may be the solution. At the very least, it’s an option worth considering.
A version of this post was originally published at Transparent BPO.