The last article in this series examined important staffing tradeoffs from a customer and frontline staff perspective. Specifically, the article looked at how service and speed of answer is impacted by staffing numbers, as well as how staff occupancy changes when staff are added or removed. This article will look at staffing tradeoffs from senior management’s perspective, with most attention focused on the financial implications of staffing decisions.

The service and occupancy concerns outlined in the prior article are not just important to customers and frontline staff. Senior management concerns include customer and employee satisfaction, so they too will be considering service and occupancy tradeoffs.

In addition to these tradeoffs, the management team will also be watching the financial implications of staffing decisions to manage bottom-line costs. Call center management is about managing by the numbers, and the most important number of all may be the number of staff in place at any given time to handle customer contacts. By far the biggest cost of call center operations is the personnel expense, so getting the just right number of staff is critical. Too few staff can mean poor service and long delays, while overstaffing results in needless spending for labor.

While other articles have examined the process of budgeting and overall FTE planning, this article will address more of the day-to-day cost implications of staff decisions.

When considering call center operational costs, it is common to focus only on labor costs. While that is the biggest cost, there is another expense that has an overall impact on the bottom line. That cost is the telecommunications cost of delivering the calls into the center. For many centers, there is a cost for telecom facilities, as well as a usage cost, particularly if the center provides a toll-free number for customers to dial to reach the center. This telecommunications function and cost is often overlooked since it typically belongs in the IT/Telecom area, but it is indeed a company bottom-line cost that should be considered when making staffing decisions.

Let’s take a look at how a staffing decision can impact this telephone usage cost. The table outlines a simple hourly scenario with 400 calls and an average handle time of 180 seconds, equating to 20 erlangs of workload. As seen in previous articles, as staff numbers decrease, the average delay time increases. This is important from a service perspective of course, but is also important since every minute of delay time results in a telephone usage charge.

Assume that the desired staffing is 23 staff to meet an average delay goal of under 30 seconds. Now look at the incremental increase in terms of delay if only 22 people are in place versus 23 people. The difference in queue time is 51 seconds versus 25 seconds – a difference of 26 seconds. If this increased queue time is multiplied by 400 calls, that is an increased queue time of 10,400 seconds or 173 minutes. Apply a cost per minute of 3 cents per minute for inbound toll-free services costs and that is an additional $5 per hour for telephone costs alone.

There are a few simple steps of calculating the costs of understaffing.

1. Determine the additional time spent in queue – the ASA difference – when staff are subtracted.
2. Multiply ASA difference by the number of calls.
3. Calculate the equivalent number of minutes.
4. Apply the average cost per minute of toll-free telephone service.

Apply these steps to determine the additional delay time cost if there are two fewer staff in place than planned.

1. Determine the additional time spent in queue – the ASA difference – when staff are subtracted. 137 – 25 = 112 seconds per call
2. Multiply ASA difference by the number of calls. 400 x 112 seconds = 44,800 seconds
3. Calculate the equivalent number of minutes. 44,800 / 60 = 747 minutes
4. Apply the average cost per minute of toll-free telephone service. 747 x .03 = $22.41

In this example, the incremental cost of understaffing by two people is over $22 per hour for the additional time spent in queue.

Costs of Understaffing

The previous example showed the potential hourly telephone costs associated with being understaffed. These telephone costs can really add up when the center is chronically understaffed.

In addition to these “hard costs” of understaffing, there are several other costs that are real, but harder to quantify.

It has been proven that when a center is understaffed, the occupancy rate is typically higher than desirable and the staff are faced with high workload and little idle time between calls. This results in a higher handle time, either due to extension of talk time, or more likely extended time in after-call work state. With this extended handle time, delays are longer and staff are less available, meaning the costs are even higher than calculated above.

In addition, with longer wait times, customers may become frustrated with long wait times and complain once their calls are answered, driving up handle time. Or they may abandon the call after a long wait time to call back later, creating double the workload per call.

Revenue Implications

The other side of the financial picture has to do with the revenue implications.

Having insufficient staffing can definitely impact revenues in several ways.

Here are three possibilities for how revenue may be impacted in an understaffed situation.

1. First, callers may abandon if the queue time is long. There may be revenue associated with that call or perhaps future calls.
2. Second, when understaffing occurs, there is less time to devote to upsell opportunities if agents feel rushed to get to the next call.
3. Third, if poor service is a chronic situation, there may be a poor service reputation preventing calls in the first place.

Staffing with a Profitability Model

Staffing for a call center typically involves calculating workload and then selecting a staffing number based on a speed of answer goal. However, for those centers that generate revenue in the call-handling process, a smarter way to arrive at staffing numbers may be to calculate the point at which net revenues or profits are maximized.

In the following scenario, consider the best staffing solution.

There are 400 calls and each is worth $40, resulting in potential revenue of $16,000.

Note the number of staff from previous examples, along with the associated ASA and number of abandoned calls.

The second section shows the costs associated with each scenario. There is a staff cost of $20 per hour. Telephone cost is calculated by taking the talk time and queue time multiplied by 400 calls and applying a cost per minute of $.05. The abandoned call cost is calculated by multiplying the number of lost calls by the value per call. These three items (staff cost, telephone cost, and abandoned call cost) provide a total cost which is subtracted from the potential revenue to arrive at net revenues.

Look at where the net revenue is maximized. In this example, a better solution is to put 26 staff in place in order to provide the best service and minimize abandoned calls, where the traditional service staffing model would have placed 23 staff in place.

In this example, with calls worth $40, it clearly makes sense to answer them, especially with staff costs at $20 per hour. When call values are lower or staffing costs are higher, there will not be as many staff justified, but it may still be financially smarter to put more staff in place than required by service goals in order to minimize abandons and maximize revenues.

These last two articles have focused on the many tradeoffs to consider when determining the right number of staff to put in place. It is important to consider the needs of each of the call center stakeholder groups – customers, frontline staff, and senior management. The right staffing solution will provide the best balance of service, occupancy, and cost.

The next article in this series will take these staffing requirements and discuss the many items to be considered when creating staff schedules.

Penny Reynolds was Co-Founder of The Call Center School and is a popular speaker and writer in the area of call center operations. Recently retired, she serves as an Educational Advisor to SWPP, continuing to provide thought leadership and training to the workforce management community. She can be reached at pennyreynolds00@gmail.com or at 615-812-8410.