Managing Shrink, Overtime, and Undertime

Ric Kosba, Ph.D. Vice President, Genesys

In many ways, the concept of right staffing our contact centers is straightforward and simple: we want the right number of agents to sit down at their desks every week. But given the ebbs and flows of our volumes and handle times, given the seasonal behaviors of our employees, given the unpredictability of our customers and events, and given the complexity of our communication channels, calculating the “right number” isn’t always straightforward and simple.

But we have tools that can help us. Years ago, I was schooled by two of the smartest folks in our industry and SWPP board members, Michele Borboa and Duke Witte, on managing uncertainty. They had a simple concept that Duke called “club length,” which helps enable operations to absorb business variability. The concept is this: staff to ensure that if needed, you can flex up or down with overtime and undertime. Your staffing doesn’t need to be perfect, but it needs to be in the center of your variability.

When developing hiring plans, the goal is not to be exactly right, but it is instead to be in the middle enough that the operation’s ability to flex will handle any unexpected events. It requires you to know how much overtime and undertime your organization will voluntarily take and it recognizes that chronic use of overtime and undertime will have adverse effects. The percentage of overtime and undertime that can be quickly called upon to address shortages or overages is the club length. If your organization can flex up, using overtime, say 5% of available staff, and flex down 7%—the club length is +5/-7.

This doesn’t mean that you do not plan for overtime and undertime. Clearly there are times when being understaffed and using overtime is a budgeted management decision. Similarly, being overstaffed is a normal condition given our industry’s seasonality. It makes sense to hire in order to consciously flex up or down, and in most instances, with a decent forecast, we will be able to quantify how much flex is truly required well ahead of time. But it certainly is smart to always be staffed well within your club length.

Managing to Seasonality

Unless your organization can swing staffing dramatically through the use of overtime and undertime, club length doesn’t relieve us of having to actively manage the seasonality of our business. We still need to develop hiring plans, overtime plans, controllable shrink plans, and undertime plans for every line of business and staff group. Club length is best used for unexpected variability.

The best staff plans include hiring, overtime, undertime, training, overtime, vacation, and outsourcer plans as part of the budget, and from one week to at least eighteen months. Clearly these plans also need to be managed and altered as new data and new forecasts are developed weekly or monthly. It has to be a living process.

So given that week over week, our demand can vary significantly, how do we best manage to our peaks and valleys? We have to use the levers available to us: controllable shrink, overtime, vacation, outsourcers, undertime, hiring, and natural attrition. But here is the kicker—it should be planned all at the same time. All of these levers enable us to put together very good plans, if we consider them together.

If you are using staffing optimization algorithms to develop optimal hiring, overtime, and undertime plans, then they are best used in conjunction with each other. These algorithms are powerful tools that every company should consider using—they always develop significantly more efficient staff plans than an analyst can develop in a spreadsheet.

Managing Shrink Medium-Term

Having this week-over-week operational plan presents contact center managers with the opportunity to do something unusual—take action for variability ahead of time. Workforce planners that work for a large healthcare provider told a story at SWPP a few years ago that I found very instructive. They demonstrated how actively managing their seasonality weeks ahead of time can drastically reduce their service variability.

They developed accurate and efficient long term plans and used overtime and undertime optimizers to pinpoint their overages and underages into the medium term future. They believed their numbers and their plans, and so were able to act on them, not today, but weeks into the future. For instance, when they saw that they expected to require undertime six weeks out, they would look for ways to either make those extra hours productive, by, say, coordinating extra training, or ways to eliminate the overages through, say, unpaid vacation or leave. When they saw they needed overtime, they would look to ways to reallocate personnel or offer overtime well ahead of the need. By coordinating these ahead of the requirement, they were able to reduce the chaos associated with being overstaffed or understaffed.

The Real Benefit

This same terrific team developed very interesting analyses that showed the benefit of their planning and management efforts—they reduced the variability of service delivery, all the while improving the efficiency of their operation. They showed me an interesting set of performance graphs that showed service variability over time—and the number of intervals that they missed their service goals shrunk dramatically after optimizing their plans and actively managing their medium term.

Another graph they showed me—and that all of us should develop—is a scatter plot with occupancy (a proxy for efficiency) on one axis, and service level or ASA on the other (a proxy for customer experience). This graph will show you whether you are clustered in the best zone—the upper right portion that is where high efficiency and high service organizations operate.

The real result of managing your shrink over time is improved consistency of service delivery, a less-stressed workforce and workforce management team, and, most importantly, lower costs to the company.

Ric Kosiba, Ph.D. is a charter member of SWPP and vice president of Genesys’ Decisions Group. He can be reached at or (410) 224-9883.