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A Primary Matters Total Cost of Ownership/ROI Analysis . . .

The Impact on Contact Center Budgets and Headcount of
Changing the Profiles of New Agent Recruits

December 9, 2002
Primary Matters, Inc.
(902) 794-7095
www.primarymatters.com

Executive Summary
Impact of Changing New Agent Hiring Profiles on the Total Budget
Impact of Changing New Agent Hiring Profiles on Agent Population
Baseline Average Quarterly Headcount by Job Type
Scenario Average Quarterly Headcount by Job Type
Baseline Three Year Quarterly and Annual Internal Budgets
Scenario Three Year Quarterly and Annual Internal Budgets

Executive Summary

In large multi-site contact centers, there is often high agent turnover. Some organizations may loose as many as 50% of their new hires in the employees’ first year of work.

By changing the profile of new recruits, several large companies have been able to make significant changes in this agent retention rate. In addition, they have been able to have productivity increases in this group of new agents. There is a cost – the agent recruitment process is more expensive, and many of these companies have outsourced their agent recruitment process to specialist organizations that focus solely on recruiting highly profiled agents. But even with this upfront cost increase, the overall budgets can be reduced by 2% to 3%.

In this analysis, which is based on a compilation of actual projects at several very large contact center organizations, the cost savings result from three factors:

A reduction in 1st year employee turnover rates of 25%.
A slight increase in 1st year employee productivity of 2%.
An increase in the costs of new employee recruiting.

These changes phase in slowly, over a twelve-month period, as the composition of this 1st year group transitions adding new employees who fit the high job retention and productivity profile. As a result, the full benefits of this change in employee hiring practices do not fully materialize until the 2nd year of this planning period.

Also note, that this is especially important in organizations that have a long initial training, for instance of greater than five weeks.

The result of this change, for instance for an organization that has 5,000 agents over multiple sites is large:

There is an annual budget savings of 2.1%, or about $5 million dollars on a budget of $240 million per year.
The total number of agents, by mid-year two, declines by 118 agents.

The following two tables provide a summary of the changes that occur over the three-year planning period addressed in this model.

Impact of Changing New Agent Hiring Profiles on the Total Budget

Annual Budget Comparison, Capitalized Investment
	Year 1	Year 2	Year 3	Total over 3 Years
Baseline	$216,592,021	$241,462,839	$267,787,883	$725,842,742
New Agent Hiring Practices	$213,976,916	$236,476,911	$262,111,613	$712,565,439

Difference between Baseline and New Agent Hiring Practices	$2,615,105	$4,985,928	$5,676,270	$13,277,303

Impact of Changing New Agent Hiring Profiles on Agent Population

Total Average Quarterly Headcount

	Q1FY02	Q2FY02	Q3FY02	Q4FY02	Q1FY03	Q2FY03	Q3FY03	Q4FY03	Q1FY04	Q2FY04	Q3FY04	Q4FY04
Baseline	5,401.4	5,506.4	5,618.1	5,729.9	5,841.9	5,957.3	6,075.9	6,197.8	6,323.0	6,451.5	6,582.9	6,717.1
New Agent Hiring Practices	5,376.9	5,459.6	5,547.1	5,633.0	5,730.6	5,839.2	5,952.7	6,071.1	6,194.4	6,322.2	6,453.8	6,588.7
Difference	24.5	46.8	71.0	96.9	111.3	118.1	123.2	126.7	128.6	129.3	129.1	128.5

Budget, Headcount and Work Activities in this Example Contact Center Organization

In creating this analysis, a moderately sophisticated customer support organization is used. It has multiple sites, and in this case, the agents totaled 5,000 at the beginning of the 3-year plan. This type of environment would be found in the health care, insurance, financial services or parts of the high tech industries. As such, there is significant new agent training required, in this analysis 10 weeks is used, before an agent is able to do useful work for the contact center.

The recruiting process is in-house in the baseline (before the transition). In the Scenario (after the transition to the new hiring practices), the recruiting process has been partially replaced with an outsourced recruiting process with a strong focus on targeting a much larger pool of potential employees and profiling them for two primary factors:

Job Retention – with a goal of cutting the 1st year, new agent job loss by 25%, from 4.17% per month down to 3.12% per month
Productivity – with a goal of the new employees having a slightly higher productivity. This analysis has increased the new agent
productivity by 2%.

The costs of such hiring practices are higher. A portrait of the Baseline and Scenario agent profiles is in the following table.

A Profile of the Agents’ Compensation and Training

Job Type	Employee Headcount at start of 3-year plan	Base Pay	Total Comp, including benefits	Percent of Employees leaving their job per month	Average Time on the Job	New & Ongoing Training	Vacation, Holidays, etc. per year

Agents in 1st Year of Employ	833	$10.10 per $26,000 per year Hour; $21,000 per year;	$26,000 per year;	4.17% per month, changing to 3.12% in the Scenario	24 Months initially; changing to 32 months under the new hiring practices	New employee Training - 10 Weeks; Ongoing Training per Year - 1 Week	5 vacations days; 10 Holidays; 3 Unplanned Absence Days;
Agents with more than 1 year on the job	4,167	$12.50 per $32,000 per year hour; $26,000 per year;	$32,000 per year;	1.67% per month	60 Months	Ongoing Training per Year - 5 days	10 Vacation days; 10 Holidays; 3 Unplanned Absence Days;

The employee population for the customer contact centers, before changing the new agent hiring practices, is shown in the following table.
As a note, the Supervisor to Agent Ratio is roughly 14.5, with a 1 to 12 ratio for 1st year agents and a 1 to 15 ratio for agents with more than 1 year of experience.