Module 3 Reducing resource cost
Area 2: Reduce agent payroll
costs |
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Background
This series on cost control
addresses three components to call center costs: handle
time, cost of resources and volume of
contacts. In this module, specific recommendations are
made for systematically reducing resource costs in your
contact center by reducing agent payroll costs. The descriptions and action steps described
below are summaries of the detailed information and
checklists provided in the
Cost Control e-Toolkit.
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| Reducing resource
costs |
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| Reducing the
cost of resources includes three primary areas that relate
to the cost of people, equipment or facilities necessary to
handle customer contacts. The major branches include:
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Area 1: lower cost channels |
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Area 2: agent payroll costs |
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Area 3 : overhead costs |
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| Area 2 - Agent
Payroll Costs |
| Reducing
payroll costs is a more problematic area for cost reduction,
but should not be overlooked given that payroll costs make
up 70% to 80% of the total costs for a majority of contact
centers. In some cases, lower payroll costs can be
achieved without adverse affects on service quality or
turnover. In other cases, there is a clear trade-off between
cost and service quality. Methods for reducing agent payroll
costs include:
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| 1. Reduce hours
of operation |
| 2. Increase
agent utilization |
| 3. Reengineer
contact handling processes to allow for lower
payroll cost structure |
| 4. Reduce base
salary for new hires |
| 5. Reduce
staffing levels |
| 6. Relocate or
add center in lower labor cost area |
| 7. Reduce
benefit offerings |
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| Reduce hours of operation |
| Although not a popular alternative from a customer service
perspective, reducing the hours of call center operations
directly reduces payroll costs. The historical trend has
actually been in the other direction (to extend hours of
operation to improve service access to customers). With the
deployment of improved self-service options, including new IVR and speech recognition technology and improved web
services, call centers may be able to reduce hours of
operation for live agents.
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| Increase agent utilization |
| Agent utilization rates are directly related
to payroll costs. If agent utilization increases, then
staffing levels decrease and payroll costs decrease. Agent
utilization is defined here as the fraction of available
work time that agents are handling customer contacts.
Several options are available for increasing agent
utilization. Some of these options may have adverse affects
on your customers or employees and therefore must be
evaluated carefully.
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| Reengineer contact handling processes to
allow for lower payroll cost structure |
| If your contact center has multiple levels
of agents based on knowledge and skill, this strategy
may reduce the cost of agent payroll. Essentially this
strategy is designed to route contacts, based on contact
type, to the lowest cost agent that can handle these
contacts. The goal here is to reduce the staffing levels at
higher paying job levels and increase the staffing levels at
entry-level or lower paid job levels. You may be able to
create a new job level and job description to handle some
contact types. You could then hire new employees into this
role at a lower base salary then existing employees.
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| Reduce base salary for new hires |
| Depending on your labor market and area
conditions, reducing the base salary for new hires may be an
option. This strategy may also be employed if significant
investments have been made in new processes and technology that lower-skilled or less experienced employees
will implement. Another
alternative is to hire new part-time employees rather than
full-time employees. In many cases part-time employees are
less expensive than full time employees. |
| Reduce staffing levels |
| Reducing staffing levels is the most general
area for reducing agent payroll costs and is often the
result of other improvement initiatives. We address this
area specifically and independently of other potential
initiatives covered in this tutorial because call
center managers always have the option of reducing staff and
balancing the effects of this change with declining service
levels and increased abandon rates. |
| Relocate or add center in lower labor
cost area |
| Employee costs vary dramatically from region
to region. Relocating or opening a second call center in a
lower cost labor market area can greatly reduce labor costs.
In some cases a satellite office can function as a second
location. Future growth of the call center can then be
evaluated to determine which call center operation offers
the lowest cost structure. |
| Reduce benefit offerings |
| Reducing
benefit offerings to employees, or requiring employees to
pick from benefit options or requiring employees to pay for
additional coverage. This
strategy has come to the forefront for many companies as the
cost of health care continues to rise dramatically year
after year. |
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| Don't reinvent the
wheel! |
Controlling Call
Center Costs e-Toolkit |
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"A truly comprehensive guide for
reducing call center costs.
A resource with this perspective is long overdue."
Gerald Tschikof, Founder of Center Partners
Order this e-toolkit and have it
delivered straight to your Inbox! No shipping costs! |
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http://www.call-center.net/benchmarking/index.pl
Module 1
, Module 2 and
Module 3 of this
series.
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Next week: Area 3
Reduce Overhead Costs
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