Call center managers need to understand that successful management means understanding the complex trade-offs inherent in the sophisticated call center operating environment, where the proper allocation, dispersal, and treatment of the human resource are fundamental requirements. Quantifying and increasing the value of workforce optimization solutions is important and needs to be addressed. Typically, analysis focuses on software and infrastructure investments that will yield greater efficiencies resulting from automation. Some call center product vendors, however, take a different approach that assesses the return on investment in the human resource, the employees in the call center.
Personnel costs usually account for 70 to 80% of overall operational expenses in contact centers. Leveraging these personnel resources efficiently through workforce optimization solutions can potentially provide significant returns. However, most models for assessing value creation only consider the benefits derived from streamlining the processes of forecasting and scheduling call center staff to meet service goals. These models may result in significant gains through the automation of various functions, but they fail to address the real complexity of workforce optimization and are far too simple to portray accurately the real meaning of workforce optimization.
The major factors involved in managing and maximizing CSR productivity and the quality of customer interactions while maximizing the number of contacts handled per agent hinge on the ability to match the volume and type of customer contacts precisely. These factors include availability of agents by skill type and contact media type (e.g., e-mail, phone, or fax). Done effectively, the returns for each call can be maximized and result in a maximization of returns for the entire call center. (see Figure 3.7)
Figure 3.7: Ascending levels of CSR skills experience.
To paraphrase a well-known authority on workforce optimization, Dr. Richard Coleman, founder of Coleman Consulting Group, it takes an organization as sophisticated as a contact (call) center to show how developing strategic staffing plans relies on understanding the complex trade-offs inherent in each staffing scenario. The effects of seemingly insignificant staffing changes are far-reaching. Staffing plans dictate the kind of service customers receive and, ultimately, the profitability of customer relationships. The implementation of best practices and an understanding of the mathematics behind workforce optimization, as described previously in this chapter, are essential to successfully leveraging the center's human capital.
Most call centers lack the tools to assess the rationale behind their service-level agreements effectively. As noted previously, government regulation dictates the service level required in some industries, for example, public utilities. Missing the service commitment in these industries can result in fines and subsequent damage to businesses. In other, unregulated sectors, most organizations set service goals according to industry benchmarks, which can be a somewhat arbitrary process. However, the difference between 70 and 80% of calls answered in 20 seconds is recognized by customers who communicate with the call center. On the other hand, the marginal benefit to the customer of moving from 91 to 93% of calls answered in 20 seconds may have significant cost implications and not make much tangible difference in the quality of the customer experience. What is also lacking from these arbitrary models is the ability to quantify the significant customer loyalty and profitability gains, above and beyond efficiency gains, that an enterprise can expect to achieve by optimizing its workforce.
The automation of workforce measurement is intended to ensure that customers remain loyal, that a mutually profitable relationship exists and is retained, and that the impact of workforce optimization will not lead the company into an unprofitable or nonviable direction. These objectives can be realized by establishing and sustaining a strong customer experience. The process begins with the people who most frequently interact with customers—call center employees—the mangers, supervisors, and CSRs who are the front line of customer contact.
By strengthening the link between employees and customers, workforce optimization enhances profitability. The call center is often the only means for the organization to regularly interact with customers. Unfortunately, the typical working environment of a call center does not foster a harmonious relationship between the company and the call center employees, for several reasons:
Limited work space
Intense and fast-paced activity
The perception of most employees of their function within the enterprise, a perception that often belies the important role of the call center employee in the organization.
Working in a call center can be a thankless job, and a reflection of this fact, noted previously in this book, is the extremely high staff turnover relative to other industries—ranging somewhere between 20 and 35% annually. In many centers, CSRs are treated as nothing more than an overhead cost rather than as critically important to increasing enterprise profitability. This view is changing as corporate executives realize the importance of customer relationship management (CRM) and the call center role to corporate CRM strategy. (Chapter 6 describes in detail the contribution of call centers and call center employees to an organization.) Organizations that are able to channel the human potential of the call center realize a significant benefit from this corporate resource. Those that succeed in positively influencing employees' attitudes about their jobs begin by including more flexibility and improving job recognition. Employee job satisfaction has been demonstrated to be one of the most significant determinants of the quality of customer relationships.
Many call center employees believe that they have little control over their own schedules and even less over how their current position might translate into a career path with future growth opportunities within the organization and beyond. When questioned about what can be done to improve their job satisfaction, the vast majority of employees cite increasing recognition for the important work they do and providing more flexibility in scheduling to allow for outside commitments. Most CSRs would also like to have the opportunity to schedule their own enrichment training, to improve their skills, or to learn about emerging technologies or products that may assist them to advance in their field of employment. They also want to be able to move into higher-paying or more strategic positions within the organization. In some centers, higher-skilled positions command higher salaries; for example, CSRs trained to handle e-mail customer contacts often earn more than those responsible for phone communication alone.
Naturally, a certain percentage of CSRs will always perceive their work as a short-term job rather than as a career, but improvements in working conditions can substantially impact the turnover resulting from CSRs changing jobs for slight improvements in their work environment. Anecdotal evidence from a Gartner research report indicates that 85% of CSRs who leave their organizations leave of their own volition, while only 15% are terminated due to poor performance. Of the agents who leave on their own, some move on to other opportunities for reasons beyond employer control, for example, a career change. It would be impossible and even undesirable to eliminate the natural turnover of the poorest performers and those employees looking for different opportunities. In many cases, however, CSRs don't leave companies, they leave managers!
The experience of call center managers and the results obtained form research reports point up the fact that a significant amount of employee turnover can be influenced by the employer. Experienced call center managers know that the nature of the call center industry will always produce a higher turnover rate than other industry sectors. The Gartner research report concludes that call center turnover for nontechnical agents will probably never fall under 10–12% per year because of natural turnover. If this statistic is valid, there is still a substantial percentage of employee turnover that falls into the category of controllable turnover. Call center turnover in some industry sectors ranges as high as 50%; the controllable turnover percentage is therefore quite significant. The challenge for call center management and for the corporation's human resources department is to determine the personnel policies that are most effective in reducing employee turnover.
One of the keys to reducing the controllable turnover percentage is to understand and respond to the changing way employees view their jobs. There is a requirement for a new approach to employee concerns and, to paraphrase Peter Drucker, it is change in the way companies need to treat employees ... organizations need to market membership (employment in) their companies at least as much as they market products and services. People need to be attracted, recognized, and rewarded. In the call center environment, increasing flexibility and allowing for a career path are two ways that turnover can be curbed and a reputation as an employer of choice can be gained—a reputation as an employer with such high levels of employee satisfaction that employees refer the business to potential customers and employees alike.
Some workforce optimization systems offered by vendors of call center services and products provide the tools and best practices needed to increase efficiency and improve employee satisfaction while meeting business goals and objectives. By empowering employees to manage their own time and providing some information on how their day-to-day activities relate to their longer-term career goals, these solutions increase employee satisfaction and loyalty. Some workforce optimization products have a training component as well that offers opportunities for training on new systems or products—within defined parameters—to meet customer service demands and to satisfy employees' desires for more control over their careers. These products include training for new and existing employees, giving them the skills necessary to meet the requirements of critical positions that need to be filled. This pays off in greater efficiency for the organization because it spends fewer resources on recruiting for new positions.
Call center analyst Paul Stockford of Saddletree Research has described how CRM has made companies realize that customer interactions with contact or call center employees have strategic value. As a result, the strategic role of these employees is rapidly being recognized. The result of a well-managed scheduling program—one that considers both customer and agent attributes—has the extended effect of building loyalty among contact center agents as well, with the resulting economic benefits flowing straight to the bottom line.
The long-term effects of increased employee loyalty often have a greater impact than the profitability gains resulting from more effective use of training and recruiting dollars. Long-term employee loyalty is critical to retaining loyal, satisfied customers. Satisfied employees are more likely to refer an organization to friends and family, with the potential for new customers as well as sources for recruiting new employees.
As noted, the average annual turnover in call centers is between 20 and 35%, and companies spend an average of $6,000–$8,000 on recruitment and training per agent. Even a marginal improvement in employee loyalty has the potential to generate considerable cost savings. But significant as these numbers are, they do not begin to quantify the tremendous financial benefits of the productivity gains that result from employee tenure. Especially during periods of economic uncertainty, when shareholders of publicly traded companies look critically at costs and earnings, controlling labor expenditures becomes even more important. Because loyal employees have critical customer and corporate knowledge, the benefits of their loyalty during these times quickly spread throughout the organization. Thus, using effective human resource practices and policies to keep employees satisfied results in knowledge and skills staying within the organization and their continual leveraging to serve customers.
Employees with what Aberdeen Research refers to as categorical knowledge are able to immediately recognize customer needs and act decisively and appropriately to satisfy them. These employees are far more likely to resolve issues on the first call or contact than less experienced agents with the same skill. Even the most talented new employee lacks the intuition and skills that come only from experience. Veteran employees are valuable because their experience and corporate knowledge translates into less time spent on each contact and greater overall productivity. A recent study by the University of Calgary further confirms the connection between customer satisfaction and employee training and tenure. The study showed that highly trained generalist agents pulled in a 22% higher level of customer satisfaction, and agents with even more specialized training average 11% higher customer satisfaction than generalists. These results demonstrate that training is very important and advanced training is even more important!
Employees with categorical knowledge are of benefit to the organization because they have gained experience and a solid understanding of the company's business as a result of the years spent with the company. Their knowledge and ability to satisfy customers transform the call center into a profit center through significant improvements in upsell and cross sell abilities. According to some studies on customer retention, it costs 5 to 12 times more to acquire a new customer than to retain an existing customer. Therefore, keeping customer-focused, seasoned employees is necessary to the overall success of the enterprise. Customers recognize the importance of good service as well. In surveys, customers repeatedly cite the level and quality of customer support as the most important variables in determining whether to do business with companies on an ongoing basis. This finding can be translated into an important axiom for call center management: Keep the CSR and retain the customer!
Customers who are not completely satisfied may defect, particularly when offered a better deal, a more convenient location, or the promise of a higher level of service from a competitor. When customers are fully satisfied with a company's service, they will return time and again to make new purchases and to expand their relationship with the organization. The secret to obtaining and retaining that elusive customer loyalty is long-term, seasoned employees. They have the power to truly satisfy customers and extend their loyalty—they know the company, the customers, and how to build lasting, profitable relationships.
Although solidifying relationships with employees and customers may be difficult, the effort expended will bring long-term benefits. In fact, reducing customer defections by as little as 5 percentage points can double profits. Studies show that, over time, companies with higher customer retention rates are more profitable. Incremental increases in retention rates have significant impact on profitability over the long term. Many have written about this correlation between customer loyalty and company profitability. The proof can be found in some of the world's most successful companies—companies like Charles Schwab, Cisco, and General Motors, to select a few household names—where a direct relationship can be established among employee/customer satisfaction, loyalty, and company success. These are also companies that have well-earned reputations for listening to both employee and customer needs and working hard to maintain relationships with profitable customers and with seasoned employees.
Many organizations have made significant investments in automating and managing the customer experience in the call center and at other customer contact points, but they have often forgotten the most important element: the people who actually determine customer loyalty and subsequently, enterprise profitability. Call centers are the places where many of these people are located and where the customer frequently has the first contact with the company.
By properly managing the most important component of a call center—the human resource—and influencing how employees view their jobs and how they perform their jobs in a positive way, sound personnel management practices and workforce optimization systems can begin a chain of value creation that leads to closer relationships with employees and more profitable relationships with customers. By assisting call center managers to manage their primary assets effectively—the call center employees who are behind customer interactions—workforce optimization systems are unique in their ability to impact relationships between employees and customers.
Following are some convenient guidelines for evaluating how well a corporate call center is optimizing the potential of its human resources with good management practices. They indicate how the implementation of workforce optimization systems can benefit the organization.
Performance Criteria for Call Center Managers
Optimize business practices to ensure employees are working in the most effective ways.
Incorporate employee enrichment effectively into employee work times.
Establish the true marginal cost of a labor hour.
Use workforce optimization software to optimize and schedule employees.
Ensure employees have schedule flexibility while meeting service-level objectives.
Ensure that the first call/contact resolution rate meets objectives.
Ensure that the cost and efficiency implications of customer service goals are fully understood by call center staff.
Establish the appropriateness of operational service goals and ensure they are cost-effective.
Establish overlapping CSR schedules to minimize the impact of absenteeism and lateness.
Be prepared to incorporate new customer contact channels into the call center.
Organize and arrange physical resources as well as CSR schedules—office space, computers, and so on—to optimize effective and efficient sharing.
Involve employees in managing their own schedules and designing flexible shifts.
Recruit and hire the right employees with the right skills at the right times.
Determine who the best customers are and quantify the lifetime value of these customers.