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Budget Prep for Next Year

Originally published in Contact Center Pipeline, June 2015

Summer in the northern hemisphere is just about here, and that means warm weather, vacations and the opportunity to enjoy the great outdoors. For those of us running contact centers, it also means that budgeting season has arrived. It will be months before it all gets finalized, but those with fiscal years beginning in January have already started with the preparations (or will be shortly).

While it can be one of the more dreaded activities of the year, the annual staffing budget process is also one of the most important. Many of us work in organizations where an approved budget gets “locked down”, with nearly no access to funds over and above budgeted amounts. Those lucky few that have more fluid budgets do only slightly better – by the time the need for funding for more staff is recognized, it typically takes so long to hire and train that the damage done early in the year is difficult to overcome.

So this year, let’s get the most from our prep time. Not only will it produce better results, but it may even reduce the time commitment this task requires. With a bit more attention on three items that impact our budgets, we can make this better for everyone.

The Trouble with Shrink

Most people use the phrase “shrink factor” to describe the percent of time spent in non-production – things ranging from disability to vacations to breaks to coaching and everything in between. It is an exceptionally important number, and in my experience more mistakes are made with these calculations than with forecasts for volume and handle time. So in our quest to better prepare for next year, let’s take the following three actions related to shrink factors:

  1. Change the wording. “Shrink” is a negative way to describe activities that generally have long-term positive impacts like meetings, coaching and vacations. The phrase cannot help but give the impression that you are better off with a smaller number, and in the long term that is not generally the case. Use a term like “developmental factor” or “staff investment factor”. Are those examples too touchy-feely for you? Then go with “design factor” (like I will in the rest of this article). It is neither negative nor positive, and can be described as the number you use to design your staffing plan.

  2. Make it more comprehensive. The design factor should include every single activity that takes place, other than completing a customer contact. Yes, that means it should also include the time spent waiting for a call to arrive. When you include everything, you will find that somewhere between 40-60 percent of paid hours are spent in these non-production tasks. That is neither bad nor good. It is simply accurate.

  3. Recognize the seasonality. Design factors vary by month just as much, if not more, than work volume. Many contact centers calculate one design factor and apply it to every week and month. That is nowhere near accurate enough to develop decent long term staffing estimates. If you do not have design factors down to at least the monthly level, then this is a good time to get started. If you have a WFM system, use the past data. If not, discuss the individual factors and estimate them. I guarantee your estimated seasonality will be closer to reality than the expectation of no seasonality.

New Hire Training

Even when your staffing calculations are perfect, they yield results based on productive staff. Unfortunately, we all have to deal with turnover in our contact centers, and our new hires spend weeks (and probably months) learning, but not producing. That time must be paid for, so it needs to show up in our budgets.

The problem is that these numbers drag down any productivity analysis of staffing requirements. You are left explaining that it is “not as bad as it seems”, since so much of the budget goes to replacement training. That is a pretty difficult argument to win, so you are better off staying out of it completely. Make a separate budget that addresses your replacement training costs. Doing so offers the dual benefit of keeping the productive staff budget intact, while also clearly spelling out the costs associated with turnover.

Account for All Production

I do not run into too many contact center leaders complaining that they always get more money than they need to run the operation. A few get a reasonable allocation, and the majority get less than the requested amount. It is a constant battle to justify what is needed, and that dynamic is not likely to change any time soon.

Ironically, in an environment where we must constantly prove how productive we are, many of us do a poor job of taking credit for all the transactions we complete. Work done in so-called alternative channels (e-mail, text chat, outbound, etc.) increases every year, yet in many cases we treat the time spent on these tasks as though they are an element of the design factor, rather than a source of production. We calculate, for example, how much time is spent handling email, and then we add this time to non-production items like breaks and disability to come up with what until today was termed a “shrink factor”.

Even where volumes are low and the data is hard to retrieve, it is exceptionally important to treat all contact handling, regardless of channel, as production work. That means forecasting a volume and handle time for each channel supported, and staffing to handle the work within service level objectives. At some point in a budgetary presentation, it is fine to roll all the work up into one workload calculation – just make sure it shows up as workload rather than what was formerly termed “shrink”. If that has not been done in the past, make the current budget year the one where this change happens.


Contact centers that are perennially under-funded rarely get the awards. A properly calculated and approved budget is one of the foundations that allow a center to continually improve and achieve recognition from satisfied customers. The clock is ticking for next year, but time is still on our side. Make some of the right preparations now, and reap the reward next year when performance and employee satisfaction trend upward.

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