The Real Cost of Employee Turnover in a Contact Center

The struggle is real: 

• Workplace compensation is the biggest line item in your contact center budget.
• Employee turnover rates in contact centers are typically high. 
• Hiring and training new agents costs many times more than engaging and maintaining existing ones. 

Finding ways to boost agent engagement and retention with your most talented team members is crucial not only to the bottom line, but to delivering outstanding customer experience (CX). 

As a contact center leader, it’s advantageous to understand the real cost of employee turnover, and, more importantly, make it a strategic priority to retain and engage your best agents. 

What Is Employee Turnover? 

Employee turnover refers to the total number of workers who leave a company over a given period of time, typically over a year. It includes those who voluntarily left their positions as well as those who were involuntarily separated from the company through layoffs, reduction in force, or termination, whether or not those roles were filled by another person. 

High turnover, especially when it’s not involuntary turnover, means that many people are leaving the company, while low turnover means that people tend to stay in their jobs longer.

Employee turnover is typically expressed as a percentage rate, and can be further analyzed based on a number of factors, including job type, geographical locations, and industry, to name a few. 

How to Calculate the Employee Turnover Rate

You can determine your employee turnover rate by dividing the number of employees who leave during a specific period by the average number of employees in the company during that same time. The turnover rate is expressed as a percentage.

For example, if you have 100 contact center agents and 25 leave over the year, the turnover rate is 25%.

Call Center-specific Turnover Rates

Some employee turnover is natural for any organization. However, high turnover rates can be challenging, for reasons we discuss below. While low employee turnover is the goal for most organizations, that rate is very rarely zero.

Depending on which report or research you review, average turnover rates in contact centers hover in the 30-40 percent range, with some research pointing to as high as 60 percent. And sadly these rates are on the rise, not on the decline. 

To further unpack the cost of employee turnover and the contributing factors in your contact center, it’s useful to break down the analysis by team, interactions, contact or support type, and performance level. Doing so helps to uncover specific areas in which to focus your retention strategies. 

The Costs of Employee Turnover

Let’s examine what goes into the true cost of replacing an employee. Oftentimes these costs are categorized by the “hard” costs, that is the financial impact which can be measured in dollars, and the “soft” or hidden costs of employee turnover. 

Direct Costs

Direct or hard costs are the measurable, financial costs that go into replacing an employee. The most common are:  

1. Recruiting and hiring. Research from SHRM shows the average cost of hiring a new, full-time employee is around $4,700. Those thousands of dollars could be put to better use on employee engagement and employee development initiatives.
2. Overtime and temporary employees. If you’re short staffed, you need to hire temporary workers or pay overtime to fill the gap left by departing employees. 
3. Onboarding. There are costs associated with average ramp-up time. For example, it may take the average new employee a three-month time period to fully onboard.
4. Training. Training new employees not only takes time but costs money. Contact centers are well served to focus on training their existing agents versus incurring training costs for new employees. 

Indirect Costs

The hidden costs or indirect costs of turnover include impacts on:

1. Employee and team morale. Current employees notice when there is turnover, especially in a contact center. Existing high-performing employees are asked to pick up the workload, and employee morale is impacted, especially when those who exit leave for “greener pastures” or job opportunities elsewhere. Does your contact center have a positive company culture that emphasizes growth and support? Are your star employees at risk of future turnover?
2. Lower productivity and quality. Both may suffer due to staff shortages and morale impacts. New employees take longer to complete their work and are often less adept at solving problems.
3. Customer experience and retention. If you’re short staffed, new employees are ramping up, and employee engagement is suffering, this can have detrimental customer impacts. 
4. Company reputation. Word travels – if your contact center turnover rate is high, your company brand and reputation is at risk. 
5. Institutional knowledge. When employees walk out, so does company knowledge and experience. Knowledge gaps can result in loss of productivity and can negatively impact customer satisfaction.  

Why Employee Turnover Matters

It’s important to highlight the importance of managing and reducing employee turnover not only among contact center leaders but also with decision-makers and stakeholders across the entire organization. Leaders need to understand the reasons behind the company’s turnover rate, associated replacement costs, and their impact on the bottom line, employee experience, and ultimately customer experience. 

What’s changed in recent years is the number of employees leaving jobs voluntarily – often referred to as The Great Resignation or “quiet quitting.” According to the Bureau of Labor Statistics, the number of U.S. employees voluntarily leaving their jobs has increased since 2021. While the trend has slowed in recent months, many workers continue to leave their jobs voluntarily – 3.6 million people quit their jobs in October 2023. High or rising voluntary quit rates like these have a negative impact on your organization and can prevent you from achieving business goals.

Reasons for Employee Turnover

Ask managers and executives, and they might tell you compensation is the main reason for employee turnover. While there’s some truth to that, ask your employees who are leaving (with a well-designed exit interview), and they may tell you a different story. 

According to a Pew Research Center survey, a majority of workers who quit a job in 2021 say low pay (63%), no opportunities for advancement (63%), and feeling disrespected at work (57%) were reasons why they quit. At least a third say each of these were major reasons why they left.  

Other reasons employees cited for leaving include childcare issues, not enough flexibility with work hours, poor benefits, and working too many hours. 

Interestingly enough, could managers have seen the employee exoduses coming? According to a Gallup analysis fifty-two percent of existing employees say that their manager or organization could have done something to prevent them from leaving their job. But only about a third of former employees said they had a conversation with their manager about leaving before they quit.

It seems that contact center leaders can learn from these eye-opening statistics and focus on employee satisfaction and employee engagement as a strategic priority for unwanted turnover. 

Reduce the Cost of Employee Turnover

Simply put, if you want to reduce the impacts of employee turnover in your contact center, you’ve got to reverse the trend. Focus on keeping your best agents engaged and happy, and higher retention rates will follow. 

Here are several ways you can lower employee turnover costs — both the hard and soft costs — in your contact center. 

Pay a Competitive Wage

This is your starting point, whether you have a team of hourly workers or salaried employees, to curtailing unwanted employee departures. Providing employees with a fair wage and offering an attractive benefits package is the baseline from which you build employee engagement and boost agent retention.

Provide Consistent Feedback on Performance via Quality Management (QM)

While no one loves to receive negative feedback on performance, giving this kind of honest feedback is better than no feedback at all. Likewise, it’s equally frustrating when employees don’t receive any feedback for a job well done. 

One way to provide feedback and enhance employee development is by conducting consistent quality management (QM) reviews. This is when a set of statistically relevant interactions are analyzed for things such as:

• Proper introduction and closing of the interaction, e.g., using the customer’s first name and asking if their issue or problem was resolved before closing out the text or chat session.
• Acknowledging the customer’s issue and displaying empathy. This can be as simple as replying to an upset customer with words such as “I understand how frustrating this must be for you.”
• Taking care to solve the customer’s inquiry through the first contact, also known as first contact resolution (FCR). 
• If a problem cannot be resolved in the customer’s first interaction, make sure the customer understands the next steps and follow up.

Invest in Training and Coaching

Investing in continuous training not only enhances the skills of agents but also boosts their confidence and job satisfaction. Regular training programs can keep agents up-to-date with industry trends and improve their problem-solving capabilities. 

Along with training, it is important to provide timely coaching to your agents. Having a solution that not only provides suggestions on improving performance, along with a way for agents to acknowledge feedback, is one of the best ways you can make coaching effective. Mentorship programs can also be very effective.

Provide Career Advancement Opportunities

Do your agents see a pathway for career progression? If not, this is another way to motivate agents to excel in their roles. Knowing that their efforts can lead to promotions or career opportunities encourages a sense of purpose, dedication, and professional growth among team members.

Make sure you give agents specific ways they can advance through your organization. Many leaders refer to this as an Individual Development Plan (IDP). An IDP includes things like skills needed, courses required, proficiency expected, and other measurable and relevant ways an agent can move up. And of course, actions speak louder than words here. Make sure agents actually do get promoted and have opportunities to take on new challenges. 

Embrace Flexibility and A Work-Life-Balance Culture

The ability to balance work commitments with personal life is crucial for agent well-being. Offering flexible scheduling options enables agents to manage their valuable time effectively, reducing stress and contributing to a healthier work-life balance.

Thankfully modern AI-infused Workforce Management (WFM) solutions can make your capacity planning, forecasting, employee scheduling, and intraday planning easy, accurate, and far less time-consuming. Make sure your solution supports:

• Omnichannel scheduling – Many WFM systems in the market were built for a phone-based call center, rather than an omnichannel contact center where agents interact with customers via. Ensure whatever solution you choose lets you schedule for the many channels – email, chat, voice, SMS, and social media – in your contact center so you have coverage when you most need it – across all of your channels. 
• Multi-step scheduling – As bots and Artificial Intelligence (AI) have automated many simple transactions, agents often are faced with complex inquiries that may require departments outside the contact center such as billing or membership services. Make sure your WFM system can schedule for complexity, so you don’t miss service level agreements (SLAs), causing agents to be overwhelmed and dissatisfied. 

Incorporate Gamification, Rewards, and Recognition

Reward, recognition, and competition are all excellent motivators and play a critical role in employee engagement. Acknowledging the efforts of agents through regular recognition programs or awards can significantly impact agent morale. Publicly praising achievements, both big and small, reinforces a positive work culture and motivates others to strive for excellence.

Another way to provide employee recognition programs is to invest in an employee recognition platform. A gamification solution works well within a contact center environment because it leverages a number of game mechanics to keep agents engaged and focused. It can also be successful in curbing bad habits and promoting better behavior, although that shouldn’t be your primary reason for implementing gamification.

Related Article: Gamification in the Workplace: More Than Just a Contest

Support Employees with the Right Technology

Interaction complexity, confusing processes, and a lack of support all contribute to unsustainable levels of stress. Make it a priority to put in place the right tools to enable employee success. This means having good leaders, effective software tools, and clear processes in place.

AI-powered technology for the modern contact center helps to:

• Automate and simplify processes and provide real-time decision-making support for agents to troubleshoot and resolve issues. Automation can help agents handle repetitive tasks, allowing them to focus on more productive or complex support calls, improving employee engagement, and increasing satisfaction. 
• Help handle increased customer demand, shorten call time, improve workflows, and reduce the burden on customer service agents.

If you’re ready to prioritize reducing employee turnover in your contact center, download our eBook “Control Contact Center Costs by Improving Agent Experience” to get started.