wor k fle x s o l u t i o n s WHAT IS MISSING FROM WORKFORCE MANAGEMENT? THE CASE FOR A SHIFT OF MANAGEMENT FOCUS FROM FORECAST TO ADAPT Workforce Management (WFM) has emerged as a key focus area for operators of call centers encompassing strategic planning, forecasting, scheduling, and reporting (see below). As an alternative to today s focus on increasing forecast accuracy to improve performance, this whitepaper explores how organizations can benefit from automated intraday workforce management to adapt to changes in staffing requirements in near real-time. Workforce Management Product Footprint Planning Forecasting Scheduling Reporting? WORKFLEX SOLUTIONS WHITEPAPER
WFM Key to Aligning Agent Supply with Demand There are many vendors who offer commercially packaged workforce management software products that are utilized by call center operators. There may be differences in the breadth and depth of feature functionality among these vendors; however the heart of all of these products are the functions that workforce administrators utilize to try to ensure that the number of agents actually working is aligned with the actual demand over the course of the day: Forecasting, Scheduling and Reporting. The reason for this focus on alignment of agent supply to demand is obvious. If there are more agents than needed then costs are higher than they need to be; if there are not enough agent to meet demand, then service levels suffer, and in the case of outsourcing vendors there is direct impact to margins associated with lost revenue and in some cases SLA penalties. Why Forecasting Agent Demand and Supply is Like Forecasting the Weather Many WFM products utilize sophisticated analytics to study past patterns of demand to anticipate future demand. Factors such as day of week, holidays, seasonality, billing cycles, and sales reports may be incorporated into these forecasting models. In most cases agent schedules are built on forecasts that are 30-60 days out, and in some cases may be adjusted a week in advance. However just like it is very difficult to accurately forecast the weather in advance, there are many reasons why it is nearly impossible to accurately forecast demand (especially 30-60 days) in advance. Even modest variances to actual call volume, type, and time-of-day can create situations whereby the actual demand is different from what was forecast. Think of how many times the weatherman saying it is going to rain 1-2 between 3:00 pm and 5:00pm tomorrow afternoon, and it actually rains 3 between 1:00-3:00pm. Equally challenging to workforce administrators is accurately forecasting agent supply. Even when a certain number of agents are scheduled there is invariably a fall out of a number of agents that simply do not show up for work on a given shift. The reasons may be anything from taking the day off to go to the beach to staying home and taking care of an ill child, but it is difficult for workforce management systems to predict the volume and skill mix of this agent absenteeism, since the analytics models typically don t take into account variables such as beach weather, and H1N1 virus trends. The fact that the call center workforce tends to be dominated by low-wage hourly-workers with employment tenures averaging less than 1-year doesn t help this situation. The bottom line is that there are simply too many variables to enable any workforce management system to predict future supply and demand with 100% accuracy. As a result, the workforce administrator is invariably faced with situations where there may be a significant gap between actual supply and demand. Page 2 of 6
So How do Workforce Administrators deal with Intraday staffing gaps? Although many Workforce Management Products do a great job in reporting demand/supply staffing gaps on an intraday basis (e.g. every 15 minutes), the ability of call center operators to address these gaps on an intraday basis is very limited. Several workforce management systems can incorporate the gap information into future forecasting models, but are generally not geared toward helping workforce administrator s deal with today s issue. Examples of approaches taken by workforce administrators to deal with staffing gaps are as follows: 1. Do Nothing: This is the most common approach. However consider a Business Process Outsourcing (BPO) scenario where there is staffing underage of 50 agents on a 300 seat program. If the BPO is paid $30/ hour and the fully-loaded cost of an agent is $22/hour then the impact of this underage is $12,000 in revenue and $3200 in margin. Over the course of a year he cumulative effect of this level of chronic understaffing could result in millions of dollars of lost revenue and margin. 2. Over-schedule Staff: By over-scheduling agents administrators can reduce the incidents of staffing underages, but a cost of higher costs for staffing overages. Just a 20% over-staffing would nearly wipe out over 50% of the margins. 3. Manual Intraday Staffing Intervention: Workforce administrators can mitigate the higher cost of staffing overages by sending agents home early. The challenges in this approach include impact to employee satisfaction (loss of anticipated income) and in some cases labor laws that may require a minimum number of hours to be paid for a shift. Workforce administrators can also attempt to find unscheduled agents that may be willing to come in to work. The challenges here include finding agents that are willing to come in on short notice, and/or commute to work a partial shift, ensuring that maximum overtime hour rules are not broken, and ensuring that the agents have the right skills to handle to staffing underage call types. The complexity and time impact to a workforce administrator tends to limit the effectiveness of this approach, which is why many administrators prefer to take an overstaffing scheduling approach. 4. Open Call Outs: At least one workforce management system that enables administrators to send a call out to all unscheduled agents and enables them to bid for understaffed shifts. The advantage of this approach is that there is less manual effort required by workforce administrators, and it may be possible to get agents at a wage level equal to or less than standard if the pool of interested agents exceeds the number of seats available. The disadvantage of this kind of first-come first serve approach is that it does not guarantee that the best agents are selected to fill the gap. For example mediocre agents may aggressively bid for shifts and high performance agents may not even bother bidding. Additionally the open bidding system approach may result in higher wages being paid if agent supply is less than demand, or may result in intraday staffing augmentation goals not being met if the workforce administrator is not willing to pay significantly higher wage premiums. Page 3 of 6
A Better Approach Adaptation of Real-time Supply Chain Methodology to Automate Agent Staffing In looking at all of the things that a workforce administrator has to do in the heat of a shift to manually augment staffing to address staffing shortfalls (agent availability, best agents to call, how to reach, wage incentives overtime rules ) the good news is that all of this activity could be automated if the administrator had a means of pre-configuring the methodology he/she would normally follow. This pre-configuration could include items such as the gap threshold for taking action, agent availability/preferred means of contact, and rules around agent selection priority that could range from performance metrics to historical acceptance rates for previous call out attempts. Automation of Intraday Staffing Other Benefits In addition to the hard financial benefits associated with enabling workforce administrators to effectively adjust intraday staffing levels, there are other benefits that can be derive from this approach: By scheduling to the lower end of the forecast and topping up versus scheduling to the mid-point or higher, a better utilization of the workforce is achieved which can enable the ratio of employees to seats to be lowered (e.g. from 2:1 to 1.5:1). The associated reduction in recruiting, hiring, training and benefits go right to the bottom line. Through automation, activities that would normally take hours could be accomplished in seconds, including call-outs to agents. By only calling out to agents that meet predefined criteria, the skill levels, responsiveness, and wage levels can be controlled while the volume of call outs can be reduced in comparison to the open call out approach. The impact of this approach is huge. Using the previous example if workforce administrators could bring on board 50 agents within an average of one hour, through automating the intraday staffing process and offering a 10% wage premium, then 10,500 (88%) of revenue and $3430 (75)%) of operating margin could be recovered over the default do nothing scenario. By offering agents more opportunities to earn extra money, attrition may be reduced, and the associated cost savings again go right to the bottom line. Additionally with an effective intraday staffing process, the need to schedule weeks in advance is reduced, and the improvement in scheduling flexibility can again reduce attrition. This approach has been proven to be highly effective within the manufacturing sector and has become generally accepted as a best practice commonly referred to as real-time supply chain methodology. Page 4 of 6
How Does Home Agent Impact an Automated Intraday Staffing Approach Most call center operators tend to think of work-at home in terms of bricks and mortar avoidance e.g. if they can find 300 workers willing to work from home, then they can eliminate most of the capital costs associated with building a call center. The result of this is that most employees either work 100% in a call center or 100% in the home. In looking at the operating impact of an automated agent staffing process, it may make sense to look at equipping agents that work today in a call center with a work-at-home station so they can work in the call center or in the home. The higher rate of acceptance to on-call requests, and reduced time to come online will likely be many times higher than the additional capital cost for additional workstations. In short, Home Agent is not required for automated intraday staffing; it just makes the results better. Conclusion By implementing an automated real-time supply-chain methodology for call center scheduling, operators can transform the scheduling paradigm from forecast to adjust, and achieve significantly higher productivity levels without the need to improve forecasting accuracy. Page 5 of 6
About WorkFlex WorkFlex is a venture-backed, Cincinnati-based software company focused on workforce optimization solutions. Founded in 2009, WorkFlex products are deployed to major service providers and Business Process Outsourcers (BPO s) within Canada and the United States. About the Author Larry Schwartz is Chairman and CEO of WorkFlex Solutions. Mr. Schwartz has 25 Years of Executive Management Experience in Large-Scale Operational Streamlining, Enterprise-Grade Software Development, Strategic Planning, Business Transformation, and Outsourced Services including Contact Centers. WorkFlex Solutions, LLC 30 West 3rd Street, 6th Floor Cincinnati, OH 45202-3559 Copyright 2011, WorkFlex LLC. All rights reserved. This document is provided for information purposes only, and the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor is it subject to any other warranties or conditions, whether expressed orally or implied in law. This document may not be reproduced or transmitted without permission. info@workflexsolutions.com Phone: +1-972-363-4300 www.workflexsolutions.com