Staff turnover costing UK call centres £1bn per year

Staff turnover in the call centre industry is costing over £1.1 billion or £2,244 for every person employed in the industry (approx. 500,000), according to a new survey*. For brand owners that’s a billion pounds worth of brand equity lost each year in the CRM battle to win the hearts and minds of customers.

The survey shows a call centre industry struggling with a skills shortage, a tightening labour market, shrinking margins and continual pressure on costs.

Britain leads the call centre field in Europe, accounting for over half of all European call centres. According to the latest Trades Union Council figures, the industry represents between 1.5% and 1.7% of all jobs in Britain.

Contact centre staff need to be motivated, respected and empowered in order to build loyalty and provide a better consumer experience. This report by training consultancy, Blue Sky indicates that this is not happening and that there needs to be a revolution in how contact centres are managed and the staff developed and trained.

Investigation into the real cost of staff turnover has largely gone unmeasured and Blue Sky’s report is the first to attempt to address this. Never before has the cost of staff turnover been so strongly linked to bottom line profitability.

Blue Sky conducted the survey between April and May of this year with 298 call centres across 10 industry specific sectors: financial services, telecommunications, retail / mail order, travel, business services, information technology, utilities, government / public sector, automotive and manufacturing. Eighty-seven percent of respondents were responsible for running call centres, 43% at director level.

While the call centre industry recognises that an acceptable level of staff turnover ranges between 5% and 10%, the reality according to the survey is nearer 20% for the majority and up to 30% for call centres with over 1,000 staff.

Blue Sky commissioned the report because of the increasing concern within the call centre industry that British businesses were not taking the cost of losing staff seriously.

“This is an issue that needs to be on every boardroom agenda,” said senior partner, Marc Jantzen. “It’s not just the cost of losing staff, it’s also the loss of productivity and the associated knock on reduction in profit, as new staff are brought up to speed.”

For too long those responsible for managing call centres have been beating the drum on the need to increase training and development as well as pay and benefits for staff, but to corporate deaf ears. Now we not only have the means to measure the hidden costs of staff turnover to our business but the evidence of the cost.

Blue Sky’s report strengthens the financial argument that a return on staff training and development investment can be achieved and British businesses need to wake up to this ‘high price tag’ issue.

According to the Industrial Society, companies spend between up to 11% of turnover on management training. The average investment per person fell in 1998 from £356 to £347.

While directors recognised the issues that managers had to grapple with on a daily basis, they focused on front line staff and seemed to ignore the need to increase the skill set of the very managers in a position to influence the issues identified, namely, a tighter labour market, reduced margins and a lack of agent skills.

Management and leadership training, asserts Jantzen, is one of the key ways forward for the industry since this influences what happens on the shop floor. Investment in management training, culture change and skill development as well as pay will also help to shake off the industry’s ‘satanic mills’ image, and move the telemarketing industry up stream toward a ‘profession’ rather than a trade.

Full time staff loss

Over 50% of respondents admitted to a staff turnover rate, for full time staff, of over 10% per annum. But when the attrition rate is weighted against a company’s size, Blue Sky found the average staff attrition rate to be more like 20% and above.

At the level of 5% attrition, the telecoms industry scored lowest with 15%, compared against the retail / mail order sector, which held on strongly to its staff at the 5-10% attrition mark. Thirty-six percent of retail / mail order respondents estimated their attrition rate (for temporary staff) at over 30% per annum, according to this survey this sector employs more temporary staff than other sectors.

A worrying issue for brand communication is, with seasonal operators on limited training, how are consumers being communicated to and how high is the potential for lost sales? Travel also failed to come in under the industry accepted standard of 10%.

Staff pay

Strikingly, several sectors, particularly retail appear highly inflexible in the salaries they offer staff. This could indicate that staff are not being rewarded for performance with performance linked pay.

Broadly, salaries range between £9,000 - £16,000. Some 15% of respondents admit to paying over £16,000, particularly those in finance and IT technical support. Telecoms were at the lowest end of the pay scale and retail / mail order appeared to have a far narrower spectrum on salary packages that peaked at £11,000.
Staff hours

Long the stuff of tabloid headlines, call centre staff hours were actually registered by the vast majority of respondents, as a very average 35–40 hours per week. Those in the finance sector not only seemed to benefit from higher salaries, but a shorter working week, while those in the telecommunications industry are more likely to have longer working hours and less remuneration. Therefore it does not follow that those staff in sectors with the longest working hours can expect to receive the highest pay.

Staff training

Whilst commitment to training full time staff is strong across all ten industries surveyed, this does not seem to translate into actual training programmes within call centres. Time spent on induction training is arguably not long enough; only 31% claim to spend three or more weeks training new staff, which drops to under two weeks for temporary staff.

The travel industry, scores highest on induction training with 58% providing more than a three week induction. This is most likely driven by overseas orientation courses. Retail and telecoms are guilty of far less investment in full time staff training wheras the finance sector performs well.

All respondents claim some monthly training for permanent staff but a pathetic average of only two hours a month, when Best Practice benchmark recommends over two hours a week. Surprisingly the travel sector performs worst of all in this area of ongoing training.

Temporary staff receive little training and given their direct access to the consumer, is extremely worrying for brand owners.

Measurement of sales performance

Staggeringly over 30% of respondents admitted to not measuring the sales performance of their staff. For the retail / mail order sector this figure rose to 50%.

Interestingly, the more senior the respondent, the higher the claim for staff sales performance measurement was given (86%) across all industries. Staff performance measurement included assessing the number, speed and effectiveness of call handling through to customer acquisition and sales appointments made.

New staff performance

New staff tend to achieve less than 30% productivity in their first month. In the survey over 52% of respondents believed that new staff were not yet fully productive even after three months. Hardly surprising says Blue Sky when on going staff development is far from adequate.

Why staff leave

Unsurprisingly, pay and benefits is seen by managers as the main reason for staff turnover in all sectors, the second was migration to another call centre for better pay and career prospects.

Blue Sky believes this to be the tip of the ice burg, had the question been asked of operators, the reasons could well have been issues of that were more readily in the control of managers, i.e. management techniques and style. Blue Sky is planning to conduct further research at shop floor level on this issue.

How to minimise staff attrition

Skill development remains the most effective solution to combat staff turnover combined with internal promotion and social and team building events. Training linked to improvements in pay and benefits will not only stop the migration from one call centre to another, but retain skilled staff in the industry.

The actual time spent on induction and ongoing training revealed in the survey is disappointing. The only sector to regularly review salaries and conditions as a top priority was the travel industry, which correspondingly had the lowest attrition rates.

* Counting the Cost of Staff Turnover, a new business survey looking at staff losses in the call centre industry, is available from Blue Sky Consulting free by contacting Liz Rochester or Marc Jantzen tel: +44 (0)1483 739400.