Basic Information of Call Center
Author: J. Michael Harrison, Yuval NovPublisher: Stanford U
Case Number: 9-OIT-29
Publication Date: Oct 16, 2003
Course Category: Operation
Case Summary of Call Center
Performance Metrics The appropriate metrics of performance necessary to evaluate the performance of the call center are different for each component within the system. They are as follows:
• Overall system – Use the average speed of answer or average wait times to evaluate how quickly calls are answered and how much time a customer must wait in a queue before they are serviced.
• Agents – The best measure of an agent’s efficiency is the average handle times and therefore the number of customers they can effectively service in an hour. Quick-line agents should be able to service one customer every 2 minutes or 30 per hour on average; non quick-line agents should be able to service on customer every 8 minutes or 7.5 per hour on average. This measure should only be applied over the long run to individual agents to avoid any probability that unusual circumstances affect this measure. We can measure effectiveness of individual agents using call monitoring scores and error rates.
• Supervisors – The average utilization rate can be used to measure how efficient supervisors are using their human capital in the call center. The higher the rate of utilization, the fewer employees required to service demand and ultimately the labor expense will be lower.
Impact of Reducing Agent Pools
Reducing the number of agent pools from eight to three according to Carr’s proposal will:
• Increase the average overall utilization rate of human capital in the call center system
• Reduce the overall average wait time across the system so that all pools have an average wait of less than 20 seconds
• Reduce the approximate total number of agents required each week to service the call demand from 97 to 63 agents.
• The reduction of required agents will reduce the overall labor expense for the call center.
• Automated service offered 24 hours 7 days a week reduces error rates
• The new overflow routing scheme of calls queuing in front of the broker service pool requires overstaffing of agents capable of handling broker service and understaffing of less trained agents. Increase proportion of highly trained agents would reduce error rates and average handle time.
By merging the non quick-line customer and broker pools from six across three locations down to two pools in a single location, the system is able to take advantage of excess capacity in each of the previous pools, which will increase utilization and reduce average wait times as well as error rates.
Agent Skill Level
Lions Financial should only reduce the skill level and implement “call blueprints” for the quick-line agent pool. While minimizing labor expense by reducing hourly expense is a clear financial benefit, implementing this change for the non quick-line customer and broker pools will severely undermine the systems ability to efficiently and effectively deliver service. It is highly likely that with a less skilled work force, average handle times and error rates would increase due to more complex tasks required in the non quick-line pools. This would in turn adversely affect customer service and the company’s position in the market.
Benefits:
• Savings in operating costs as a result of lower wages
• Increased objective performance measures, which in turn leads to higher productivity
• Blueprints decrease variation in the delivery of customer service
• Accelerated training times and shorter recruiting cycles for lower level employees yield lower replacement costs
Costs:
• Lower customer service, not personal and perhaps robotic
• Increase in error rates with reduction of skill level of agents
• Increased turnover rate, which would result in replacement costs
Financial Implication of Carr’s Proposal
Existing System Carr’s Proposal Unit
Hours of Operation/ Week 57 57 Hours
Average # of Agents/ Hour 88.2 56 Agents
Agent Hours/ Week 5027.4 3192 Hours
Total Agent Demand/ Week 167.6 106.4 servers
Average Utilization Rate 52% 76%
Agent Hours/ Year 261424.8 165984.0 Hours
Agent Cost/ Hour $ 34.00 $ 34.00
Total Agent Cost/ Year $ 8,888,443 $ 5,643,456
Total Savings: $ 3,244,887
|
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Existing system
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Carr’s system
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Replacement costs per employee
|
1-2 times worker’s fully loaded annual compensation
(Wage + benefit)/ hr = $34 Annual salary = $65,280 Btw $65,280 and $130,560 |
Half of fully-loaded annual
compensation
New wage/hr: $15 Assuming benefits etc/hr: $17 Total per hour: $32 Annual salary = $61,440 $30720 |
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Total replacement cost savings assuming 50-55% turnover
rate (slightly higher than existing at 45-50%)
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Out of 138 (
Btw $4,504,320 and $9,008,640 |
Out of 90 (
$1,536,000 |
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Total max. savings:
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$7,472,640
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Case Analysis of Call Center
Recommendations I recommend minimizing the number of pools within parameters that will not sacrifice operating efficiency or delivery of service. Therefore I suggest having an automated pool, a quick-line pool and a single non quick-line pool that services both customers and brokers. We can eliminate the differentiation between the customer and broker non quick-line pools as they essentially perform similar services at the same rate. There will inevitably be an additional incremental cost to train customer agents to the level of their broker counterparts, but the savings generated by streamlining the system and increasing utilization in the pool will outweigh the cost.
I recommend that Lions reduce the skill level and wages of the quick-line agents, but maintain the same quality for the non quick-line agents as their financial expertise and experience is necessary for the optimal service. Implementing these changes will:
• Increase the average overall utilization rate of human capital in the non quick-line services from the existing system at 52% and Carr’s system at 76% to 83%.
• Reduce the overall average wait time across the system so that all pools have an average wait of less than 15 seconds.
• Reduce the approximate total number of agents required each week to service the call demand from 167.6 (existing system) and 106.4 (Carr’s plan) to 96.7 agents.
• Reduce the overall labor expense for the call center due to the reduction of required agents and reduced skill level for quick-line agents.
The financial benefits comparing both the existing system and Carr’s proposal to our own are:
Existing System Carr’s Proposal My Proposal Unit
Hours of Operation/ Week 57 57 57 hours
Average # of Agents/ Hour 88.2 56 51 agents
Agent Hours/ Week 5027.4 3192 2907 hours
Total Agent Demand/ Week 167.6 106.4 96.7 servers
Average Utilization Rate 52% 76% 83%
Agent Hours/ Year 261424.8 165984.0 151164 hours
Agent Cost/ Hour $ 34.00 $ 34.00 $34.00
Total Agent Cost/ Year $ 8,888,443 $ 5,643,456 $5,139,576
Total Savings: $ 3,244,887 $3,748,867
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