Reducing attrition for Call Center BPO Process
By Mandy Sidana (Founder)
Apex management services (name changed) is a homegrown business that provides business process outsourcing processes like sales force automation and customer support service management. One of the biggest HR pains in customer support roles across the industry is high attrition, sometimes upwards of 30%. The current selection process entails that candidates go through a screening exam with structured interviews and language fluency tests, but little experience is required as most of the training required for handling customer queries is provided on the job. To keep costs low in this competitive space, Apex services typical intakes new candidates batches consisted of 95% fresh graduates or diploma holders. However, the company wanted to further reduce turnover costs by reducing attrition and creating a competitive advantage in the space.
We looked into a variety of factors such as payscale, years of experience, promotion history and growth. Since people tend to switch jobs more often early in their careers, we decided to explore the option of hiring more experienced candidates. On the surface, it looks like a bad idea as it would dramatically increase costs. However, doing some analysis of applicant and employee history data showed that the company could hire some customer care workers more likely to stay by simply hiring candidates that were more experienced. Note that this correlation only worked for early experience years (1 to 5 years), beyond that it just flattened out. Of course, more experienced candidates had to be paid more but the data showed that they were more like to stay with the company beyond the first 6 months as well as 12 months. This meant that higher salaries could be offset by reduced turnover costs.
So the company decided to give it a shot. The percentage of fresh graduates in the new batch reduced from 95% to 70%, taking in 25% more experienced candidates. 25% was the lowest number we could do to test out this strategy in a statistically significant way. Remember its always a good idea to test theories based on past data before during a complete rollout. However, to accommodate higher salaries and designations expected by experienced candidates, human resources had to divide the role into 2 bands — associate and senior and defined different pay scales for each band. This also made them look into the salaries being paid to existing senior customer care executives and create a standard pay grade structure for this role going forward.
After 6 months, as expected the retention was higher for the new batch driven mostly by experienced candidates. Part of the higher spend on salaries was covered by reduced turnover costs (hiring +training + lost productivity). On average the company spent 50K on turnover cost per associate and higher salaries meant paying 50% more for the same role, so overall the company was still spending more. That being said, the higher pay and more experienced candidates also resulted in greater performance and quality control. So the team looked into quality metrics next and sure did find some interesting numbers like the reduced handle time (AHT), call abandonment rate, and increased first call resolutions. We could quantify the value add but we didn't have to. Senior management came back to us and confirmed that they wanted us to scale the experience candidates mix to 50% or greater percentage we find optimum.
Don't get me wrong, reducing attrition is not about hiring more experienced candidates, but discovering the key relation between attrition and other factors that influence it. In this case, it was something as simple as years of experience (1 to 5), for some companies it might be the opposite. In others, it can something completely different like payscale, Job satisfaction, and promotion opportunities.
