Shrinkage Calculation Formula

The shrinkage formula explained: what counts as shrinkage, how to measure it, and how it inflates the raw Erlang requirement into real schedules.

What is Shrinkage?

Shrinkage refers to the percentage of time that agents are unavailable for customer interactions due to activities like breaks, training, meetings, and time off. It's a critical factor in workforce planning.

The Formula

The basic shrinkage formula is:

Shrinkage % = (Unavailable Time / Total Available Time) × 100

Components

Shrinkage typically includes:

• Breaks: Scheduled rest periods (typically 15-30 minutes per shift)

• Lunch: Meal breaks (typically 30-60 minutes)

• Training: Ongoing skill development and compliance training

• Meetings: Team meetings, one-on-ones, and coaching sessions

• Administrative Time: Paperwork, email, and system updates

• Unplanned Absences: Sick leave, tardiness, and no-shows

• Paid Time Off: Vacation, holidays, and personal days

Calculation Example

Suppose an agent works an 8-hour shift:

• Breaks: 30 minutes

• Lunch: 1 hour

• Training: 30 minutes

• Administrative: 15 minutes

• Total Unavailable: 2 hours 15 minutes (2.25 hours)

Shrinkage = (2.25 / 8) × 100 = 28.125%

Industry Benchmarks

Typical shrinkage rates by industry:

• Financial Services: 25-30%

• Healthcare: 30-35%

• Telecommunications: 28-32%

• Retail: 20-25%

• Government: 35-40%

Impact on Staffing

Shrinkage directly impacts staffing requirements. If you need 10 agents on the phones and your shrinkage is 30%, you actually need to hire:

Required Hires = 10 / (1 - 0.30) = 14.3 agents

Conclusion

Understanding and accurately calculating shrinkage is essential for effective workforce planning. By accounting for all unavailable time and using accurate shrinkage percentages, contact centers can ensure they have the right number of agents available to meet service levels.