On this new article I would like to talk about another KPI that help us to understand how our labor cost gets impacted by focusing on our agent’s productivity. UTILIZATION is a concept that oftentimes gets misunderstood and even confused with OCCUPANCY.
Anyhow on my previous article about Occupancy we defined it as the percentage of time Agents spend handling calls including after call work time compared with the total amount of time they are connected or logged in.
And we defined the formula below:
Occupancy % = Total Handle time /Total Logged in Time×100
I started with this definition and calculation so we can now move on to understand Utilization and make a clear differentiation between both.
So, what is Utilization?
UTILIZATION is defined as the total logged in time that your agents spent in the contact center, including internal shrinkage compared to their total shift time or paid time they are in-center.
To calculate Utilization, we can use the formula below:
Utilization % = Total Logged-in Time /Time Total Shift or Paid Time×100
Another way to calculate your utilization would be:
Utilization %= Total talk time + Total Hold Time + Total Wrap + Available Hours) / Paid Hours×100.
Utilization%= Total Billable Hours/Total Paid hours×100.
So the difference is that Occupancy only tells you how busy your agents in a period of time while they are at work, which will help you to determine if you have the right amount of people at the right time vs Utilization that focus on your agents work time and paid time productivity.
The industry normally considers a standard Utilization target between 79%-86% but this might vary depending of your internal company goals and other company decisions like investing on uptraining, Upskilling or Engagement activities.
Additionally, keep in mind, Utilization includes the internal Shrinkage, not just logged-in time.
Some examples of internal shrinkage might be:
- 1×1 Coaching or uptraining, Upskilling time.
- Team Huddles
- Unplanned Personal for bathroom break
- Project time off phones
- Engagement Activities, Townhalls, Focus groups, etc.
- System issues or downtime
On this example you will learn how to calculate your Utilization %.
- Total Logged in Time = 1,911 min
- Total Paid Time = 2,640 min
Utilization Rate % = 1,911/2,640×100= 72.0%
So, why is it important to be on top of your Utilization?
Utilization will help to understand for what percentage of the time that you pay your agents, are they logged in assisting or available to assist a customer call.
On the example above if your Utilization is on 72%, This means 72% of the time you are paying your agents they are handling calls and as we said before this KPI is directly linked to your Financial cost, so increasing your Utilization means you are being more efficient on labor cost spent, however be careful you don’t want to have a high utilization rate without mantaining a balance in offline activities.
As I said this metric is related to your labor cost. If you hired an agent to take calls that would be his or her main role so you would expect that agent to spend most his or her time doing that primary role, if you set a target for them to do that job and hit that target, you can better manage costs.
In other words, a target for utilization will help you to optimize both Labor costs (Salaries) and the efficiency of your schedules and how shrinkage can also impact your productive time.
Keeping a close loop on this metric can also save you extra cost in terms of employees burn out and possible spikes on turnover or Attrition.
Associate Director of Vendor Management LATAM Global Strategy at UnitedHealth Group