Updated: Jan 19, 2021
"Shrinkage is the amount of paid time that an employee is not available to do productive work, such as answer phone calls or meet clients, despite being scheduled to work."
Do not make the mistake of assuming shrinkage is only for Call Centres, it is an extremely important element for resource planning in almost any Department or Organisation.
Ensure Shrinkage is factored into staffing requirements
So often we come across well thought out and researched Capacity Models that have either no shrinkage or the wrong measure being used!
When all the hard work is done and you know your staffing requirements use the shrinkage formula to work out your true requirement.
The formula in written form - Staffing Required / (1 - Shrinkage Percentage)
The formula in Excel =50/(1-30%)
In the example above 50 staff are needed to fulfil staffing need before any shrinkage, then a 30% rate is applied taken true staffing requirement to 71.43 FTE.
What is the correct Shrinkage %?
Shrinkage is critical to planning and requires the same focus as any performance metric. We regularly see shrinkage rates of 10 or 15% with no real thought behind this with completely obscure figures to cover annual leave and sickness.
The correct shrinkage number is often contentious and debatable and often somewhat different between organisations.
Below is a fairly standard Customer Service type shrinkage breakdown of 30%
10% Annual Leave
4% Wastage (comfort breaks etc)
This is by no means suggesting this is your shrinkage and is simplified somewhat but I have added this to provide context!
Don’t flatline shrinkage across the year - think about the season, summer holidays, known peaks etc
Use decimal points and don’t round down - do not round shrinkage needs to be considered at every reasonable level.
Work across the business to determine how shrinkage can be reduced - Talk to the rest of the business, planning for anomalies and work it out together.
Tackle Shrinkage - Create vision and understanding of each member of staff’s role and the value of their contribution and explain the effects of sickness etc.