The refrain is common: We need to adhere to our targeted service levels, but at the same time, we also need to keep staffing costs down. Workforce managers everywhere face the constant challenge of balancing the yin and yang priorities of service levels and labor costs. This is especially true in today's economic environment where inaccurate forecasts can lead to poor scheduling decisions and can have dramatic impact on bottom line profitability.

The laws of supply and demand

Workforce management (WFM) software has long been used to match demand (calls, e-mails, web chats and other staff work) with supply (employees). Precise forecasting is a classic win-win scenario, enabling managers to more closely align demand and supply resulting in optimal cost and profit performance.

When demand is greater than supply, price – in the form of reduced service levels, falling customer satisfaction and poor employee morale – rises. When supply is greater than demand, service levels tend to improve, but at the cost of idle and unproductive agents. In both situations, profit potential is negatively impacted.

The key to optimizing your organization's bottom line performance is directly impacted by the costs of hiring and employing the right employees to do the right tasks at the right place and time.

Empower your workforce

Studies suggest that labor costs can be between 60 percent and 75 percent of the operating costs of a contact center. Effective workforce optimization rests on pillars like analytics, particularly workflow forecasts, and precision forecasting to help managers accurately predict both workload and staffing needs.

To lower agent churn and improve work-life balance, contact centers are empowering agents in several ways. Take buddy scheduling as an example. Employees who carpool or otherwise need to coordinate shifts with colleagues can specify shift preferences. Managers can also use multi-variate scheduling within WFM software to schedule agents based on virtually anything measurable, including proficiency, competency, skills and customer satisfaction scores.

With the right WFM software, managers can also use powerful wizards, which automate repetitive manual tasks, to quickly and efficiently adjust staffing levels based on user-defined factors. It's also easy to extend or shorten an agent's schedule. And if using an advanced WFM system, managers can receive immediate feedback regarding impact to service levels, workload fit (the relative balance between supply and demand) and agent costs, so they can make further schedule adjustments instantly.

Too much. Too little. Just right!

In most organizations, the two key metrics most closely watched by management are targeted service levels and operating budget. Given differences in business priorities and resources, each organization needs to analyze their unique situation to determine the right balance between these two competing needs.

When demand outpaces supply (understaffed condition), callers wait longer for their calls to be answered, lowering service levels. As a result, customer satisfaction drops, which, negatively impacts customer retention. Lost customers mean lost revenues. Another unintended consequence is poor employee morale, which leads to greater employee attrition.

When supply exceeds demand (overstaffed condition), employees are idle and non-productive. Service levels may be high; customers may be delighted; but money is essentially wasted due to these idle agents. Because agent salaries are a contact center's largest variable cost component and, as a result, have a direct impact on profit, it's important to optimize these costs.

Striking a balance between customer and employee needs means creating schedules that match the right employees to the projected workload based on agents' skills and preferences. By using precision forecasting and the powerful, flexible scheduling capabilities of many advanced WFM solutions, organizations can hire smarter, ultimately creating a profitable, harmonious balance between supply and demand.

Three key take-aways:

1. Be prepared for frequent changes to your staffing plan. Agents call in sick, will be late, will need to leave early, won't leave or return from meals and breaks on time for a variety of reasons. Streamline the schedule change process to reduce administrative overhead (and associated costs) and ensure key metrics continue being met.
2. Consider your over-staffing and under-staffing impacts independently. Gain a keen understanding of what factors drive the business. If customer satisfaction is "Job 1," some overstaffing may be desirable, even if it results in increased agent costs. If revenue generation and profit maximization is most important, then understaffing may be desirable.
3. Use recurring and non-recurring events to create a precision forecast. Forecasting best practices suggest that more accurate forecasts will result, enabling more effective scheduling.