# What is the actual definition of shrinkage? How is shrinkage different than attrition? Is there any universal formula available to calculate shrinkage and attrition? If not, which is the easiest formula to use to calculate attrition and shrinkage?

**Question**

What is the actual definition of shrinkage? How is shrinkage different than attrition? Is there any universal formula available to calculate shrinkage and attrition? If not, which is the easiest formula to use to calculate attrition and shrinkage?

**Answer**

Shrinkage is a term that is broadly defined as the percentage of time that scheduled agents are not available to handle customer interactions. Conceptually, it’s the time that “shrinks” from the schedule. Shrinkage can encompass planned events, such as breaks, paid time off, training, team meetings, coaching sessions, or other activities. It can also include unplanned events such as absenteeism, tardiness or agent attrition. It may also include time lost when agents do not adhere to their planned schedule. This is the percent of time that agents are not where they are scheduled to be or not doing the activity they were scheduled to do. For example, if an agent is supposed to be handling calls but instead is unavailable, they are out of schedule adherence.

Attrition is a component of contact center shrinkage. It is the rate at which the agent workforce is reduced through voluntary (resignation, transfer, promotion, job abandonment, etc.) or involuntary (termination, disability, sick leave, layoff, etc.) events. There is a clear distinction between the two. Shrinkage erodes the percentage of time agents spend productively handling customer interactions, but it is a variable that can be managed, to some degree, by making real-time adjustments to schedules and issuing reminders so that agents are more aware of the need to change their activities. Attrition, on the other hand, reduces the actual number of agents who are available to be scheduled. Given the considerable amount of time required to recruit, hire, train and on-board agents, attrition can have a more significant and costly impact on the contact center.

As with many other contact center metrics, the formulas for calculating shrinkage and attrition vary. To come up with a formula, you must begin by determining what is included or excluded from the calculation. Then you must define what you are attempting to quantify. For attrition, this may be annual attrition, monthly attrition, rolling attrition based on a period of months, attrition for a particular subset of agents, etc.

Some common formulas for calculating attrition are:

Net Agent Attrition rate: Total number of agent exits/total employees * 100

Actual Agent Attrition rate: Total number of involuntary exits/ total employees * 100

Annual Attrition rate = (Total number of agent exits/average number of agents during the period) * (12/number of months in the period)

Shrinkage rates are used to help determine the number of excess staff needed to ensure that the actual number of agents required to meet service level objectives are actually in place. This is formula is difficult to develop, given the number of variables that can be factored into shrinkage calculations: adherence, absenteeism, occupancy/utilization rates, etc. There is also more than one approach for calculating shrinkage, based on either a linear or inverse formula. To determine a formula for shrinkage, you will need to start by defining which variables to include in the calculation and then determine how much time is associated with each variable. All workforce management solutions calculate shrinkage so that it can be taken into account when creating agent schedules.

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