Changes in the labor force will impact the customer experience (CX) as much, if not more, than emerging technologies over the next decade.
While next-generation CX technologies, like artificial intelligence (AI), augmented reality, and the metaverse, are exciting, they disregard the most important part: the human touch. And that is why contact centers are about people helping people. But there are significant challenges in ensuring enough people are available to help customers.
In Part 1, I discussed the macro population issues, labor market trends, and government policies that will continue to shape the availability and cost of contact center employees.
In Part 2, I describe key customer service staffing trends and how contact centers can plan and respond to them.
Customer Service Industry Trends
The contact center industry is particularly susceptible to changes in the labor force because of high attrition and the ongoing shift toward outsourcing to save money.
Contact centers require a stream of people to backfill jobs and support growth. Recruiting and keeping the right people is vital to a center’s success and a never-ending challenge.
The U.S. Bureau of Labor Statistics’ (BLS) Occupational Outlook Handbook forecasts that employment in the customer service industry, which includes the contact center industry, will decline by 5% between 2022 and 2032, pushed downward by automation. Nevertheless, there will still be an average of 373,400 job openings per year, due primarily to churn.
Automation impact?
It is tempting to imagine that widespread automation will lead to an equilibrium in contact center hiring, where the labor pool and hiring needs align in the near term.
As discussed earlier, most consumers prefer human interaction despite the industry’s unprecedented investment in automation, illustrating the conflict between profitability and consumer demands. Companies will continue to seek innovative solutions to lower costs, but these investments may not satisfy customers.
Although technological advances will eventually supplant human interaction, much work remains before AI can deliver the CX customers expect. In the meantime, how companies balance cost savings and meeting consumer expectations will ultimately determine the impact of the reduced labor force on contact center hiring.
Work-From-Home Effect
The move towards work-from-home (WFH) began decades before COVID-19 turned the world on its head. While WFH has long been common in certain fields, like journalism and sales, it has only recently expanded beyond such niches.
Nearly 50 years before the pandemic and four years before the first mass-produced personal computers hit the market, a NASA engineer, Jack Nilles, coined telecommuting and telework in 1973 to describe a hypothetical working arrangement where machines could streamline communication between people working from satellite offices.
The contact center industry is particularly susceptible to changes in the labor force...centers require a stream of people to backfill jobs and support growth.
Originally viewed as a hedge against petroleum shortfalls in the late 1970s and a cost-cutting measure, IBM launched a WFH experiment with five workers in 1979. The program expanded to 2,000 WFH employees by 1983, including many contact center workers, and 386,000 in 2009, representing 40% of IBM’s workforce (Kessler, 2017).
Although contact centers have long been at the forefront of the WFH movement, the COVID-19 pandemic accelerated its adoption. The global crisis forced slow adopters to transition to WFH to maintain business continuity. Fortunately for many of these companies, broadband internet, virtual private networks (VPNs), and enabling technologies (i.e., VoIP, CRM, and performance monitoring) eased the transition.
WFH still represents a viable cost-cutting strategy, but the capacity to expand access to labor pools makes it an attractive option to many contact centers. For example, I typically see applicant-to-hire ratios in brick-and-mortar centers of around 12:1 versus 30:1 for WFH. When companies receive more applicants, they can – at least in theory – choose employees with better skills.
WFH expands access to talent pools in three important ways.
First, WFH overcomes the geographical restrictions of brick-and-mortar centers. Companies can recruit workers in untapped and remote markets where centers do not exist.
Second, with 48% of workers expressing interest in pursuing WFH roles, according to SHRM, contact centers can attract people who prefer to skip the commute in favor of a home office.
And finally, WFH makes it easier to cater to aging workers, unemployed or underemployed, military spouses, and individuals with disabilities.
Despite its benefits, WFH has drawbacks. Many workers find WFH alienating because they need acceptance and social contact.
Contact centers must look beyond their traditional hiring demographic: frontline agents in the 18-34 age bracket.
Contact centers struggle with effective management and leadership in best-run brick-and-mortar centers; WFH amplifies the problem, leading to poor performance and high churn. The people who perform best in WFH jobs – those with ambition and conscientiousness – may be more likely to leave unless they have opportunities for advancement.
What Can Contact Centers Do?
Contact centers must look beyond their traditional hiring demographic: frontline agents in the 18-34 age bracket. Here are the labor pools they must begin focusing on:
Aging workers
Contact centers must begin embracing – and catering to – older workers, who are by far the largest group of untapped and available talent.
The prevalence of disinformation about older workers (e.g., they are more expensive) creates some hesitancy in recruiting them.
In truth, there are few legitimate drawbacks to hiring these people. Older workers tend to be:
- More reliable than younger workers.
- Possess broader skills and problem-solving abilities.
- Similar in health, education, and technology skills to younger age groups.
- Nearly the same cost as younger workers.
- Willing to work, and a growing population.
Individuals with Arrests and Convictions
A 2018 study by Minor, Persico, and Weiss found that people with criminal histories may outperform and stay longer than other employees.
New laws and policies will give applicants with criminal histories a fairer chance of getting jobs by moving background checks later into the hiring process. The Fair Chance Act, for example, prohibits federal agencies and contractors from requesting data on an applicant’s criminal history until after a conditional employment offer.
Individuals with Disabilities
People with disabilities have more career opportunities than ever. However, data from BLS (February 2023) shows that companies employed only 21.3% of people with disabilities in 2022, and the unemployment rate for these individuals was twice as high as for people without a disability. One factor skewing the unemployment rate for people with disabilities is that half of these people are aged 65 or older.
Slightly more than 92% of individuals with disabilities are employed, though 30% of these people work part-time. Collectively, there are approximately 2.8 million workers with disabilities in the U.S. who are either unemployed or working part-time.
The proliferation of WFH can help contact centers attract individuals with disabilities because of more flexible working arrangements and the availability of assistive technologies.
Job Satisfaction, Engagement Key
Contact centers must improve job satisfaction and engagement to attract and retain qualified workers. Centers need to invest in building more positive environments, offering competitive compensation and benefits, and providing legitimate career growth and development opportunities.
Centers need to do more to combat burnout and improve employee well-being. For example, providing stress management resources, promoting work-life balance, fostering positive relationships among team members, and building a supportive, inclusive work environment can improve coping skills and reduce stress, a leading cause of churn.
Ultimately, hiring an employee is expensive, but the cost of churn is significantly higher, especially when dealing with a challenging labor force.
It is more important than ever for contact centers to hire the right people for the job. The hard truth is that most contact centers do not effectively select the right people for frontline agent roles.
Just consider that the industry’s attrition is 60% higher than the average company, according to Cresta. Although the jobs are emotionally exhausting and demanding, it is possible to choose people best suited for them by following these steps.
Ultimately, hiring an employee is expensive, but the cost of churn is significantly higher, especially when dealing with a challenging labor force.
- Specify the requirements. Invest the time to accurately define the job’s tasks and the required knowledge, skills, and abilities. Do not cut corners on this step. It will pay enormous dividends if you take the time to specify the requirements carefully and comprehensively.
- Create a comprehensive and attractive job description. First, the job description provides a map for recruiting because it delineates the type of applicant you seek. Second, a well-designed job description helps applicants decide whether the role is something they want to pursue.
- Implement a valid, fair assessment process. Finding assessments that deliver value is easier said than done, but there are good products on the market: caveat emptor. Using well-designed and carefully implemented assessments that measure essential skills and abilities will provide a comprehensive understanding of the applicant’s suitability for the job.
- Ensuring hiring decisions are free of unfair bias. Monitor the hiring process to verify that decisions are job-related and fair for all applicants, regardless of group membership.
Conclusion
Delivering a differentiating CX requires the right people and technology. This article reviewed the labor force issues likely to impact contact centers’ ability to find and retain the workers necessary to achieve their goals.
Over the next nine years, if not more, contact centers must overcome a shallow labor pool and an aging workforce to provide the human touch consumers demand. Unfortunately, there is no one-size-fits-all solution that will solve all the problems.
Centers must adopt a multi-pronged approach that involves (a) expanding its targeted demographic to include older workers, (b) doubling down on initiatives to improve employee satisfaction and well-being, and (c) adopting a more thoughtful, disciplined approach to the hiring process.
The contact centers that will thrive over the next nine years will be the ones that successfully adapt to the changing labor force demographics and invest intelligently in recruiting and retention.