Shrinkage | Part 3 | WFM Calculations - In-Office Shrinkage
Updated: Jan 3, 2022
In our previous article, we got visibility on shrinkage from employee perspective along with various components attached to it.
Let's get into mathematics- how do we calculate shrinkage during FTE estimation?
Before we get going, there are some pre-requisite:
https://www.scribblr.in/post/let-s-understand-fte-definition
https://www.scribblr.in/post/shrinkage-part-1-in-office-shrinkage-ios
https://www.scribblr.in/post/shrinkage-part-2-out-of-office-shrinkage-oos
If you have gone through the above posts/article, please move forward:

As suggested earlier, shrinkage breaks down into two components - In-office shrinkage and Out of Office Shrinkage.
These components are represented by percentage value so as to arrive at FTE requirements. Let’s understand this by an example:
Let's take an employee Ms. Nina who works for ABC company in India:
Ms. Nina starts her day ay 14:30 IST and works until 23:30 IST.
=> Shift Length: 9 hours
During the course of her work, she is allowed to take the following breaks:
Short Break - 1 for 15 mins
Dinner Break for 30 mins
Short Break - 2 for 15 mins
=> Total break time: 1 hour
During this time, Ms. Nina is also scheduled for Team meeting of 15mins and Coaching of 15mins every day to discuss any process change or operational decision of different work roles.
Now lets calculate In-Office Shrinkage using the above data:
Total Shift Length - 9 hours
Breaks - 1 hour
Team meeting - 15 mins
Coaching - 15 mins
IOS formula:
In-office Shrinkage = 1 - (Total staffed time/Total scheduled time)
Let's understand Nina's FTE Definition for a week
=> (9 hours X 5 days) - (1 hour X 5 days)
=> 45 hours - 5 hours
FTE Definition = 40 hours
Remember In-office Shrinkage formula:
In-office Shrinkage = 1 - (Total staffed time/Total scheduled time)
In this case:
Total scheduled time = FTE definition = 40 hours
Unproductive time = Team Meeting + Coaching
=> (0.25 hour X 5 days) + (0.25 hour X 5 days)
=> 1.25 + 1.25
Unproductive time = 2.5 hours
Total staffed time = Total scheduled time - unproductive time
=> 40 hours - 2.5 hours
=> 37.5 hours
In-office Shrinkage = 1 - (Total staffed time/Total scheduled time)
=> 1 - (37.5/40)
=>( 1-0.9375) *100
In-office Shrinkage = 6.25%
The above example is for illustration purpose only.
Below is an excel attachment with workings to understand In-Office Shrinkage better:
The in-office shrinkage calculations varies between different companies, location and country's rules and regulation.
DO IT YOURSELF:
Mr. George is working for ABC company in PHP; Can you find the IOS using the following criteria?
Total Shift Length - 9 hours
Breaks = 1.5 hours
Meeting - 30mins every day
One-on-one - 30 mins every week
Please share your answer on the comments section below: