Shrinkage | Part 4 | WFM Calculations - Out-of-Office Shrinkage

Updated: Jan 3

Welcome to the last part of this topic:


In this article, we are going to understand the calculations of out-of-office shrinkage.

Let's take a look at Mr. Roy who has just joined ABC Company in India:

Mr. Roy have been informed that he will work for 5 days in a week with 2 days off.


Apart from this, he is entitled to get the following paid holidays:

  1. Planned Leave = 15 days a year (on tenure based)

  2. Sick Leave = 7 days a year

  3. Bereavement Leave = 3 days (if applicable)

  4. Maternity Leave = 26 weeks in a year (If applicable)

  5. Paternity Leave = 5 days in a year (if applicable)

From the above list, planned leaves are usually exercised by every employees;

Sick Leaves are occasionally applied and majorly falls into unplanned absence

The rest other leaves are applied only in case it is applicable.


Let's take a look at scheduled hour calculation for employees using just Planned Leaves.

There are 52 weeks in a year; thus, an employee works for 52 weeks

=> An employee works for 5 days in a week with an FTE definition of 40 hours; since ABC Company is in India.


=> 52 Weeks X 40 hours = 2080 hours

Planned Leave = 15 days X (40 hours/5days) = 15 days X 8 hours = 120 hours

=> An employee will give (2080 hours - 120 hours) productivity every year

=> An employee will give 1960 hours productivity every year

This is just an illustration and can change between different companies.


In event of OOS, this data purely depends on employee behaviour and always assessed as per the process trends or historical data. This can not be practically calculated using standard methods (similar to ones we did with In-office shrinkage).


Overall Out-of-office shrinkage is bench marked using historical data with series of analysis. The bifurcation of Planned Shrinkage and Unplanned Shrinkage will closely depend on how many employees have applied for leave in advance against the total headcount for a given week or a month.


Lets study this with an example:

ABC Company have bench marked their Out-of-Shrinkage at 12%.

The current headcount for the process is 107 FTEs.

The process works from Monday through Friday and Saturday-Sunday are business off (this is quoted to make the calculation easy for time being; we will understand rotating schedules once we move further into advance blogs and articles)

The scheduling team is in process to freeze planned holidays for the week commencing 06 Dec 2021 and until now, 10 FTEs have applied for holiday on 06 Dec 2021 and 8 FTEs have applied on 07 Dec 2021.

Calculate Planned and Unplanned Shrinkage.


Given:

OOS - 12%

HC - 107 FTEs


Planned Shrinkage on 06 Dec = 10 Leave/107 FTEs = 9.35%

Unplanned Shrinkage = 12% - 9.35% = 2.65%


Planned Shrinkage on 07 Dec = 8 Leave/107 FTEs = 7.48%

Unplanned Shrinkage = 12% - 7.48% = 4.52%


The Unplanned shrinkage is always derived by the remaining percentile from benchmarked shrinkage.

This factor is critical part of risk assessment for a given day.

If more employees take unplanned absence over and beyond the target for the day, then the process may not meet the contractual service goals. Therefore, process is at risk of non-adherence which will have consequences.

Intraday Team or Real Time Team are assigned to assess these risk factors and raise alarm at right time to ensure a back-up plan is in place to avoid such risk. We will understand this better on our future articles.


Attached is an excel document with calculations for better understanding.


OOS
.xlsx
Download XLSX • 10KB

Thanks for reading! Happy Learning!


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