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  • Writer's pictureVinay Vasudevan

Occupancy - From a Revenue and Cost Perspective

Updated: Feb 7, 2022

Most of us in WFM would have heard the word "Occupancy" a lot.

In my view, Occupancy is the resultant of the definition of WFM - "Right People with right skills at the right time".

Occupancy is sometimes confused as "Productivity" and "Utilization", but they measure different things in reality. Occupancy answers the question: for what percentage of the time that the FTEs are logged in live and are busy with customer activity, or are they available to do more? Utilization answers the question: for what percentage of the time FTEs get paid and are logged in and assisting or available to assist with a customer activity? Productivity comes from the word 'productive'. As a result, productivity can easily be understood as the comparison between the rate of output versus per unit of input.

We can calculate the Occupancy using many methods, and I've mentioned some of them below.

Using Historical Data

If we have historical data, even for the past one interval, we can calculate the Occupancy using the below formula.

But this method is restricted to only historical use.

Using Workload Formula

When we have the volume, AHT, FTE, etc., we can calculate Occupancy using the below formula. This method can be used for both Historical and Futuristic.

Using Erlang

For the case of immediate response queues such as Inbound, Chat, Social Media, etc., we can use the Erlang formula to calculate the Occupancy as mentioned below.

=Utilization(Agents, Calls per Interval, AHT)

There are many methods to calculate Occupancy for Deferred Media, out of which the Time and Motion Study is the primary method. Time and motion study is a work measurement technique for recording the times of performing a particular specific job or its elements carried out under specified conditions. Apart from just the Volume, AHT, and FTE, the Intraday Pattern and the SL Goal also plays a significant role in Occupancy. However, irrespective of how we calculate and what we call it, it is the same and can be termed "Occupancy". But, did you know apart from this, we have other occupancies which are calculated and mainly come from a Revenue perspective? Those are called Staffed, Actual and Billed Occupancy.

We need to first look at a capacity planner to understand those occupancies. The main reason for a capacity planner is because that is the easiest way to know what the future looks like. I've attached a sample capacity planner at the end of this blog where the calculations are more elaborated in context with the topic here. Make sure to check the planner. Some significant inputs are required to calculate the Occupancy that could be taken from the capacity planner. Let's deep dive into each one of them to understand more.

Staffed Occupancy

Occupancy is used as an input to calculate the FTE Required and the call capacity to build a capacity planner. This Occupancy comes out of any methods mentioned above and is mainly calculated using the Forecasted Volume and Target AHT. This Occupancy is termed as "Staffed Occupancy". I just took the weighted average against the Projected FTE to determine the overall Staffed Occupancy.

Actual Occupancy

The main agenda of building a capacity planner is to ensure we don't have any Head Count deficit in the future. We bring new hire batches for this, which could be due to attrition backfills or Ramp up. However, due to some restrictions, sometimes, we end up having more or less than the required. When we have excess staff, the call capacity will be higher than the forecasted volume, but we cannot handle more than the forecasted volume in an ideal scenario. In the same way, when we have a staffing deficit, the call capacity will be lesser than the forecasted volume, and we can handle only those volumes. Of course, we can handle more calls by using support staff or overtime. However, let's not consider that for this context since they are planned mainly on a real-time basis. So, whichever is minimal between the forecasted volume and the call capacity would be called "Billable Volumes". Also, the newbies go through an AHT Learning Curve to get accustomed to the process. Due to this, the overall weighted AHT will be higher than the Target AHT. Due to the variance between the forecasted volume and call capacity and between overall AHT and Target AHT, the Occupancy is impacted. It could either increase or decrease compared to the Staffed Occupancy on a monthly basis. But, the Actual Occupancy will definitely be lower than the Staffed Occupancy overall. So to calculate the Actual Occupancy, below are the required inputs.

  1. Minimum Volume between Volume Forecast and Call Capacity (Billable Volume)

  2. Weighted AHT, which includes the Learning Curve

  3. Projected FTE

  4. Shrinkage

Billed Occupancy

As told earlier, the Weighted AHT will always be higher than the Target AHT due to the new hire AHT Learning Curve. This necessarily doesn't mean that we can bill the client at the Weighted AHT. Therefore only Target AHT can be used and is called "Billable AHT". That is the only difference between the calculation of Actual and Billed Occupancy where instead of using Weighted AHT, we use the Target AHT to calculate the Billed Occupancy. So to calculate the Billed Occupancy, below are the required inputs.

  1. Minimum Volume between Volume Forecast and Call Capacity (Billable Volume)

  2. Target AHT (Billable AHT)

  3. Projected FTE

  4. Shrinkage

The Billed Occupancy will definitely be lower than the Actual since the AHT is lesser. Looking at the attached Capacity Planner for the numbers, you can see a decreasing trend between Staffed, Actual, and Billed in descending order.

The deviation between the Staffed and Actual Occupancy mainly comes from the over/under staff we plot.

And the deviation between the Staffed and Billed is mainly due to the AHT Learning Curve.

Higher FTE will lower the Actual Occupancy and vice versa.

And at the same time, raise the Learning Curve and lower the Billed Occupancy.

After reading this blog, you must be wondering why we are even doing this?

What is the use of calculating these occupancies?

Well, to know that, please look forward to my next blog

I'll end this up with a beautiful quote.

An educated workforce is the foundation of every community and the future of every economy

As always, thank you for reading.

Stay Tuned!!

Check out the weWFM Podcast on Apple or Spotify

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