Rethinking Shrinkage: The 40-Hour Assumption That Distorts Contact Center Planning

Most contact center leaders believe they understand their labor model.

Headcount is approved. Salaries are budgeted. Capacity is forecasted.

And underneath it all sits a quiet assumption: 40 paid hours equals 40 productive hours.

That assumption deserves scrutiny. As Mark Alpern, Co-Founder and COO at Cinareo, explained, “When we talk about shrinkage, it’s really a generic term for non-productive time… it is as simple in principle, but complex in execution.”

The complexity is not in the arithmetic. It lies in how shrinkage assumptions ripple through staffing models, financial forecasts, and service commitments.

From 40 Hours to 27: The Mathematical Reality

A simple waterfall model makes the issue tangible, as Zakaria Berrada, a contact center and workforce management leader with over 20 years of experience, illustrated.

Start with 40 paid hours a week. Now subtract the realities of operating a contact center (sample list below):

Vacation

Sick Time

Breaks

Meetings

Training

System Downtime

In the example shown, the result was not 40 hours of productive time. It was closer to 27.

Zakaria noted, “When organizations just consider 40 hours input as 40 hours output, then every problem will start from there.”

That is not a commentary on inefficiency. It is a reminder of structural reality. The gap between paid time and productive time is not optional. It must be engineered into planning models.

For executives, this is not an operational detail. It is the foundation of forecast integrity.

Shrinkage Is Not a Blended Percentage. It Is a Governance Variable.

Karen Elliott, CEO of Cinareo, acknowledged, “Shrinkage is often rolled into a single percentage because it feels easier to manage that way. But when you blend everything together, you lose visibility into where the real risk sits.”

What gets lost in that blending is the nuances of the intricate structure of shrinkage. Shrinkage is not a single phenomenon. It operates across distinct dimensions:

• In-office versus out-of-office

• Planned versus unplanned

• Controllable versus uncontrollable

• Predictable versus volatile 

When those dimensions are collapsed into a single annual percentage, risk becomes harder to detect and harder to manage.

Data from industry respondents shows that a substantial portion of organizations still treat shrinkage as a single blended metric, and some lack confidence in their true rate.

When visibility is partial, forecasts are inherently fragile.

For a CFO or COO, that should raise a question: if the shrinkage assumption is wrong, how many downstream forecasts are distorted?

The Compounding Cost of Being “Slightly Off”

Shrinkage variance rarely looks dramatic on paper. A two or three percent difference may feel tolerable. In reality, even a 2.85 percent error becomes material at scale, compounding into millions across large contact centers.

At:

• 1,000 agents, that variance represented over $1.4 million and the equivalent of 28 FTE overhired.

• 5,000 agents, it exceeded $7 million and 142 FTE.

This is where shrinkage shifts from an operational metric to an executive concern.

Overestimating shrinkage inflates cost structures and reduces operating efficiency. Underestimating it reduces effective capacity, increases occupancy, and degrades both customer and employee experience.

Mark cautioned, “Just because you can save a penny does not mean it will truly hit the bottom line. When shrinkage is understated, the savings often resurface elsewhere, through service degradation, higher attrition, rehiring costs, and customer dissatisfaction. At scale, shrinkage is not overhead. It is capital allocation.”

Unplanned Absence Is Not Random

Unplanned absenteeism is frequently cited as the primary driver of excess shrinkage.

Les Nichols, Supervisor of Contact Center Operations at Enbridge Gas Ontario, challenged a common reflex: “If absenteeism consistently exceeds plan, we cannot keep calling it unpredictable. When ‘people called in’ becomes the recurring explanation for missed service levels, that is no longer volatility. That is a modeling issue. At that point, it becomes a question of planning discipline.”

That discipline requires a shift in mindset. As Zakaria Berrada put it, “Predict it. Act on it. Make sure that you control it.”

Unplanned absence is rarely random. It reflects patterns, seasonality, and behavioral signals. When those are not engineered into forecasts, service risk becomes predictable rather than episodic.

Planning and Execution Cannot Operate in Silos

Reducing shrinkage to either a planning failure or an execution failure oversimplifies the issue.

Mark captured it directly: “Operations management, including workforce management, is a team sport… you can’t operate in silos.”

Shrinkage assumptions affect:

• Workforce planning

• Operational discipline

• HR policies

• Finance forecasting

• Recruitment timing

If planning models and operational behavior are misaligned, shrinkage variance compounds. If finance approves headcount based on incomplete assumptions, cost structures drift.

For executive leaders, this reinforces an important principle: shrinkage belongs in governance conversations, not only operational reviews.

What Mature Organizations Do Differently

The goal is not to eliminate shrinkage. It is to engineer it intentionally, so capacity, cost, and service remain aligned.

Mature organizations tend to:

• Separate in-office and out-of-office components.

• Forecast historical absenteeism rather than treat it as a surprise.

• Reconcile the shrinkage variance monthly.

• Align workforce management, operations, and finance assumptions.

• Treat shrinkage as a capacity planning discipline rather than a scheduling adjustment.

As Mark summarized, “Plan the work right. Then work the plan right.” 

Les added a simpler but equally important directive: “Find out what you don’t know.”

Shrinkage is not eliminated. It is engineered.

The Strategic Question

40 paid hours will never equal 40 productive hours.

The question for leadership teams is not whether shrinkage exists. It is whether it is modeled with sufficient discipline to protect margin, service levels, and employee experience simultaneously.

If the underlying assumption is off by even a few percentage points, the impact does not stay operational. It becomes financial, and at scale, strategic.

That is why shrinkage deserves more than periodic review. It requires deliberate modeling and cross-functional alignment.

For leaders who want to pressure-test their assumptions and examine the full financial modeling behind these scenarios, the complete session is available here.

A more detailed breakdown, including benchmarks and modeling frameworks, is also outlined in our Transforming Shrinkage from a Hidden Cost to a Strategic Opportunity white paper.