Executive Interviews : Dennis Donovan - Principal, Wadley-Donovan-Gutshaw Consulting On Site Location

When choosing a new location for a contact center, what are the top 3 most important aspects to consider?
Contact center locational decisions are overwhelmingly influenced by labor. The ability to achieve staffing objectives (recruitment retention), now and in the foreseeable future, is the most critical location selection consideration. The paramount factors to take into account are

Labor Cost

Starting wage
Wage Progression
Incentive compensation
Future wage pressure/escalation (based on emerging competitive conditions)

Labor Availability

Underemployed (e.g., retail clerks, lodging industry clerks, lower wage CSRs/TSRs/pool)
Unemployed
New entrants (high school and college graduates)
Supplemental sources such as military dependents
Competitive demand for requisite labor within the primary commute zone (e.g., 30 minutes)
Call center
Back office
Other (e.g., high-tech manufacturing)

Labor Quality/Stability

Speech patterns
Basic skills attainment (e.g., communications)
Problem solving skills
PC literacy
Turnover
Unscheduled absenteeism

A second important criterion is presence of an available building. Plug-n-play is preferred. An alternative is a structure with ample parking (8-10 spaces per rentable square foot of office) that can easily be retrofitted. This reflects the imperative to become operational ASAP.

Post 9/11, risk has also assumed a lead role. This category encompasses natural disaster potential, terrorist threat (e.g., proximity to a nuclear power plant), site security, and redundant utilities (Telecom, power, and back-up generator).

In terms of cost, what should a contact manager expect when moving to a new location?
Unequivocally, the predominant cost variable is labor. Payroll typically constitutes 75%+ of geographically-variable costs for a contact center. Key payroll cost elements are:

Competitive entry level wage, necessary to generate a large flow (typically 5 or more per open position) of well qualified applicants
Sustainability of the initial salary structure well into the future
Cost of fringe benefits most coveted by workers in the targeted location
Replacement costs (e.g., recruiting/training) due to turnover (can range from $1,000-$3,000 per replacement)
Cost of unscheduled absenteeism (can range from $150-$300 per incident)

Second most important cost element is occupancy. But this is far down the ladder vis-à-vis labor. Third on the list would be state/local sales tax on interstate telephone calls.

Do you agree that the most important component of site selection is the geographic location?
The curt response in No. Explanation follows.

Customer service agents do not personally interface with customers
Effective customer service via telephone or email can be conducted from nearly anywhere in the world
Time zone balance only becomes important for staffing during when calls are made/accepted. This should only come into play if there is a peak call period during hours that are traditionally difficult to staff (e.g., 5 to 9 PM). And this should only become important if there are large numbers of people that must be employed during these hours.
In general, we find that time zone strategies are ill founded. More important is the dynamic of business continuity. This has more to do with telecom providers and electric power grids as opposed to time zones.

What does the site selection process for contact centers involve?

For most companies, they should be thinking of a multi-shore strategy including the US
In multi-shoring, the primary drivers is language requirements based on character of customers served
Of course, total cost structure for enterprise-wide operations must be considered
But it would be a mistake to overlook low cost options in the US or Canada. There are many communities wherein an $8 hr. or less wage would result in a commanding labor market presence. These locations can yield a big pool of highly qualified workers. An example would be the NEW customer service center in Klamath Falls, OR.
Not all companies have been satisfied with offshore centers due to issues of language, cultural awareness, and service quality. An illustration is Dell which has moved several offshore operations back to the US.
In short, companies will continue off shoring due to cost pressure. But part of the solution will be location of facilities in small towns both in the US and Canada
When sighting a new facility anywhere in the world, a structured four phase process should be followed.
Phase One: Discover/Definition
-Determine the role of the new contact center in attainment of business objectives
-Define year one and most importantly longer range operating requirements especially labor
-Determine what geography to target for the new facility
-Assign relative weights to various locational criteria
Phase Two: Location screening
-Follow a systematic process to identify a longlist, maybe 8-10 of promising locations
-Further evaluate, rank, and score the longlist
-Benchmark existing locations, if pertinent
-Select three locations for due diligence evaluation
Phase Three: Location Selection
-Conduct a field based due diligence evaluation
-Primary component is interviews with comparable employers in the main commute zone
-Secondary components are interviews with other groups such as personnel agency
-Inspect potential sites/buildings
-Determine if there are any red flags on other services such as telecom, electric power, and taxes
-Secure preliminary incentives package
-Compare the long-range viability of each area, led by labor market, to make the final choice
Phase Four: Final incentives/real estate negotiations
-Focus on the preferred location and back-up location
-Undertake negotiation for office space and incentives
-Be sure that there are no deal breakers on concerns such as Telecom
-Prepare a "getting into business" plan
-Select the best location (community) and site (property)
-Announce the decision
-Create an implementation team (e.g., HR, real estate, tax, legal, corporate affairs)
-Prepare an exit strategy should conditions deteriorate (e.g., labor market or social/ political)
-Prepare a business continuity plan

What are the new trends when it comes to designing a call center?

Contact centers should be state-of-the-art, leveraging the latest technologies
Redundancy should be built into contact center design
The center should be designed to be worker friendly (e.g., avoid bullpen appearance, ergonomically state-of-the-art, quiet, bright, airy, and physically attractive)
If a critical mass is not possible, then the final site should be within walking distance of requisite amenities
Corporate giving/ civic responsibility is important to ensure employer of choice status
Short-term leases (less than 5 years) are advisable as part of an exit strategy

What suggestions would you give to a contact manager looking into a new site location?

Understand that the planned center needs to be viewed as a preferred place to work which embraces the following
-Salaries
-Benefits
-HR practices (e.g., alternative work weeks)
-Recruiting sources/methods
-Career mobility
-Buddy system for new hires
-Onsite amenities
-Internal work environment
-Supervisory development/training (especially interpersonal skills
Hire as many as possible professionals/ supervisors that are from the area or region that understands the culture of the workforce
Retain local legal and labor counsel
Consider incentives "icing on the cake"
Far more important than incentives is efficacy of operating conditions, especially labor market
Create an exit strategy should operating conditions sour
Be sure that the new facility is an attractive place to work
Develop a business continuity plan