Shrinkage

In workforce management, Shrinkage refers to practice that coordinates staffing and scheduling across teams and shifts. It relies on data, clear workflows, and role-based rules to translate demand and rules into day-to-day execution, giving managers visibility into exceptions, trends, and capacity gaps. Done well, it strengthens service levels and labor efficiency, reduces unplanned costs, and supports consistent decision-making across locations. Regular reviews and feedback loops keep assumptions current and improve outcomes over time. It creates a shared operating rhythm across teams, improves handoffs, and gives leaders the data needed to coach performance. It creates a shared operating rhythm across teams, improves handoffs, and gives leaders the data needed to coach performance. It creates a shared operating rhythm across teams, improves handoffs, and gives leaders the data needed to coach performance.

Value for Leaders

Shrinkage is the portion of paid time that is not available for scheduled work, such as breaks, training, meetings, and unplanned absences. It affects coverage and drives staffing requirements.

Accurate shrinkage assumptions prevent understaffing and reduce reactive overtime.

How Outcomes Are Delivered

Teams track shrinkage by category and time of day, then apply those rates to staffing models. This creates realistic schedules that reflect true availability.

Regular reviews help leaders see which drivers are controllable and which are seasonal.

Frequent Pitfalls to Avoid

Using a single, static shrinkage rate hides important patterns. For Shrinkage, another issue is failing to separate planned shrinkage (like training) from unplanned shrinkage.

Core Metrics

• Shrinkage rate by team and interval.
• Overtime linked to shrinkage gaps.
• Planned vs. unplanned shrinkage ratio.
• Forecast accuracy after shrinkage adjustments.

Shrinkage is often misunderstood as waste, but much of it is planned time like training and meetings. The goal is to separate what is controllable from what is required.

Teams should maintain separate shrinkage targets by role because availability differs between frontline and support functions.

When shrinkage increases, analyze whether the cause is seasonal, policy-driven, or operationally avoidable.

Many organizations calculate shrinkage separately for operational and non-operational time so staffing models are more accurate.

Short weekly reviews can catch unexpected increases before they affect service levels.

Communicating shrinkage assumptions to supervisors improves schedule planning discipline.

Shrinkage targets should be reviewed after major policy changes or staffing model shifts.

Different shift patterns often require different shrinkage assumptions.

Operational leaders should understand how shrinkage affects required headcount.