Any combination of absenteeism, tardiness, time offs, planned or unplanned, and other lost time instances that takes away from time that could have gone to assisting customers or producing for the business. There is flexibility in what is included or excluded in the consideration, but generally, only time spent working or waiting on work to arrive is not considered Shrinkage.
Measurement: 1-((Working Time + Available Time)/ (Schedule Time – Any Excused Shrinkage Items, such as breaks))
Benchmark: With every possible non-customer facing included, Shrinkage should generally not exceed 25-30% of the Schedule. Lower is better.
Importance: 30% Shrinkage means in a 40-hour workweek, only 28 hours are available to produce or assist customers. The other 12 hours while may be needed for employee benefit or development, should clearly be defined with a focus on reducing. Generally, any time not adding value to customers or going towards productivity, is a cost for the business.
Alternate Terms: Staff Shrink, Shrink%, Lost Time