Contact Center Convictions

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I’d like to introduce what I plan to be a long-running topic in this blog: performance-based compensation.

Should we compensate agents based on their performance?  Well… I would guess that about half of you will not only say yes, but say that you are already doing it.  I’ve heard stories of success and just as many stories of failure in this endeavor.  I’ve experienced success and failure in my own call centers.  So, let us surmise that incentives are a tricky business.

Thomas Jefferson once commented (regarding the Boston Tea Party), “So inscrutable is the arrangement of causes & consequences in this world that a two-penny duty on tea, unjustly imposed in a sequestered part of it, changes the condition of all its inhabitants.”

In one of my favorite books on economics (Freakanomics) the authors proclaim, “An incentive is a bullet, a lever, a key: an often tiny object with astonishing power to change a situation.”  They go on to share many impressive examples of how an incentive, even a small one, can change the dynamics of any situation.  The subtitle of the book is the “hidden side of everything.”

What about in the call center? Will agent performance change based on incentives?  Yes, my experience is that incentives can motivate agents to do more of a good thing or less of a bad thing.  But again, it is a tricky business.  Where do we start?  What do we measure, and how often?  What about service level?  No.  Average handle time?  Uh… maybe.  Think about ways we measure quality (e.g. customer feedback or first-contact resolution) and ways to measure effectiveness (e.g. unit of accomplishment per hour of work). We can drill into this in future entries on this blog.  For now, I will ask you - how do you measure an agent’s contribution?  What has worked or has not worked for you in motivating agents with incentives?  Can you tie key indicators of the agent’s performance all the way back to the goals of the company?  (With any input, please let me know if you operate a customer service contact center, technical support, or sales, as these three categories require different strategies.)

The next question is how do we make it fair?  How often should we change it? What percentage of the agent compensation will be based on these metrics?  What about supervisors, managers, quality assurance staff, workforce planners, and training personnel?  We need to explore these questions.

Finally, while talking about compensation we should also be aware that recognition and rewards (non-cash rewards) are also powerful incentives to motivate agents.  The question is how do we balance performance-based incentives between recognition, rewards, and cash?

Let me finish by sharing another example from Freakonomics.  Some economists studied the behavior of parents arriving late to pick up their children at a chain of 17 day care centers.  They found there was an average of eight late pickups per week per center.  Then they implemented a penalty of $3  to anyone picking up their child late.  What happened?  Late arrivals more than doubled to 20/week.  Why?  I would suggest if this interests you then read the book… the authors go on to say that the economists failed when they substituted an economic penalty (and too small of one) for a moral penalty (guilt for being late).

I’m asking a lot of questions here and hope that as a community we can find the right answers. Please send me your thoughts on this topic, and watch for additional entries in the future.