Pay-for-Performance Schemes: Where Most Contact Centers Go Wrong

Updated: January 08, 2008

Issue

Today's contact centers are ideally suited to performance-related pay schemes. Yet many companies fail to make the most of this important motivation and retention tool. What's worse, a substandard pay-for-performance strategy can have a disastrous impact on a company's workforce morale, recruitment success and attrition rate.


So where exactly are contact centers going wrong? According to Colin Taylor, CEO of The Taylor Reach Group, a contact-center consultancy, "The big problem most contact centers have is determining what the goals and objectives should be to associate with performance pay."


Analysis

In a sales environment, for example, a contact-center agent's performance pay relies on a commission-based structure, representing a fraction of a representative's overall sales. That'seasy enough to calculate. But when it comes to developing a performance-related pay formula in a strictly customer-service environment, Taylor said "most organizations really manage to screw up dramatically."


That's because quantitative metrics such as handle time and available time aren't always an accurate reflection of an agent's performance. Take, for example, a company that decides to make the ability to up-sell on a particular product or service a performance pay-worthy activity. The danger, warned Taylor, is while "that hugely values the ability to generate new revenue, at the same time it devalues the people who may not be as effective at sales but are quite effective at the primary role of the center."


Rather, Taylor advises companies to use qualitative metrics such as customer satisfaction and first-call resolution to determine performance pay among contact-center agents. And that means deploying the right measurement tools, such as call-monitoring software and quality-assurance solutions.


"Qualitative metrics will give you a better picture of the quality and effectiveness of the agent," said Taylor. "Of course, you can't compensate people on first-call resolution if you don't have the ability in the contact center to measure it accurately."


Once a company has decided on the metrics it wishes to use to measure performance, determining what type of reward to offer employees should be easy enough. "It's money, money or money," said Taylor. That's not to suggest, however, that verbal recognition isn't also a valuable reward. After all, said Taylor, publicly acknowledging an agent's superior skills "allows star performers to receive more compensation and be treated better than the people they're working alongside who aren't performing as well."


Conclusion


Whether offering a top-notch agent a handsome financial bonus or a plaque on the wall, one thing is for certain: Companies need to deploy a performance-related pay scheme properly — or not at all. Said Taylor, "There's no faster way to destroy morale in your contact center than to implement a poorly thought out, executed and measured pay-for-performance model. Any change to compensation creates a huge amount of questions in the minds of the staff and has huge downside risks."


For more on contact centers, check out Focus' related resource center, where you'll find in-depth research, topical research briefs and community-contributed content.

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