Making Pay for Performance Work for Your Contact Center

Pay-for-performance programs can improve collaboration, customer and client satisfaction, and employee retention and recruitment. They also can break the budget, hurt customer satisfaction, and destroy team morale. The difference between the two is all about designing the right incentives.

At SaviLinx, we started implementing pay for performance more than 15 years ago when we realized that our compensation system was not rewarding our best people. Agents who had been with us the longest were the best paid, and not all of them were our best performers. We decided to replace tenure with performance as the primary consideration for salary. The move leveled the playing field: Everyone earned the same base pay, but they could make more per hour by hitting payment incentives. It was wildly successful. Yes, some agents left, but only a handful, and the best-performing people stayed.

I've implemented pay for performance at every contact center I've managed since, and I am happy to share some information on what works and what doesn't.

Building a pay-for-performance program is all about figuring out which outcomes you want and which behaviors will get you there. We design ours based on a mix of contract and staff considerations around the following:

  • Client requirements;
  • Agent actions;
  • Supervisor buy-in;
  • Transparency; and
  • Anticipating outcomes.

Source Ideas from Client Contracts.

SaviLinx provides a variety of services, from customer service to tech support. Our contracts spell out specific deliverables. Our objective is to meet and exceed those expectations, so we start with our contract when we design performance incentives. If call time is a key performance indicator, we can develop incentives based on that. If incidents per hour, reduced callbacks, or high customer satisfaction scores are in the contract, we start there.

Measure Agent Actions.

The key is to find behaviors that can be measured, including one or more metrics at a time. Here are some examples:

  • We set up quality on one axis and handle time on the other. The higher the quality and lower the handle time, the greater the incentive.
  • We focused on decreasing error rates on a contract where agents manage very sensitive calls.
  • We track how many incidents per hour are closed successfully, with an incentive kicking in after a certain baseline amount.
  • We use a daily metrics dashboard for one federal contract staffed primarily with work-from-home agents. Every day the agents know their goals for the week and where they stand. Agents who perform the best get preferential shift scheduling.

Get Management Buy-In.

All employees, including management, seek recognition. We always ensure that supervisors are committed to the incentives and share in their team wins. Supervisors can earn an equivalent of a 15 percent pay increase each week that their teams hit their goals. Our supervisors are the company ambassadors. It's imperative that they believe in the program and can articulate its importance to their teams. We include quality control in the process to ensure that supervisors have ample feedback for agents who are nailing it and others who are struggling.

Be Transparent.

Communication is the most important factor in a successful program. Once you have designed incentives, be very explicit about who gets them, how much, and when. Make sure that supervisors, payroll, and finance all understand program details. Provide a tracking mechanism so agents and supervisors can see their performance and measure it against their peers. Be up front that it is not cast in stone and that the goals and pay outs could change as business needs evolve. Don't be afraid to raise the bar.

Measuring Results

What can you hope to achieve by implementing a pay-for-performance program? Here are some results that we have tracked:

Contract #1: For this client, we were eager to boost the number of incidents handled per hour while also ensuring that adherence and quality remained high. After we implemented a bump to the hourly pay rate for agents who met goals, we tracked the following results:

  • The number of incidents handled per hour rose on average by 35 percent.
  • Adherence jumped 24 percent, from a low of 72.16 percent in one month to an average of 90 percent per month.
  • Our quality stayed high. We started with an average of 95 percent and now it's at 96 percent.

Contract #2: For this client, our goal was to reduce errors while maintaining or improving quality. Agents could earn up to $3 extra per hour for hitting goals: $1 for no errors, 50 cents each for QA and QC greater than 95 percent, and 50 cents each for 85+ percent productivity and perfect attendance in the time period. We tracked the following results:

  • Call error rate decreased from a high of 2 percent per month to 0.53 percent. This rate is consistently trending downward.
  • Quality assurance trended up, from a low of 77 percent to 91 percent.
  • Quality control is also up, from 88 percent to 96 percent.
  • This has saved us money: We calculate that we lost more than $53,000 in revenue prior to implementing pay for performance. Revenue lost since implementation is down to $640.

Avoiding Mistakes

Some things we learned the hard way included the following:

The timeframe matters: After initially measuring quarterly we learned that it was too long a timeframe for employees to appreciate the impact of the incentive on their pay. We now measure biweekly. Agents who have a bad couple of weeks are motivated to turn it around; agents who do well see it in their next paychecks.

Attendance is a key performance indicator for us across all contracts, so we make it a mandatory aspect for eligibility. If someone isn't showing up, it skews the results for other agents. Bottom line: if an agent misses work during the paycheck period, she is not eligible for incentives. She can get back in the game during the next period.

It can be easy to blow the budget. Early on in a former contact center, we designed an incentive that was just too easy to hit. We spent a lot of money too fast and had to scale back other incentives. Take a look at your hourly wage when designing a program. When we bring on a new client, we'll set the base rate so that there is room for incentives and communicate that in our interviews. With some contracts, agents can earn $4 more than the base.

Make sure incentives are measurable, attainable, and drive the right change. The goal here is to incentivize agents to meet certain goals. That means being able to measure the baseline and the growth toward the goal. Incentives must be tangible or you risk being called out for favoritism. Every incentive will impact all behavior, so pay attention to the levers you are pushing. A focus on one incentive could have unintended consequences. For example, we once paid agents a premium for reducing call times. It worked great until we realized that call quality was suffering. Back to the drawing board…

Make incentives fair and attainable. We once designed an incentive that was based on handling a particular type of client call. The only problem was that calls are assigned at random to agents. Some were able to earn more while others had no way to participate. On the flip side, we also designed a program that ended up driving agents to seek out a specific type of call, which meant that others had to pick up the slack on work that didn't offer incentives. The program must be fair to all.

Is Pay for Performance Worth It?

When designed well, pay for performance delivers for both the company and the employees. The American Compensation Association looked at more than 660 incentive plans across a range of industries and identified the net return on payout as 134 percent. For SaviLinx, our pay-for-performance program helps with retention, recruitment, and team building. Our best people make the most money, we bring people on board who are eager to do what it takes to make more than the base pay, and competition among teams builds engagement among agents, especially those who work form home.

At SaviLinx, pay for performance has been wildly successful, and some times abysmal. We've learned, iterated, and incented based on a mix of science and human intuition. We start with metrics that are correctly attuned to the agents and supervisors being measured and create an environment for them to succeed.

Kim Williams is chief operations officer at SaviLinx, a contact center outsourcer headquartered in Brunswick, Maine. She has established brick-and-mortar and work-from-home contact centers in numerous industries and geographies, including Europe.