Call Centre Incentive Plan Backfires
Caribbean Connect runs a 120-seat call centre in Port of Spain, handling inbound service calls for a Canadian telecom client. Annual agent turnover is 55%, absenteeism averages 12%, and average handling time (AHT) is 420 seconds against a client target of 360. First-call resolution is 71%, and the client has warned that the contract will not be renewed unless service improves. Six months ago management introduced a commission of TT$150 for each upsold data package, with no cap. Since then, upsell revenue has risen 18% but customer satisfaction has fallen from 84% to 69%, and quality-assurance scores have dropped to 76%. Agents work fixed 8-hour shifts with two 15-minute breaks; supervisors coach only when quality scores fall below 70%. The human resource manager proposes a team bonus based on first-call resolution and attendance, while the operations manager wants to increase monitoring and discipline.
1. Diagnose the causes of the performance deterioration using motivation theory.
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The commission changed what the organisation actually rewarded. Agents learned that effort directed at upselling produced a TT$150 payment, while first-call resolution, empathy and accurate advice produced no comparable reward. In expectancy terms, effort-performance expectancy for upselling is high, the performance-reward link is clear and the reward is valued. For service quality, the same links are weak or absent. Rational agents therefore spend more time on sales talk, which helps explain why AHT has risen from the 360-second target to 420 seconds and why first-call resolution has fallen to 71%.
Herzberg's distinction helps separate the problems. Pay and supervision are not motivators in themselves, but their absence or unfairness causes dissatisfaction. Supervisors coach only when quality falls below 70%, so coaching is experienced as punishment rather than development. Fixed shifts and limited breaks add to the hygiene problem, consistent with 55% turnover and 12% absenteeism. The commission also creates equity problems: agents on different shifts or call mixes earn different amounts for similar effort, and team members may compete rather than help each other.
The drop in customer satisfaction from 84% to 69% and QA scores to 76% is therefore not evidence that agents are lazy. It is evidence that the reward system is misaligned. Any solution must change what is measured and rewarded, not simply demand more effort.
2. Evaluate the HR manager's team bonus against the operations manager's tighter monitoring.
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The HR manager's team bonus correctly shifts attention to first-call resolution and attendance, which are closer to the client's service requirements. A team element encourages peer support, reduces the incentive to poach easy calls, and can improve attendance if the bonus requires a minimum team threshold. Its weakness is free-riding: a strong agent may carry weaker colleagues, and high performers may leave if their individual contribution is not recognised. The design also needs a quality gate so that teams cannot hit resolution targets by rushing customers.
The operations manager's tighter monitoring addresses short-term compliance but risks making the underlying problem worse. Monitoring can detect long calls or skipped scripts, but with turnover already at 55% and coaching used only as a sanction, more surveillance is likely to raise stress and absenteeism. Discipline may produce a temporary dip in AHT, but it does not build the capability to resolve calls correctly. It may also damage the client relationship if agents sound scripted or fearful.
My judgement is to combine the two, with the emphasis on the HR proposal. Introduce a balanced scorecard with individual and team components: service quality and first-call resolution, attendance, and a capped upsell measure. Use monitoring data for coaching and process improvement, not punishment, and require supervisors to coach routinely rather than only below 70%. Pilot the scheme for eight weeks before rolling it out.
3. Design a balanced performance management system with metrics, weights and implementation steps.
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Use a scorecard with clear weights. Suggested weights: 40% customer service (first-call resolution, customer satisfaction and QA), 25% productivity (AHT and calls handled within quality thresholds), 20% attendance and reliability, and 15% value-added sales, capped so that upselling cannot dominate. Team and individual components should both exist: for example, 70% individual score and 30% team score. Set minimum quality gates: no bonus if QA falls below 80% or if a customer-complaint threshold is breached.
Baselines are already available: AHT 420 seconds, first-call resolution 71%, customer satisfaction 69%, QA 76%, absenteeism 12%, turnover 55%. Set 12-week targets, such as AHT 380 seconds, first-call resolution 80%, customer satisfaction 80%, QA 85% and absenteeism 9%. Do not target turnover directly in the bonus; track it as a health measure.
Implementation: week 1, brief agents and supervisors and explain the scorecard; week 2, calibrate QA scoring; weeks 3-10, run the pilot with weekly dashboards and monthly coaching reviews; week 6, hold focus groups and adjust weights if gaming appears; week 11, evaluate against baselines; week 12, decide whether to continue. Controls should include random QA audits, complaint tracking, payroll checks and a review of whether the TT$150 commission is affordable relative to the margin on each upsell. If customer satisfaction does not rise within six weeks, suspend the sales component and investigate.