Should a call center agent's compensation be based on performance?

I’d like to introduce a topic in this blog that I hope to revisit often: 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, start thinking - 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?  

To be continued...