When Reps Ask for MOre Cash
A Fortune 50 telecommunications giant wanted to improve the performance of employees in their call centers in North America. The phone reps jobs was a mix of both sales and support urging customers to add services whenever possible.
The reps were paid a base hourly rate, a commission on sales they made and a cash bonus when certain levels were reached by their teams. Most reps earned between $45,000 and $65,000 annually.
The reps were working very hard and morale teetered on poor in the 16 US-based call centers. The company doubted that the incentives they were using were delivering the results they desired.
A test was proposed to segregate 4 of the call centers from the group and test different incentive models on them.
Additionally, academic partners were proposed to act as co-designers and third-party advisors on the project to insure objectivity.
With the support of Dan Ariely, PhD and Victoria Shaffer, PhD, the pilot was designed using a 2 x 2 matrix for the call centers who would participate in the 30-day test.
Employees at 2 call centers were offered more cash ($60, $120 or $240) for either (a) reaching pre-set achievement levels or (b) reaching the same levels but allowing each person in the call center to select and commit to their own goal.
Employees at the other two call centers were offered more merchandise at the same values as the cash rewards for either (a) reaching pre-set achievement levels or (b) reaching the same levels but allowing each person in the call center to select and commit to their own goal.
The results seemed staggering, but not to the academics. The 30-day test resulted in the following for each of the 4 call centers, compared to individual baselines prior to the test:
Cash Reward/No Goals:
Cash Reward/Self-Selected Goals:
Merchandise Reward/No Goals:
Merchandise Reward/Self-Selected Goals:
Reps who had no choice in the matter of what incremental rewards they received performed significantly better when they earned crockpots, binoculars and bicycles. (Hedonic motivation)
With such a strong result, the next steps seemed obvious. But not to the client. The leader of the call centers noted, "I guess you don't understand...we're a cash company." (Continued influence effect)
Although my academic partners weren't surprised, we had all believed that the results of a scientific trial would prevail. They didn't.
People are irrational.