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Call centers that invest in their workers reap benefits

December 1, 2002

For more information, contact: Benjamin Haimowitz,

Still, today it's a race to the bottom, its author says.

Call centers are among the country's fastest growing industries; yet, in terms of customer satisfaction they are in a downward spiral. Frustration with call centers' over-mechanized answering systems and with personnel who fail to respond to callers' needs has yielded customer-satisfaction rates barely exceeding 50 percent, a level far below the norm of almost any other industry.

What makes the industry's apparent indifference to its customers surprising is that, according to a study in the current issue of the Academy of Management Journal, centers whose workers are geared to customized service have been enjoying sales increases far above those of centers that embrace a depersonalized, assembly-line approach.

The sales growth was more than twice as great over a two-year period, with human-resource practices playing a critical role in the outcome.

Given such benefits from quality service, why is it so rare?

"Today it's a race to the bottom," says Rosemary Batt, an associate professor at Cornell University and author of the new study in the Academy of Management Journal. "Over and over again, I would hear the same thing from managers: 'I know we give lousy service, but so do our competitors, so we don't have to worry.'

"As things stand today, the pressure to give quality service is minimal," she adds. "The dominant incentive, instead, is to cut costs through office consolidation and service automation. Centers are investing little in human resources, and most employees have few skills, opportunities, or incentives to provide good service."

Yet, an increasing body of evidence, according to Prof. Batt, suggests that quality service, achieved through emphasis on employee training and initiative, pays off handsomely, not just for workers and customers but for the call centers.

Her new findings are based on a survey of general managers of 354 call centers that provide service and sales of telecommunications services to residential and business customers. A representative sample of centers was drawn at random from a national listing of establishments. Fifty-three percent of the centers were in wireline, 24 in wireless, 16 in cable TV, and seven were in Internet services.

Prof. Batt and her research team surveyed the call centers' general managers about their use of what workplace scholars call "high-involvement human-resource practices," a set of management practices with three main elements -- investing in the skills of workers, giving them them leeway in their interactions with customers, and creating incentives for employee initiative. General managers rather than human-resource managers were chosen for the phone survey, because general managers, Prof. Batt notes, tend to be "less optimistic about human-resource practices than HR managers."

High-involvement HR practices were associated with a big boost in sales growth for centers serving small businesses and residences but not for centers serving large businesses. Big-business clients, Prof. Batt explains, take such practices for granted, whereas, centers that serve small businesses and residences "typically adopt a production-line approach to services, emphasizing high-volume, low-cost transactions."

This runs smack up against the fact that such consumers "are increasingly demanding customization and service bundling," she writes. "If employees have the skills and discretion to create customized packages of multiple services, rather than being limited by standardized menus, they will sell more and sell more value-added services."

Prof. Batt also found that centers with high-involvement HR practices have significantly lower quit rates than those which follow an assembly-line model, a factor that partially accounts for the striking difference in sales growth between the two groups. The presence of a union results in significantly lower quit rates but not in greater sales growth.

"As they're run today," Prof. Batt adds, "most call centers are creating a classic conflict pitting workers against employers. Most call-center workers have been experiencing a degradation of working conditions, with more and more machine-pacing of work, increased routinization and boredom, and at the same time, increased stress associated with speeded-up job cycles."

She concedes that the study leaves unanswered the question of profitability - whether, in view of the costliness of high-involvement HR practices, the robust sales growth associated with them translates into greater profits as well. But she also doubts that economic data will ever be definitive enough to change the industry's current practice - using new technology to substitute for labor rather than to complement it - without concerted resistance from consumer organizations.

"Consumer organizations need to take on this issue," she says.

Meanwhile, a change in prevailing industry practices could be momentous. As Prof. Batt puts it: "Given that call-center management has become an industry in itself serving many other service and manufacturing organizations, the findings of this study have implications for these contexts as well."

The Academy of Management Journal, a peer-reviewed publication now in its 45th year, is published every other month by the academy, an organization with more than 12,000 members in 60 countries that seeks to foster the advancement of research, education, and practice in the management field.

Media Coverage:
National Public Radio. Morning Edition. (Monday, January 06, 2003).

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