A multi-level incentive model for service organizations

Abstract

Incentive programmes for production employees have been used for many years. However, more recently, there has been an increasing desire to use incentive programmes in service applications, particularly with the advent of electronic performance monitoring. This paper summarizes the methodology for developing a model that incorporates the parameters of quality (customer and supervisor evaluations), quantity of production, sales and individual goals. The model was used to compute incentive bonus payments for customer service employees who performed above standard. Employees were motivated by the incentive bonus, and thus productivity was increased. The model could be applied to any service organization. The model was developed to assist a customer service department where performance standards, quality measures or customer feedback were not firmly established. It measured objectively employee performance and rewarded the employee with individually calculated incentive bonuses through an electronically monitored system. The internal working of the model is a combination of the above parameters. Customized software was used to collect and tabulate customer feedback regarding a recent inquiry to the customer service department. This made up the first part of the quality measure for the department. The second part of the quality parameter was a regular evaluation by the supervisor. The quantity of production was measured by the number of inquiries handled per unit time. Sales were also calculated on a per-unit-time basis. The individual goals were the result of regular employee-supervisor meetings where past and future employee performance was discussed and mutually agreed upon. The five model parameters of quality (customer and supervisor), quantity, sales and individual goals are combined through the use of a linear equation. It was found that this form of employee evaluation worked very well in an electronic monitoring environment and was accepted by the participating work group. Overall, monthly productivity gains exceeded 15%.