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Don't Ignore Reality: Employee Engagement Begins In Agent's Pockets

Depending on the pundits you read, we have a crisis in employee engagement in the American labor force.  Gallup reports that only 1/3 of all workers in the American economy report feeling "engaged" at work.  Within the call center industry, surveys like McKinsey'sshow that it's actually much worse.  
The same is true in the outsourcing industry, as revealed by this IAOP report.

And yet, there are plenty of front-line managers that receive awards, and experts that writearticles telling heartwarming stories for being "engaging" and for producing better-than-average results in their contact centers, because they've unlocked the secret of that elusive and sisyphean "employee engagement."

I would never tell you that managerial engagement techniques, such as transparency, accountability, "listening" to your agents, as well as caring for their careers, are meaningless.  They're 100% not, and in this we have Maslow to guide us.  More than anything, Maslow proved that once basic needs are met, the fulfillment of more important needs like, safety, belonging, esteem, and eventually self-actualization shall follow.

While you can probably dispense with focusing on the self-actualization bit for now, you cannot 100% ignore the "physiological needs" that form the base of Maslow's pyramid.  Maslow defines them as breathing, water, food, shelter, clothing and sex. While attending to the sexual needs of your agents will, of course, land you in a lot of hot water with HR, the other 6 are essential and very simple needs that are provided by one thing that you can control: the money in your agents' pockets.

Okay, you've heard this argument before as well.  Just take this article by Myra Golden, a well-known and successful trainer in our industry.  As much as I respect Myra's work, I must tell you that she's gotten it wrong when she writes:

"If employees don't earn enough money to comfortably meet basic financial needs such as rent, healthcare, etc., it is difficult to focus on creating value in the workplace. Are your employees consumed with the salary issue? If so, conduct market research to ensure your salary is competitive and fair." [Myra's emphasis, not mine]

To me, what's frustrating about this line from Myra's article is that she sees the bigger issue - but she's telling us to measure agents' salaries against the wrong benchmark, which is what's going on with your competitors, instead of the economic reality of everyday life that your agents are living.  If your judgement of what's "fair" is like Myra's - against what your competitors are paying - then what you're doing is building a weak base of the needs pyramid for your agents. And thus, not just your employee engagement, but your ability to get your agents to perform as you need them will flounder as your agents are consumed with their own economic needs, instead of those of the customers you're paying them to serve.

What is the solution here?  It's quite simple really. When you evaluate your agents' salaries, you need to change the denominator of your comparison.  
Instead of comparing agent salaries to what your competitors pay (or worse what finance tells you can pay), you need to benchmark your agents' salaries as they relate to the local economy they're actually in, where they are living day to day trying to survive.

I cannot state strongly enough how paying agents compared to what your competitors are paying, or minimum amount you can pay is the WRONG way to look at your agents' salaries.

Instead, you need to benchmark your agents' salaries against local economic conditions, because that's where they are living.  Many companies in our industry are doing this already. This is why we have contact centers in small towns in Canada, India, the Philippines, and Central America.  In these places, wages that companies can afford to pay are sufficient to meet the agent's basic needs, so that the remainder of what goes into the contact center can be focused on meeting the higher order needs in Maslow's pyramid.  Without strong foundation, no pyramid can be erected.
At Rethink Staffing, whenever we're evaluating a job offer relating to a new account, if we don't already have the data, we always benchmark against three broad measures of wages:
  1. The government-defined poverty line for the city we're operating in
  2. The government-defined minimum wage for the city we're operating in
  3. The government-defined middle-class wage for the city we're operating in
All three of these measures interplay with one another and affect the psychology of your agents, and subsequently, the work they're able to do and at what quality and level of production.  Let's understand what each of these mean - and more importantly, what does it feel like to be an agent earning at each of these three critical levels.

First, the poverty line: National numbers are bunk and not something you should use.  You have to get ahold of local economic data (The BLS website has a lot of this) and evaluate your salaries this way.  The general rule for Rethink Staffing is that no employee makes at or below the poverty line (in our centers in the developing world, we actually require every employee to make at least 3x the poverty rate, but the developing world is different than the US and Canada).  I have met many good people in this industry, and I know that none of us wants to employ someone at a wage that keeps them in poverty.

Let's talk briefly about what is abject poverty. You can read more here for the official definition, but it's really all about insecurity: food insecurity, health insecurity, personal safety issues (at times), and more than likely limited access to clean water, electricity, and communication networks.  You will see higher absenteeism if you're paying at the poverty line, because someone in poverty lives most of their life in "crisis." One thing or another always crops up that is more urgent than getting to work on that day, and they are sick more often.

Second, the minimum wage: This is a hotly contested issue in the US right now, and generally a policy disaster in the US with many states and municipalities enacting their own rules, due to the fact that the US federal minimum wage has not been raised in 9 yearseven though inflation has risen 17.5% in the same amount of time.  That means that, on a compounded basis, the purchasing power the minimum wage has lost in that time is $1.27/hour.  Someone earning the minimum wage today is really earning $5.98/hour in purchasing power vs. the last time the minimum wage was raised.  Could you live on $5.98/hour?

In economic terms, the minimum wage should never be below the poverty line, otherwise it's a failed policy. In the US and Canada, most of you are not paying the minimum wage because frankly, you can't get anyone to walk in the door if you do.  In this case, the market, not the minimum wage policy, is performing its function and pushing wages up.

In the US, the minimum wage is below the poverty rate, and thus a failed policy.  In the developing world, the minimum wage is always several times above the poverty rate, which means that the minimum wage policy is functioning as it should and pushing wages up to sustainable levels for those earning at that wage.

Someone earning the minimum wage in the developing world is actually on their way up the economic ladder and can sustain themselves. If they are frugal, they have extra resources with which to improve their economic station in life.  They're still riding public transportation and are probably living in communal housing of some sort, but they have money to attend school, go to the movies, and food, safety and income insecurity are not really a part of their lives.

At Rethink Staffing, by compensation policy, no agent earns less than 1.35 times the minimum wage in our Philippine contact centers; in our coming Philly contact center, entry-level salaries are set at 1.68x the minimum wage (USD $12.20 an hour is what the city's labor department considers a "living wage.")

Third, the middle class wage: You should consider this the "promised land" of wages for agents, much like we do, so much so, that we incorporated it into our mission and vision for the company.  The life a middle-class person leads is vastly different from someone in poverty.  First, they most likely have their own transportation, so they begin their day with greater control of their time.  Second, they have much more disposable income, which they can spend on the things in life that can give them joy outside the workplace.

But third, and most importantly, they earn enough, so that they are an economic anchor for their immediate family, and possibly their extended family.  

At our service centers in the Philippines, 73% of our agents earn greater than the middle-class wage. While this is a great statistic, this is a better one: 91% of our agents are supporting 3 dependents on average, and 66% are the main breadwinners in their families.

This is where it gets good for you.  You see, if your business' microeconomics allow you to pay middle-class wages, you are now not just a local employer, but a pillar of your local community.  You are someone that is helping the community around you by returning middle-class wages into the community beyond just your individual agent.

Of course, as your agents progress in their careers and become supervisors, managers, etc., wages should rise concordant with those responsibilities.  This means that learning and development done by those who are promoted is rewarded with a constant march upward in their personal economics, their purchasing power & overall economic opportunity.  

The best part of that upward economic march? It has witnesses.  Those below will experience it with those promoted, and they themselves will begin to imagine what is possible in their own lives.  That witnessing is a powerful motivator for work ownership and the delivery of quality work by the average agent, and, along with wages that provide security at the base of your agents' needs pyramid, will create engagement in your contact center without much work on your part.

In conclusion, while this article has given you a high-level handbook on how to look at various economic factors in setting wages, the author admits that it ignores the many business realities and internal politics you may face when trying to set wages.  I recognize that, as a 100% owner of my business, I have no policy committee, no investors, and no bosses, on whose approval I must rely.

Except I do have my clients, and their approval is easy to judge - they either stay with me or they leave for my competitor.  I either earn revenue or I don't. Thus, whether I can feed my dependents (I have 3 boys and they eat a lot!), I rely on benchmarked wages, and the witness of economic progress by agents, as the surest production of performance that keeps my clients with me, instead of going to you.

I submit that you have all the powers within your control to surmount these obstacles and make your contact centers outperforming.   You need do nothing different when dealing with your finance department: prove it to them. Prove to them how employee engagement can be a value driver to your business, and as my friend Bruce Belfiore reminds me all the time, show them how better paid employees leave less often, show up for more, more often, and are easier to manage.  Prove how all of the money your contact center is spending on managing attrition and absenteeism can be put back into wages.

In short, if you're worried about proving it to those whose approval you need, do this as you will often hear me say: "make the economics work, and the rest will take care of itself."  I implore you: make the economics work for your agents. If you take care of them, trust me, they will take care of you. I think that's called "engagement."

Mike Dershowitz
Chief Executive Offier (US)
Rethink Saffing


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