It never fails. When you begin talking about employee issues (morale, retention, productivity, turnover, etc.), the topic of compensation is sure to come up. While money is not the cure-all, it can contribute to a reduction in turnover. A research study (Guthrie 2000) found:
1. As the use of skill- or knowledge-based pay systems is increased, turnover is decreased.
2. Extensive use of group-based incentive plans increases turnover rates. However, the negative effect of the group-based pay might be lessened if we distribute the group pay according to individual performance.
3. As the size of the group involved in group-incentive pay plans increases, so does turnover.
Whenever Response Design implements a performance management infrastructure in a call center, we find rewarding agents for improved performance is always a hot debate. While alternative pay structures won’t ever be the complete solution to reward and recognition, this research certainly gives good reason to include it!
Guthrie, James P., (2000) Alternative pay practices and employee turnover: An organization economics perspective, Group & Organization Management, Vol. 25, Iss.4; page 419, 21 pages
