Human Resources: Call Center Compensation Information

New York - October 10, 2001 - Barely part of the American lexicon a generation ago, call centers today are a central part of business operations across all segments of US industry. Â But while call centers offer an appealing way to handle such functions as customer service, sales, technical support, and credit/collections, they also present new challenges in people management, a new survey indicates.

The 2001 Call Center Compensation Survey, conducted by human resource consultants William M. Mercer, Incorporated, reflects the booming interest in call centers. Â This year, 310 organizations (representing more than 322,000 employees in 1,478 call centers nationwide) provided data on pay levels and practices for 96 different call center jobs. Â This is a sizeable increase from just three years ago, when 252 organizations responded to Mercer´s survey, providing data on 76 jobs representing more than 177,000 employees in 875 call centers.

By industry, the largest group of respondents was from finance/banking (20%), followed by insurance (15%), manufacturing (9%), telecommunications (8%), and utilities (7%). Â Other industries represented include retail, computer software/services, health care, wholesale/distribution, hospitality/restaurant, and media/entertainment, among others.

According to Kim Witt, Mercer´s leading expert on call center compensation, regardless of industry or call center type, call center operations today are facing a number of common challenges, including:

Â· Â Â Â Â Â Â Â Finding the optimum balance between base pay and variable pay;

Â· Â Â Â Â Â Â Â Determining the most effective use of merit pay increases (when, how often, and how much);

Â· Â Â Â Â Â Â Â Effectively using shift differentials; and

Â· Â Â Â Â Â Â Â Reducing employee turnover.

Mercer´s survey examined these issues, as well as pay differences by call center type, the impact of customer focus on pay, and the emergence of new call center jobs. Â Key findings include the following:

Â§ Â Â Â Â Â Â Â Â Variable rewards. Â Most survey participants (88%) use formal variable pay plans to compensate phone-based employees. Â Of these, 69% use multiple measures (e.g., individual objectives, team objectives, calls made or completed) to determine variable pay awards. Â Most call center employees also have other opportunities for bonuses. Â Among the companies surveyed, 85% offer referral bonuses to employees who attract new employees to the company. Â Some companies also offer non-cash recognition, such as gift certificates (used by 55%), recognition certificates (43%), company merchandise (35%), and plaques and trophies (27%), and time off with pay (15%).

Â§ Â Â Â Â Â Â Â Â Base pay increases. Â Most call centers granted raises of 4.4% in 2001, with a smaller share raising base pay 4.3% or 4.2% this year. Â For 2002, pay increase budgets have been set slightly lower - typically around 4.1% to 4.2%.

Â§ Â Â Â Â Â Â Â Â Shift differentials. Â Many call centers operate 24 hours a day. Â Three-quarters of the respondents (75%) use shift differentials for employees who work second and third shifts. Â The average hourly differential is $.83 for second shift, $.99 for third shift, $1.23 for weekend second shift, and $1.43 for weekend third shift.

Turnover. Â In the past, turnover at call centers was inversely related to job level - the lower the job level, the higher the turnover, and vice versa. Â That no longer holds true. Â "Turnover has become an issue at all levels," says Ms. Witt. Â Mercer´s survey studied six levels of call center jobs - entry-level, intermediate-level, and senior-level representatives, as well as team leader, team/group supervisor, and team/group manager. Â This year, annual turnover among entry-level representatives was 73%, but among team/group managers, it was even higher - 78%.

Mercer´s study also looked at call centers by 11 functional categories (such as inbound order entry, outbound with selling, customer service, credit/collections, and technical support). Â Here, the turnover pattern remained the same as past years. Â The highest level of turnover was found in "outbound with selling" call centers (187% per year), followed by inbound/outbound call centers (94%), and inbound order entry (87%). Â The lowest levels of turnover were found in call centers focused on full account management (25%), Internet (31%), and credit/collections (33%).

Â§ Â Â Â Â Â Â Â Â Functional pay differences. Â There also are distinct pay differences among these different functional categories (see table below). Â Pay tends to be highest in call centers focused on full account management, technical support, and the Internet. Â Pay is generally lowest for the categories of outbound with selling, inbound/outbound, and inbound order entry.

Pay for Entry-Level Representative by Functional Category

*Call Center Function*	*2000 Average Total Cash Compensation*	*2001 Average Total Cash Compensation*
Inbound order entry	$10.20	$10.62
Inbound with selling	$10.57	$10.84
Outbound with selling	$9.80	$10.11
Inbound/outbound	$10.01	$9.74
Customer service	$10.80	$11.27
Internet	N/A	$12.27
Credit/collections	$10.48	$11.43
Technical support	$12.60	$12.05
Full account management	$12.18	$13.28

Â§ Â Â Â Â Â Â Â Â Customer focus. Â Of the call centers included in Mercer´s survey, 42% serve only consumers, 12% serve only businesses, and 45% serve both. Â Generally, compensation for staff focused on business clients is the highest. Â For example, a senior-level representative with a business focus receives average total cash compensation (base pay and annual bonus) of $15.75 per hour, compared to $13.99 for a consumer-focused representative, and $14.66 for a representative who serves both business and consumer customers.

Â§ Â Â Â Â Â Â Â Â New call center jobs. Â As call center operations continue to evolve and mature, new jobs are emerging. Â New to Mercer´s survey this year are traffic and scheduling assistant, director of traffic and scheduling, call center programmer, executive response representative, and operational support executive, as well as the Internet functional area and the six levels of jobs within this function.

"Call centers continue to grow in size, scope, and complexity, leading to new management challenges and the creation of new jobs to address these challenges," says Ms. Witt. Â "For example, the addition of the Internet jobs to our survey shows that more companies are using online communication, as well as the telephone, to interact with and serve customers through call centers."

The 2001 Call Center Compensation Survey is one of 450 surveys conducted annually by Mercer in the US and around the world on topics related to compensation, benefits, and expatriate information. Â The survey can be purchased online at imercer.com or by calling 800 333 3070. Â The cost is $650 for survey participants and $1,950 for companies that did not participate. Â Mercer also conducts surveys on call center compensation in Canada and Australia.

William M. Mercer, Incorporated, one of the nation´s leading consulting organizations, assists employers in the areas of human resource strategy and implementation. Â Headquartered in New York and with offices in more than 40 US cities, the firm is the US operating company of William M. Mercer Companies LLC, a worldwide consulting organization with more than 13,000 employees serving clients in more than 136 cities in 40 countries and territories.

Business writers and editors can reach Mercer consultant Kim Witt in Chicago at 312 902 7716 for additional background and comment. Â (Note: Â The foregoing phone number is provided as a convenience to journalists and is not for publication.)