The Problem with Incentives

We are delighted to introduce our first guest blog.  Please welcome "The Problem with Incentives" by James Lawther and take the opportunity to follow the link at the bottom to see his sometimes humorous, but always insightful, comments on customer experience.


I have wasted (or was that murdered) 6 hours of my life in a QCRM (Quarterly Compliance Review Meeting, it trips off the tongue). 

It was a truly dreadful meeting.  I am sure you have experienced something similar; it was originally set up to drive “performance improvement” but just ended up as 360 minutes of political posturing, defensiveness and back biting.

I wanted to throw myself off the roof by lunchtime.

To get a real sense of just how dysfunctional it was I need to give you a little background…

It started as a sensible idea

The call centre was having a crisis.  Customers were getting angsty and the authorities were placing the occasional warning shot across our bows; we weren’t processing requests nearly as well as we could have been. 

After bit of judicious investigation it became clear what the solution was, a brand new all singing all dancing call centre process that stopped the issues.

All we needed to do was get the agents to follow it.  Run of the mill stuff.

How do you check an agent is following the process?

A call centre manager just out of nappies can tell you the answer to that.  You quality audit them.  You give your audit team a check list of the things that need to be done and check that that is what is happening.  Then you give feedback to the agents on how they are doing, highlighting the breaches and asking for them to be resolved.  It’s not rocket surgery.

But we got too clever

The problem with an audit is that it is to motivation what a stick is to a donkey, unfriendly and unyielding.  So to make it more meaningful for the agents and their team leaders we rolled out an incentive programme.

Their bonus (which is not insubstantial) was linked to their audit metrics.  If they complied with the process they got a fat payment, and if they didn’t, well, then they didn’t.  Our incentive was a carrot to go with the stick.  There is nothing quite as effective as performance management.

It all seemed very sensible.

Until the bitching started

The review session was horrific.

On the one hand the audit results were not good, and they had been consistently not good since the “improvement” went in.  So the auditors had been busy uncovering all the reasons for non compliance and they presented them… at length.

On the other hand the operations guys kicked up one hell of a fuss about those same audit results:

  • They were not statistically significant
  • They didn’t audit the right population
  • The auditing process was flawed

To back up their position the operations team had done their own internal check which showed comprehensively that their performance was getting much better.

The audit guys really loved that.

Six hours of bash, bash, bash and let’s be honest, not a minute of it actually drove the business forward.

What was the root cause of our issue?

We designed a system that was incongruent.

  • We paid auditors to find and highlight defects, the more defects the better.
  • We paid the operation to stop defects, the fewer defects the better.

On reflection, it is hardly a surprise that they are having a pitched battle in the board room.

So how should we have done it?

  1. Looked at the issue and revised the process
  2. Put in place an audit to understand what was happening
  3. Looked at the results
  4. Then targeted the staff.  No, no, no.  Scratch that!
  5. Then fed back the results so it was clear what the issues were (without blaming anybody)
  6. Held an adult discussion about what we could do to improve performance
  7. Coached the agents in the areas they were going wrong
  8. Incorporated their feedback into the new process
  9. Gone back to point 1.  And started again

The problem is incentives work

If you dangle a sizeable bonus in-front of a call centre agent and his management team they will respond to it.  As the old adage goes:

"Tell me how you measure me and I will tell you how I will behave"

But think very long and hard about what you ask them to do.

And if you do decide to set your organisation against itself, please leave me off the guest list for your quarterly compliance review.

Disclaimer: The characters in this story are fictitious and any resemblance to persons living or dead or on the verge of killing themselves is purely coincidental.

James Lawther writes about business process improvement.  Learn more at