Academic journal article Journal of the Australian and New Zealand Academy of Management

Calling on Compensation in Australian Call Centres

Academic journal article Journal of the Australian and New Zealand Academy of Management

Calling on Compensation in Australian Call Centres

Article excerpt


While there is a growing body of research on telephone call centre management in the U.K. and the U.S.A., empirical studies in Australia are at an embryonic stage. To date, most of the studies have focussed on the management of employee performance. The principal aim of this study was to provide data on current compensation practices in Australian call centres and to determine the extent of their strategic and best-practice orientation. A second aim was to explore whether the strategic management of compensation can help to balance the tension between commitment to customer service and commitment to employee motivation.

Using data collected through a mail questionnaire survey of telephone call centres operating in a range of industries in Australia, the paper explores the effect of compensation practices on employee performance, absenteeism and turnover. Following a review of the literature on call centre management and the literature on compensation strategies, the findings are presented. Key findings include: a) a significant negative correlation between annual salary and the number of calls handled by full-time customer service representatives (CSRs); b) a significant positive correlation between casual CSRs' pay rates and turnover; c) a significant negative correlation between full-time CSRs' pay and absenteeism; d) a highly significant difference between the compensation strategies currently practiced in Australian call centres and the strategies call centre managers think should be practiced and e) Australian call centre managers report their compensation strategies are not very effective in increasing performance or employee satisfaction.


The call centre industry has been described as the gold rush of the late twentieth century (Hester 1999). In early 2001, the call centre industry in Australia was estimated to be worth A$6.5 billion each year, growing at 30 per cent per year, and employing in excess of 160,000 people (Gregory 2001). Call centres are valued by governments because they carry the prospect of job creation, particularly in regional areas with high unemployment rates (Kinnie, Hutchinson & Purcell 1999; Richardson & Marshall 1996), while for industry, call centres herald cost minimisation in globally competitive markets. However, for employees, the attractiveness of call centres is less certain. Whilst some call centres use sophisticated HR practices (Kinnie, Hutchinson & Purcell 1999), others are criticised for 'sweat shop' conditions and 'panopticon' systems of surveillance (Fernie & Metcalf 1998). The challenge for call centre management lies in fulfilling different but interdependent promises to multiple stakeholders: job creation for governments, improved performance for enterprises, and satisfying workplaces for employees.

This challenge is complex because improved performance requires call centres to balance the objectives of increased customer service in a cost effective manner with maintaining a motivated workforce that is highly controlled. This means balancing the needs of the customer with the needs of customer service representatives (CSRs). This is a difficult issue because the CSRs are the service. Given that call centres are labour intensive, HR practices have a critical role to play in the successful management of the tension between customer satisfaction, increased business performance and employee motivation (Schneider & Bowen 1993). However, while the overall field of HR management is now well developed, research on HR practices in call centres remains embryonic and exploratory and consequently there are a number of unresolved issues in the literature. Two such issues are the nature of the employment relationship in call centers and the selection of HR strategies that best support the dual commitment to customers and employees. Typically an HR strategy includes the HR bundle of recruitment and selection, training and career development, performance management and compensation as well as empowerment, communication and motivation (Guest 1997). …

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