By Kate McEnroe, President of Kate McEnroe Consulting
Writing an article about call centers is always a tougher assignment than it may seem; not because there is nothing to talk about, but because it is hard to decide exactly how to interpret what this term “call center” really encompasses and how to focus a discussion accordingly. In fact, it’s become so complicated that it is hard to even know what term to use in this article to talk about operations that are called call centers but are really something else, and operations that are called something else but are really call centers. So, for the sake of brevity and clarity in this article, let’s settle for the moment on “call center” to cover all of the infinite variety of operations like these.
The term “call centers” first came into use at a time when the options for businesses to connect with one another or with customers were moving from face to face contact and snail mail to the new model of interacting over the phone. The call center was the new, cost effective option intended to replace at least a part of the more costly face-to-face connections. Very quickly, however, the functions of this type of operation came to include many types of interactions with internal or external customers that did not fall into the face-to-face category. In many cases these functions were being moved from decentralized to centralized models, which may explain why so many of them still include the word “center” as new names are coined. Whether their evolution has a positive or negative net impact on customers and employees remains controversial. For those who were performing their jobs in a decentralized environment such as power company counter reps who accepted payments in most towns in the country, this trend caused a great deal of disruption to relationships, job locations, and work environment and processes. From the company perspective, however processes were standardized and money was saved. In most cases this change was driven or at least enabled by a shift away from paper records to computer systems. On the plus side for employees, call centers created entire new categories of jobs that provided many people with better jobs, better career prospects and better benefits than they may have had in a retail setting, for example, or as an entry level position. Nevertheless, in many places they developed a reputation for being stressful, regimented places to work with a broader image as being the source of annoying phone calls at home.
The next development was coming up with a variety of new names for operations of this type, partly to more specifically define the type of functions being performed, but also in large part to enhance the reputation of the operation to potential employees and to the communities they chose to establish themselves in. Originally there was a fairly-distinct separation between operations designed to generate income for the business, and those intended strictly to provide service, but that too has largely gone by the wayside as few interactions between companies and their external customers fail to at least attempt to generate additional revenue. Today, especially with the explosion of the number of ways people can communicate with each other and with businesses, this variety of names are largely a distinction without a difference.
Although this name game is unlikely to change soon, the bottom line is that all of these operations have two things in common. The first way to recognize one of them is what they look as a workplace. Whatever function is being performed and whatever they are called, they tend to be located in places where it is possible to have as much of the operation as possible on a single floor, where people have at their disposal a semi-private workspace like a cubicle, have a phone and headset and a computer (perhaps with video chat capability). It is important that the lighting is good, that the furniture is ergonomically designed, and that ambient noise is minimized so that conversations can be conducted easily. Sometimes the atmosphere is spartan and institutional looking, and sometimes it is colorful and lively with highly personalized workspaces. Often there are support spaces for training, eating, and maybe even play spaces of some kind in more progressive companies. Though traditionally locations in suburban office parks are chosen that have very large parking lots, new models are emerging in city centers or high density areas with public transit available.
The second thing that all of these centers have in common is that their largest variable cost is the investment they make in their labor force. Though the name of the operation may no longer be a useful way to distinguish one project from another there are real differences in the skills required and the salaries paid. Even individual employees responsibilities’ are no longer neatly classified. Identifying an individual employee as, for example, a Telemarketer or Customer Service Representative doesn’t really cover the universal representative model adopted by many operations; that job does not correspond to any Standard Occupation Code.
So why does it matter what these operations are called? Many site selection processes recognize that whatever they are called, these operations tend to draw from the same broad segment of the labor force. If the difference in names actually corresponded to a difference in pay and skill rates in these operations, as was the original intention, they would be more useful to site selectors but that is seldom the case today. For that reason, when new locations are being evaluated it is common to lump all of the back offices/call centers together in order to get a sense of whether or not competitive conditions favor a new operation.
The problem is that while call center positions have always required a job market offering employees with a mix of people skills and technical skills. The mix and complexity of job requirements along these lines is tremendous, and be a more helpful way to segment this market that any other.
People skills can range from the need for no contact with customers, to the ability to handle scripted contact, to the more sophisticated ability to handle self-directed communication. Technical skills required also run the gamut. They always include proficiency in the systems necessary to perform the job, but can also extend to subject matter expertise in fields such as health care, financial services, or technical support. Within each of these specialties, there will be individuals whose talents should lie primarily in the service and problem solving arena, and others who are particularly skilled in revenue-generating activities.
For communities, putting the effort into segmenting this industry sector so that a site selector can readily see where there are opportunities for new companies to fill gaps in the market in terms of pay ranges or skill specialties will enable a more nuanced presentation of the strengths of the market. For companies looking trying to match the specific function they need performed to the best possible labor market, deconstructing the competition in this way will also lead to better, more sustainable operations.
While these issues are timeless and unlikely to resolve soon, there does appear to be an emerging trend that may have a more immediate impact on the plans companies have and the way communities will respond.
There is currently a relatively high profile movement in cities and states across the United States to raise the minimum wage or to establish a minimum “living wage.” It is hard to predict at this time whether this issue will have much visibility in the upcoming national election season, but it is being more widely reported in national media, and some companies are already reacting. Some call centers have had a reputation as low-wage operations, but the fact is that few currently pay minimum wage or if they do it is in an environment that also allows for extra earnings in the form of commissions or performance bonuses.
As these minimums change, some of the most impacted people are not current call center employees, but those in the retail and hospitality sectors who in the past have served as a source of recruits into call centers. The call centers benefit because these individuals have had customer service experience as well as general work experience and the new employees have an opportunity in many cases for better benefits, possibly better schedules and an opportunity, quick simply, to sit instead of stand through a shift. On the other hand, some employees prefer the somewhat less regimented environment and direct customer contact that is available in retail and hospitality, along with some of the discount perks, and may choose to stay in those jobs if the wage differential decreases. Starting in 2014, a number of companies started to raise their minimums regardless of the regulatory requirements. Notable among them are retailers such as WalMart, CostCo Target and the Gap along with restaurant chains such as McDonald, Shake Shack, and In-and-Out Burger. In the Business Process Outsourcing sector, pay raises have been happening on more of a case by case basis thus far, but are being announced openly more often so that their impact on recruiting is more direct. In late 2014, for example, Sitel openly announced a raise in minimum pay from $8 to $10 at their Glasgow, Kentucky call center, along with plans for performance and annual step increases; this accompanied an announced expansion. In early 2014, SSI, an outbound center in Orem Utah, announced a 21 percent increase in hourly rates along with expansion plans. In the corporate sector, insurers Aetna and Nationwide have each also raised their minimum wage, which primarily impacted their call center and back office workers, with Aetna going to $16 in 2014 and Nationwide most recently to $15 in September 2015. Whether these actions reflect simple market conditions a desire to get ahead of legal requirements, a desire to enhance the image of the company among customers as well as employees or some combination of the two there are enough high profile examples emerging to speculate that after many years of relatively stagnant wages in this sector, a trend may be emerging.
About the Author
Kate McEnroe is President of Kate McEnroe Consulting and has been advising corporations on location strategy and economic development organizations on marketing strategies for over 20 years. She can be reached at kate@katemcenroe.com.
