Jack Manages a Call Center

Jack manages a call center for a mail order company. Frequently his reps end up staying late because call volume is heavy. This results in a lot of overtime pay that Jack would like to avoid. He's considering reclassifying the position as exempt so he wouldn't have to pay them overtime. He would, however, give them a small raise when he reclassifies them. Do you think Jack's idea has merit? Discuss the pros and cons.

Eliminating overtime pay in exchange for a fixed, higher salary is a terrible idea from the company's point-of-view both in terms of its bottom line and also in terms of employee motivation and its affects upon productivity. When workers receive a salary, they come to expect it as a given. They budget their personal expenses accordingly. Overtime and bonuses, in contrast, are seen as exactly that -- bonuses. True, certain bonuses may become expected, depending on the nature of the company, as this overtime payment has become at the call center. But no bonus, however regularly given to employees, is as expected as a regular salary. No matter how much employees might grumble at a stingy Christmas bonus, it is not the same thing as a slash in an employee's weekly pay.

Jake, of course, would argue that he is only trying to save the center money. But assume for the sake of argument that this is the case and the small salary increase over time will be less costly than the overtime Jake will have to pay his workers. Regardless, the prospect of overtime pay is a powerful incentive for employees to work harder and longer for the company. They know that the longer they stay, the greater the 'bonus' in their next paycheck. In contrast, if they can no longer receive overtime pay, employees will be less likely to strive to stay longer, and to find more excuses to duck out of the door earlier. If they do stay, they are less likely to work hard at their job and give good customer service.

Finally, the idea of a job at a call center without overtime pay that demands its employees to put in long hours seems unattractive, to put it mildly, given that it is an entry-level occupation. Employees who are given a comfortable base salary without any ability to get overtime pay yet who are forced to work long hours are usually professionals, like lawyers, who hope to advance in a company and/or have profound love for their job, which is unlikely to fit the profile of a call center worker. Employee attrition rates, always a problem at call centers, will likely increase as employee motivation and productivity decreases.

Question

You are a member of the Board of Directors for a non-profit organization. A new executive director has just been hired. The previous executive director received a salary and no variable pay. Several Board members have indicated they would like the new executive director to be paid based in part on the organization's achieving its goals. What would you recommend and why?

Variable pay based upon an organization meeting its goals has some merit at corporations where executive directors tend do be overpaid, a common occurrence in recent years. The argument against a fixed salary for a director is that the unmotivated leader is likely to remain in the position for a few years, enjoy the various perks of employment, and then leave without contributing much to the organization. Unless the executive director is a major shareholder, he or she is unlikely to have a substantial financial interest in the organization's future and success. Thus, the organization can set certain financial benchmarks that it desires the director to meet, and encourage the individual to meet such benchmarks. Variable pay is a possibly powerful incentive system for a potentially disinterested individual, who might be content to be a figurehead.

However, the leader of a nonprofit organization presumably is motivated by something more than pure financial gain. Nonprofits traditionally cannot pay the largest salaries in the executive salary marketplace, certainly not as large as the salaries of the major for-profit corporate organization. Leaders are drawn to these not-for-profit entities for a chance to give back to the world, to fight for a cause they believe in, and to gain exposure, good publicity, and media recognition. Thus making financial compensation the main motivator for success seems counterproductive. If the individual in question was solely motivated by financial gain, he or she would have looked elsewhere for a position. Giving the new director some additional leeway in terms of cultivating pet projects, or added opportunities for media exposure might be a better way to encourage the new director to feel a strong personal investment in the organization and to fight for its future success.

Question

You supervise a group of 10 people in a manufacturing environment. One of your direct reports, Mitch, has confided in you that his wife has left him and has filed for divorce. He has seemed depressed, often a few minutes late for work, low-energy.

One of Mitch's coworkers mentioned to you that Mitch told him he "just wanted to blast everybody," and at another time he "just wanted to close the door and turn off the lights." The coworker is concerned about Mitch. What should you do?