Working Papers in Economics, Department of Economics, University of Bergen
Karl Ove Aarbu
Pay and performance in a customer service centre - principal and agents or principally angels?
() and Gaute Torsvik
Abstract: We have followed a pay for performance reform in the phone
based customer service centre of an insurance company, from its
introduction in 2001 until the end of 2004. We use hard and soft data from
the design and impact of the reform to contrast two theories of work
motivation; the traditional self interest hypothesis that the
principal-agent model builds on, with the hypothesis that fairness and
reciprocity are significant motivational forces at workplaces. The reform
was initiated to increase sales of insurance in the customer service centre
and it gave the operators both economic incentives and fairness- and
reciprocity incentives to increase their sales effort. The reform had a
positive effect on sales; the operators answered more calls and sold
insurance to a higher fraction of customers after the reform. This
observation alone does not help us identify the importance of the
motivational hypothesis we compare. However, when we look closer at the
evolution of the design and impact of the payment plan, we conclude that
our data correspond best with the standard principal-agent model.
Keywords: Team incentives; multitask; fairness; reciprocity.; (follow links to similar papers)
JEL-Codes: C23; C72; J33; M52; (follow links to similar papers)
36 pages, August 1, 2006
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