Hidden emergency for contact centres

Changes to the Labour Relations Act require equal pay for work of equal value.

Read time 4min 30sec

Worryingly, there is an emergency heading towards South African contact centres - in the form of changes to the Labour Relations Act that stipulate equal pay for work of equal value - and very few contact centre operators are taking steps to deal with it.

The issue is urgent because the changes to the Act are likely to come into force by the end of February next year. There may be a period of grace for implementation, but the complexity of the crisis these changes will trigger is so considerable, that even with a grace period, there may not be enough time for operators to prevent elimination of their profit, and possibly the destruction of their entire businesses.

So, what's so bad that it can't be fixed in a few months?

Equality conundrum

The equal pay clauses of the Act will apply to all people earning R173 000 or less annually. That pretty much means everyone in a contact centre from the supervisor down. However, in every contact centre there are different skill sets working on the same tasks within a given discipline, such as billing or credit control. The name of the job ('billing') may be the same, but agents will be applying different skills and be remunerated on different outcomes.

In most contact centres there is also some multi-skilling, with agents with a range of capabilities doing a number of different tasks that, if done individually, would have a lower or higher value attached. The multi-skilled agent, however, is paid a package rate.

So, when considering that some contact centres employ 3 000 people or more, the possibility of, say, 1 000 employees suddenly having to be upgraded from R8 000 to R12 000 a month just for working on 'billing' will have frightening financial consequences for the operator. Have organisations budgeted for this change? And what could this do to the operator's overhead costs and financial stability?

However, the situation wouldn't be a crisis if performance management was being effectively applied at contact centres.

The situation wouldn't be a crisis if performance management was being effectively applied at contact centres.

It isn't, because performance management requires dedicated and ongoing attention and the use of appropriate management information (MI) systems. It's a specialist discipline that comes at a cost, all the more so in an environment where there is a mix of labour broking, permanent employment and contract working.

It starts with defining roles and responsibilities so it is crystal clear, for example, which agent will be answering which queries. Each set of roles and responsibilities must then be graded as to payment. Key performance indicators (KPIs) must be defined for each pay grade, and the means of measuring performance against those KPIs must be both documented and agreed with employees. On top of that then must be layered the process of providing regular feedback to employees and updating the metrics and methodologies, where necessary or relevant. All of this is manageable only if there is a suitable management information system in place. That in itself can be a significant cost factor from the point of view of purchase and implementation.

Without this level of documented detail regarding roles and responsibilities, operators will find it well nigh impossible to justify differentiated pay for work of apparently equal value. Operators need to have justifiable means of differentiation available for evidence and inspection of varied pay versus value - and will lay themselves open to possible prosecution and penalties if non-compliant. However, scoping and deploying performance management for thousands of workers is an enormously time-consuming task that could easily overrun any period of grace afforded by the government.

Who should care?

An additional challenge is that of who takes responsibility for performance management. At the moment, labour brokers ensure their agents perform to agreed-upon service levels, while operators manage their permanent and contract workers. Inevitably, this leads to pay disparities, and under the new Act, the potential for costly disputes. Labour broker and operator methodologies and processes need to be aligned to an overall strategy going forward.

Also, the Act stipulates that, after six months of a contract, labour brokers and operators must take joint and several liability for worker output and claims resulting from so-called "unfair dismissals". To mitigate the risk of misconduct, non-performance and disputes, therefore, it is essential that there is a robust MI system delivering precise reporting on all performance management activities - against methodologies, definitions, and processes that are known and clear to all parties.

For an outsourcer, the situation is even more complex. Servicing many customers with thousands of agents, all working in different ways to meet the specific needs of the particular customer, outsourcers must ensure that by the time the Act is promulgated in February, their performance management systems are not only fully compliant, but that their clients or themselves are not financially exposed by these changed requirements.

Are some operators leaving things just a little late?

Evan Jones
Merchants director of operations.

Evan Jones particularly enjoys applying his unerring instinct for large-scale business development within the customer management and business process outsourcing (BPO) industry, because: “Every decision you make is about empowerment. A new 300-seat contact centre puts food on the table for new families and helps educate those directly or indirectly involved. So, the industry allows me to express my own need for challenges and serve a broader purpose all in the same day.” At Merchants, that broader purpose currently covers the management of multi-channel back and front office environments for nine client operations, with a total operational footprint of 3 000 – in KwaZulu-Natal, Johannesburg, and Cape Town. Having earned a business management qualification, he joined the company representing Edward de Bono in South Africa, honing his lateral thinking skills. Looking for more corporate experience, he became a contact centre agent at Discovery Health. Within six months he had moved into a training position and then, in quick succession, managed a contact centre operation, individual projects, and all the executive projects across all of Discovery’s centres. He set up and managed the new Durban contact centre before being tasked with transitioning the Destiny Health business back to South Africa, while maintaining services to the American market. Once again in search of fresh horizons, Jones went off to manage the outsource relationships for one of Europe’s largest provider of telecommunications services, Phone Warehouse. There, the value of the solution ideas he provided to Merchants was such that they recruited him as a consultant. Inevitably, as his lateral thinking and BPO experience began to make a positive difference to Merchants’ operational models, he moved rapidly to services and solutions manager, and because his solution designs were resulting in new client acquisitions, business development manager. In his two years in that position, he has on-boarded six of the nine clients now managed by Merchants – most of which have both significant scale and tenure.

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