Good bonus management is like masterplay in quite many cases
20/11/2024; 5 min to read
Many companies have implemented CX-based compensation systems to motivate employees to enhance CX using metrics derived from customer feedback. Despite their popularity, these compensation schemes frequently have unintended negative consequences. It's important to consider alternative ways to reward employee progress before opting for a CX-based compensation system.
Why CX bonus management may appear to be a good idea
When customer experience is prioritised in your business strategy, recognising those who excel is an obvious choice. Often, financial rewards serve as the strongest motivator to encourage individuals to enhance their performance. While incentives can alter behavior, the outcomes may not always align with expectations. They can foster healthy competition and drive substantial progress, but associating monetary incentives with an NPS or CSAT score can be challenging.
Providing employees with increased pay or financial incentives based on their performance is most effective in sales settings, where success is clearly demonstrated through financial gains. Employees who do not achieve sales do not receive bonuses, while those who do earn a commission proportional to the sale's value. This approach is logical and leaves little room to challenge its fairness. However, rewarding employees for excellent customer experience (CX) is not as straightforward, which is why this bonus method often falls short in CX-focused environments. Unlike financial metrics, customer-based metrics are not as exact or indisputable according to me.
The issue with CX-based compensation systems
Sometimes customer feedback cannot be taken at face value, and when financial incentives are introduced, employees start to doubt the legitimacy of the scores' reflection of performance. To begin with, scores are not necessarily indicative of the job performed. A score can often be based on external factors outside of any employee's control.
Financial incentives are not effective at motivating employees to create better customer experiences. They induce stress, fuel unhealthy competition, and they make scores the priority over doing a good job. This is not great for confidence and leads to falling motivation. Rather than bettering customer experiences, employees try to game the system to enhance scores over helping customers as they begin to obsess over scores to the detriment of customers. They may pester customers to leave feedback, focus on specific tasks or customers that are more likely to lead to high scores, or question the veracity of feedback collection altogether.
Furthermore, it is rare for someone to go to work wanting to do a bad job, so the need for financial incentive should not even exist. If employees are appropriately motivated and encouraged by their managers to perform well, praise alone should suffice to get them on the right track to improving CX. For employees who are struggling, obtaining any sort of financial incentive may seem out of reach, so there is no chance of them working harder and they may even work less as a result of feeling defeated. They won’t bother to do a good job at the task they were hired to do, as their attitude may change to them doing the bare minimum until they are compensated for doing anything else. It eradicates the responsibility they have to perform well and create great customer experiences, thus lessening their accountability.
A great customer experience is defined by genuine empathy and emotional connection with the service provider.
Alternative ways to reward your employees
1. Consider non-monetary incentives
There are numerous ways to reward employees for exceptional performance that are more fulfilling than monetary compensation. Celebrating outstanding work with shout-outs in meetings or internal newsletters, quarterly awards, and the promise of potential promotions or raises can provide enough motivation for employees to excel. Employees need to feel that their tasks are meaningful, so verbal reinforcement and encouragement can remind them of their purpose. You should foster a culture of positivity where good actions receive recognition. This will enhance employee engagement and empowerment, ultimately leading to improved CX.
2. Prioritise the group over individual reward
Focusing on individuals can lessen the progress of the group. Customer experiences are rarely executed by a single individual. It takes a whole team to create great experiences. Team members should be boosting each other up, helping each other and working as a group to perform well. Competition amongst individuals to be the best creates a distraction that is detrimental to progress. When recognising great work, make sure to acknowledge the collective rather than a single employee. Focusing on team-level metrics will nurture a cohesive work environment amongst employees and get them to encourage each other rather than get in each other’s way.
3. Focus on better CX, not better scores
Senior management frequently overlooks that the goal of CX programs is to genuinely enhance customer experiences, not just to boost metrics. While these aspects are connected, if employees become fixated on numbers, they might resort to shortcuts to raise CX scores instead of concentrating on authentic experiences.
Motivate your employees to focus their efforts on ensuring that customers receive the highest quality service possible, and over time, the scores will naturally rise along with your brand's reputation. Invest in training programs that educate employees on providing top-notch customer experiences, rather than depending on metrics and financial incentives to fuel their motivation and performance.
The importance of employee satisfaction as a determining factor for customer satisfaction cannot be stressed enough. Happy employees yield happy customers, but striking a balance between creating great customer experiences and rewarding your employees for their hand in making these experiences happen can be tricky business. Monetary rewards are not likely to get you the positive results you desire. Focus your energy and funds elsewhere to provide a work environment that inspires your employees to shine.
How to associate NPS with bonuses?
If you plan to use Customer Experience KPIs, like Net Promoter Score (NPS), to establish goals and targets in your organization, it will involve a transformation for the entire organization.
The first step is deciding which Customer Experience KPI to implement for your organisation.
The second step is setting the targets for this or these CX KPI(s).
Once this is clearly outlined, you can move to step three: associating a bonus with the established Customer Experience KPI targets.
When associating a bonus with a Customer Experience KPI such as NPS, it's crucial to make a clear decision between an organizational/departmental objective or an individual objective.
Sample exercise for linking a CX KPI to the bonus
A method that might work well for customer support agents in your organisation is to link NPS score on an individual level with a quality assessment index. This way, you will consider the customer perspective (tNPS) and the following of internal standards and targeted level of quality (QA index).
QA index is good to have a minimum value to boost the bonus. Performance below the index will not be rewarded anyhow.
An important element for incentivising operational client-facing staff based on NPS scores is to guarantee that the score is not manipulated. It is often seen that salespeople or customer support people "convince" customers to give them good scores. It is critical for customer feedback to be as independent, meaning not assisted, as possible.
I would propose that there be a CX KPI for everyone within the organisation as well, from the top management to support functions. An annual NPS target for everyone is quite a good choice.
Good luck!
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