My friend Paul Hebert has a nice post up on Surge Pay for Call Center workers at Zappos, a concept that's built on the surge pricing model at Uber, the ride sharing service. Go check out Paul's post, and here's a description he used of the concept:
Surge Pricing is based on the concept used by Uber, the taxi-disrupting car service, where they increased the cost of their service based on demand in the market. From their own site at Uber:
…surge pricing helps maximize the number of Uber cars on the system during times of extreme demand, maximizing the chance that there will be a car available when you need one.
By increasing the price – they hoped to increase the number of people providing rides to customers (of course – customers paid the increased fares.) But in some cases the “surge” was 6 times the normal price for an Uber ride.
Paul's an expert in employee engagement, so his natural question is whether surge pricing as a model to compensate call center workers will kill culture and engagement at Zappos. Here's how Zappos ponders "surge pay" in their call center:
"Under the former system, call center workers filled in their preferred shifts on sheets of papers on a quarterly basis, a time-consuming process, according to Fortune. With preference for choice spots given to those with seniority, zappos was also looking for a better way to incent employees to work when call needs were highest, aligning with its commitment to customer service.
zappos, owned by Amazon, began testing an “Open Market” concept during the holidays with full-time call center employees. Employees were able request their time preferences based on likely wage rates that were estimated based on algorithms tied to forecasted call volume, past bidding on coveted shifts and emergency adjustments."
Interesting, right? My view is less about engagement and more about the market. Some thoughts and questions:
1. Is Zappos attempting to staff the entire call center with same budgeted salary costs? Put another way, are they attempting to pay the same bucket of money overall or are they putting more $$ into they system? I'm assuming they want to keep the money the same.
2. Surge pricing at the ride-sharing company Uber can result in fares that are 5-6 times as expensive than normal, with most of that enhanced fare going to the contractor/employee.
3. There's no way you can do surge pay in a call center and make 5-6 times what others make for the same bucket of budgeted money, which means the surge pay is likely to feel more like a shift differential.
4. The willingness of a call center worker to take surge pay is directly related to a couple of factors. How much more will surge pay give them, and does it allow them to work a shift that fits with the rest of their life? They'll take disruption to their life if they can, but only if the $$ makes sense. Otherwise, they'd rather be home for The Bachelor.
5. The call center still has to plan, so you still have shift bidding going on. Those with less tenure are still going to get the shifts that no one wants. The only difference is whether that based on the traditional preference of day and time, or if it's based on $$ if they surge pay creates demand.
Will the Zappos model of Call Center surge pay work to drive behavior? Tell me the $$ differential and I'll tell you what's going to happen.
By the way, please take a drink for every time I said Zappos in this post. And give you car keys to someone responsible in Accounting.