Scrapping rewards, NRC finds higher employee morale, productivity

By Xavier van Leeuwe

NRC Media

Amsterdam, The Netherlands


NRC recently moved its retention team — reps trying to retain subscribers who say they want to stop the subscription — from an external sales-focused call centre to the internal service department and ceased the bonus pay programme.

The customer service-oriented approach has worked wonderfully, increasing retention to 51% during a recent work week. Read more about the process in Xavier van Leeuwe’s most recent blog post.

My greatest insight from the service department’s idea to sell without a bonus is that it bypasses the paradigm of power in the workplace.

Power has negative side effects. No matter how clever or well-intentioned your reward system, it still sends the message to your employees (subordinates) that you have the power and right to control them. You are somehow “better than they are.”

And if you can reward them, you also have the right to punish them. Even if that is not your intention, that is how the message can be interpreted.

We saw morale decline with the former sales team led by bonuses unless the “boss” was constantly vigilant. This was an unsustainable process. I saw rewards work for a very limited amount of time. In the old system, we would only see the scores go up in the last week of the month because that was bonus time. People made sure to reach their targets in that week, just reaching the threshold, instead of performing well consistently.

Another limitation of the paradigm of power through financial rewards is that you must know exactly what is reinforcing and what is not reinforcing for each team member, because people are different. You should then design a precise schedule of reinforcement for each team member and maintain that discipline over a very long period of time.

The alternative to leadership through power is leadership through listening.

These leaders hold people accountable, listen to what they have to say, respond intelligently, and aim to resolve conflicts equitably.

And, of course, we still have built-in rewards and punishments: You complete a difficult report on time, and it feels good. That is a kind of reward. Your name gets mentioned in a flattering way during a meeting, and it makes you proud. A customer thanks you for making a special effort.

From time-to-time, the opposite occurs as well. Someone frowns because you interrupted her during a meeting. A customer is angry because of a bad newspaper delivery.

Yet all of these things are not rewarding or punishing. They are the natural outcomes of doing work. They are not imposed by someone who has power over you.

As time moved on, both sides started to build on each other. Customer service introduced a learning programme to develop their team leaders, actually “coaching the coach.”

This led them to better understand themselves and improve how they respond to different situations, so we could grow the number of saved relationships. The team leaders also better understood where their service team members were coming from, their pitfalls, and how to support them in their personal growth.

Now, the sales department is starting to implement this programme of “coaching the coach” for sales reps.

Social mining dashboard raises the bar

In return, the marketing analyst spent weeks perfecting a dashboard where the performance of service representatives is much better understood. We not only look at the dashboard of the day, but we can now see who is consistently great over a large number of calls.

A refined dashboard offers insight into employee strengths.
A refined dashboard offers insight into employee strengths.

And how did they score in our different KPIs?

Let us look at subscription years sold, which represent the actual contract volume. Agent A is selling the most three-year contracts (green bar). Now the team leader can listen to Agent A’s calls and talk with Agent A to discover why this person is so good at selling three-year subscriptions.

The dashboard also uncovers areas where different agents can learn from each other.
The dashboard also uncovers areas where different agents can learn from each other.

The team leader uses this dashboard at an even more granular level to discover who in the team is good at saving customers with specific “stop reasons.” Different agents are good at understanding different customer needs. Again, only a large data set over the course of time will filter our incidents and really show core capabilities of different agents. And it is the granularity of the data and the improved visualisation that reveals the insights.

In this example below, our best-scoring Agent X is compared to our newbie Agent Y, who is still learning the tricks of the trade. Agent X has a great pitch and knows how to empathise with people calling us who want to stop the subscription for financial reasons or lack of time.

But when it comes to relationships stopping because of an offer from a competitor (second column in the chart), or for editorial reasons (far right in the chart), our super hero Agent X can still learn from our newbie Agent Y, who is better at those stop reasons and vice versa.

The team is now looking at results in new ways.
The team is now looking at results in new ways.

This way of looking at results is coming from sales, but works really well in a service environment that is not used to measuring results. As service and sales departments, we found out we complement each other, each bringing the best of our fields to the other department and blending this into something totally new that strengthens relationships with our customers.

Caring can improve your business

Wrapped up in all these learnings is the fundamental precept that profits and purpose go together — and that companies marrying the two faithfully will outperform the competition over the long term. Together with my co-authors, Matthijs van de Peppel and Matt Lindsay, I have coined this development the “relationship economy” in our book of the same title.

Consider the who’s who of business elite who have echoed this theme. There is the “compassionate capitalism” of Salesforce’s Marc Benioff, “creative capitalism” of Bill Gates, and “just capital” from investor Paul Tudor Jones.

One particular CEO inspires me the most: John Mackey of Whole Foods. He has gone through difficult times, but his business paradigm offers a different kind of leadership that he calls “conscious capitalism.”

He believes in free enterprise but focuses on empowering employees and building a culture of care and trust. It is a mode of doing business that attempts to create value for employees, customers, community, and shareholders rather than sublimating the needs of the first three to those of the last.

Take organic food. Organic is a great system, he says, but it’s not a complete solution. So he rolled out a new KPI through a rating system called Responsibly Grown, which measures factors like energy conservation, waste reduction, and farm worker welfare. He looks at the whole value chain, not just avoiding the use of pesticides, which earns something the label of “organic.”

The point he is making is that it is the entire system bringing out better results. Think about Olympic champions who thank their “teams” — an assembly of coaches, therapists, trainers, advisers, managers, agents, and publicists, says Anne-Marie Slaughter in the Financial Times. And behind them are the parents, teachers, talent spotters, and coaches who found and launched the athletes.

In the same way, it is the better recruitment, better onboarding, better training, and better analytical tooling of both sales and service people that will lead to more loyal readers. The recognition of the value of coaching, something athletes and singers have long known, is spreading rapidly and for good reason.

We still have some way to go before sales, service, and editorial receive the same onboarding in our company, but I am confident we are heading in the right direction. First sales and service worked on different floors. Now we have moved sales toward the service department in our office located in the canal district of Amsterdam.

This is a small but significant step toward a new way of doing business where we nurture people, not products. It is this blend of service and commercial people, this supportive system, that sustains the talented, independent journalists we need so hard in these times of alternative facts.

About Xavier van Leeuwe

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