A collection of articles written by Customer 1st

Do we pay enough for great service?

20th November 2011

Do we pay enough for great service?

Customer Service Skills, Reward and Recognition

I read recently about the increased number of people now working in the service sector, and was intrigued to find out if pay and conditions for front line staff had improved in line with demand. I looked at the most recent statistics relating to numbers entering the sector, together with financial remuneration.

I came across some interesting information on the subject. The US Bureau of Labour Statistics in relations to customer service representatives states that there were about 2.3 million service jobs in the USA in 2008, and forecasts an additional 400,000 new jobs over the next decade.

Customer service representatives are especially prevalent in the finance and insurance industry, as many customer interactions do not require physical contact. Employment of customer service representatives in this industry is expected to increase 9% over the period 2008 to 2018. In May 2008, median hourly wage of customer service representatives was $14.36. The middle 50% earned between $11.34 and $18.27. The lowest 10% earned less than $9.15, and the highest 10% earned more than $23.24.

Earnings for customer service representatives vary according to level of skill required, experience, training, location, and size of firm. Median hourly wages in the industries employing the largest numbers of these workers in May 2008 were:

Insurance carriers $15.74

Agencies, brokerages, and other insurance related activities $15.28

Depository credit intermediation $14.56

Employment services $12.73

Business support services $11.56

In the UK, a joint study was conducted by the Centre for Economic and Business Research (CEBR) and the Institute of Customer Service. It showed that the total number of people employed in customer service occupations grew from 98,000 in 2002 to 328,000 now, and currently accounts for approximately 1.5% of all employed adults in the UK. Recent findings also show that the total of all UK wages for those employed in customer service rose from £1.2 billion in 2002 to £4.9 billion in 2010. According to projections by the Institute of Customer Service and CEBR, this is forecast to rise to £6 billion by 2015.

Jo Causon, Chief Executive of the Institute of Customer Service commented, "The rise in prominence of customer service over the past decade is not surprising, given that almost 77% of the UK's GDP is now service related. However, total wages in the sector do not reflect the importance of customer service to the UK economy. There is arguably no more important job role than that which interacts with the customer, and if we want to provide world-class service in this country, employers have to invest more in the people that deliver for the customer." Despite the significant increase in customer service roles, the sector remains undervalued in salary terms. Average UK earnings were just £14,868 in 2010, not far above the national minimum wage of £12,334 and significantly below the national average wage of £22,568. Other relevant data show that:

  • 328,000 people now work in UK customer service, up from 98,000 in 2002.
  • Customer service now represents almost £5 billion in wages each year.
  • Customer service salaries remain 34% below the UK average.

These statistics are evidence that we still significantly under-appreciate the customer service skills required, and continue not to reward those who do these jobs well. Jo added, "It demonstrates the need for a sea-change in the way that customer service employees are viewed by their employers. Never before has it been so important to invest in engaging and rewarding customer service employees to reap the rewards in long term customer loyalty and satisfaction."

All of your people are part of the cycle of service excellence; all are of paramount importance in customer satisfaction, and no organisation, in my opinion, should underestimate the impact that its people have on business success, especially those who deal with customers directly. I wonder why it is that organisations (in general) do not appreciate their value. And why are these employees often paid so poorly, when they play such an important role in keeping customers happy?

I found it interesting that, when I compared the average hourly pay for service jobs in the UK and the USA, it was roughly the same, at around £9 and $15 per hour respectively. This is not, it seems to me, fantastic, considering for the value they deliver, especially those with the right attitude to serve customers well.

Anthony Thomson, chairman of Metro Bank, said, "If you want to give a great customer experience you have to align your culture and the way you reward staff. None of our customer facing staff has sales targets or sales bonuses - their rewards and bonuses are based purely on their customer satisfaction scores."

Perhaps we should reflect on the concept of "emotional labour." Sociologist Arlie Hochschild stated in 1983 that, "Emotional labour is the work we do as employees in managing our emotions according to a set of organisational rules about what is appropriate and effective." Customer service roles typically require high levels of emotional labour. Unfortunately, these roles often result in stress-related illness or "burnout".

So, have service organisations fully understood the implications of what their people have to contend with on a day to day basis? Do you appreciate your people for their natural aptitude to do the job? Do you ensure they are inducted and given the chance to develop the appropriate skills? I am sure that service leaders and managers do understand that their people commit considerable emotional labour to deliver the quality of service that today's customers demand.

I think we need to recognise the value of skilled emotional labour when recruiting. We should placing emphasis on personal development, to ensure that our customer service professionals have the knowledge and skills to satisfy our customers' demands. If you ask your customers, they can tell you whether your people have the knowledge and skills to satisfy their needs. Great customer experiences are created by uniquely talented customer service professionals who use their knowledge and skills, together with their natural disposition, and their emotional intelligence, to create satisfied and happy customers.

With rising youth unemployment, companies should now highlight the opportunities for professional development and lifelong career options in customer service. They should try to attract young talent into this fast-growing industry, offering financial incentives when customer service professionals excel.