Pay and performance in a call centre : principals and agents or principally angels?

Abstract

We use data from a pay reform in an insurance company to contrast different theories of work motivations. The management installed performance pay to boost sales in the customer service centre of the company. The reform was successful. The bonus scheme gave the operators both self-regarding and other-regarding incentives to increase sales. The increase in sales does therefore not in itself help us identify the underlying motivation of the workers. However, when we examine the evolution of the design and impact of the scheme, we conclude that the standard principal-agent model best explains the patterns in our data.