MHR 505 Lecture Notes - Lecture 4: Customer Service, 18 Months
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By Steven L. McShane, The University of Western Australia
YakkaTech Ltd. is an information technology services firm employing 1,500 people across Canada. YakkaTech has a
consulting division, which mainly installs and upgrades enterprise software systems and related hardware on the
client's site. YakkaTech also has a customer service division, which consists of four customer contact centres serving
clients within each region.
Each customer contact centre consists of a half-dozen departments representing functional specializations (computer
systems, intranet infrastructure, storage systems, enterprise software systems, customer billing, etc.). These centres
typically have more than two dozen employees in each department. When a client submits a problem to the centre
by email or telephone, the message or call is directed to the department where the issue best applies. The query is
given a “ticket” number and is assigned to the next available employee in that department. Individual employees are
solely responsible for the tickets assigned to them. The employee investigates and corrects the issue, and the ticket is
“closed” when the problem has been resolved. If the client experiences the same problem again, even a few days
later, a new ticket is issued and sent to whichever employee is available to receive the ticket. A client's problems are
almost always handled by different employees each time, even when the issue is sent to the same department.
Furthermore, when a customer centre department is heavily backlogged, clients are redirected to the same
department at another regional centre where their problem can be addressed more quickly.
At one time, YakkaTech operated more than a dozen small customer contact centres in each city because client
problems had to be diagnosed and resolved on-site. Today, employees can investigate most software and hardware
system faults from the centre through remote monitoring systems, rather than personally visit the client.
Consequently, eight years ago, YakkaTech amalgamated its customer service operations into four large regional
centres. Customer service staff work entirely within the centre. When a client visit is required, the ticket is
transferred to an individual or team in the consulting business, who then visits the client.
YakkaTech's customer service business has nearly doubled over the past five years, but with this growth has come
increasing customer complaints regarding poor quality service. Many say that employees seem indifferent to the
client's problems. Others have commented on the slow response to their problems where the issue requires
involvement of more than one department. Several clients have also complained that they are continually educating
YakkaTech's customer service employees about details of their unique IT systems infrastructure.
Another concern is that until 18 months ago, YakkaTech's voluntary employee turnover rates in the contact centres
had risen above the industry average. This increased labour costs due to the cost of recruiting new technical staff as
well as lower productivity of new employees. According to results of an employee survey two years ago (as well as
informal comments since then), many employees felt that their work is monotonous. Some also said that they felt
disconnected from the consequences of their work. A few also complained about ongoing conflicts with people in
other departments and the stress of serving dissatisfied clients.
Eighteen months ago, YakkaTech's executive team decided to raise pay rates for its customer service staff to become
among the highest in the industry. The assumption was that the high pay rates would improve morale and reduce
turnover, thereby reducing hiring costs and improving productivity. In addition, YakkaTech introduced a vested
profit-sharing plan, in which employees received the profit-sharing bonus only if they remained with the company
for two years after the bonus was awarded. Employees who quit or were fired for just cause before the vesting
period forfeited the bonus.
Employee turnover rates dropped dramatically, so the executive team concluded that customer service quality and
productivity would improve. Instead, customer complaints and productivity remain below expectations and, in some
cases, have worsened. Experienced employees continue to complain about the work. There are a few disturbing
incidents where employees are careless at solving client problems or do not bother to forward tickets that belong in
another department. Employee referrals (where staff recommend friends to join the company) have become rare
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