It’s Time to Take a Counterintuitive Look at Hourly Pay
By Peter Lyle DeHaan, PhD
The biggest expense for telephone answering service is payroll. You know that. You strive to hold down payroll costs to control expenses and stay in business, hopefully, to turn a profit. Scheduling too many people to answer phone calls drives payroll costs up. Paying too much per hour also drives payroll costs up. This is bad. Left unchecked, runaway payroll costs is the quickest way for an answering service to fail.
Or is it? What if we challenge conventional wisdom and dare to consider paying new hires a higher hourly rate?
Will Higher Pay Increase Retention?
I’ve never met anyone at an answering service who felt they earned too much. Most employees, especially entry-level operators, complain they’re not being paid enough. I get this—from both the employee and the employer standpoint.
Employees leave an answering service for various reasons. Sometimes they quit and exit the workforce, but usually, they leave for a new position—often one with better pay. And often it’s the best employees—the most employable ones—who leave first. Will paying a bit more encourage them to stay a bit longer?
Will Higher Pay Reduce Other Costs?
Assuming that by paying telephone operators a bit more will increase your retention rates, consider the ramifications of this. If employees stay longer, that means you need to hire fewer replacements. This means hiring costs will go down. Even more significantly, training costs will decrease. You won’t have to pay as many new hires for their training; you’ll also save on the cost of the trainer.
Will Higher Pay Improve Customer Service?
When you pay an entry-level rate, you get entry-level work. This reflects the level of service your staff provides to your clients. New employees are also the ones who make the most errors. If you pay new employees more, will you get a higher level of work from them? Maybe. Keep reading.
Will Higher Pay Reduce Management Hassles?
Is there a correlation between the level of pay and job commitment? People who arrive late, quit without notice, cause conflicts with coworkers, and trigger a myriad of other issues take up management bandwidth to deal with. If paying staff a bit more will reduce a bit of these headache, is it worth it?
Will Higher Pay Result in a Higher Caliber Employee?
The fundamental question is, will a higher pay rate result in higher caliber employees? That’s largely up to you. Seriously. If you offer to pay more but don’t change your hiring process or expect more from new hires, you won’t realize many benefits by paying a higher hourly rate.
However, if you tighten your screening procedures, raise your hiring requirements, and increase your employee standards along with the hourly rate, you can expect to get a higher caliber employee. When you do this, you’ll be able to shift money from your hiring and training budget into your operations payroll budget. This could even have a net positive effect on your bottom line.
Increasing your starting pay to realize these benefits is a high-risk, high-reward proposition and shouldn’t be entered into without careful thought and preparation. However, when done wisely, the result could positively impact every aspect of your answering service.
Peter Lyle DeHaan, PhD, is the publisher and editor-in-chief of TAS Trader, covering the telephone answering service industry. Check out his book How to Start a Telephone Answering Service.