Customer Service: Human Capital Management at Selected Public and Private
Call Centers (Letter Report, 08/22/2000, GAO/GGD-00-161).

Pursuant to a congressional request, GAO reviewed strategies for
managing human capital management at selected public and private call
centers, focusing on: (1) whether they identify human capital needs as
part of developing management strategies and practices to meet missions
and goals; (2) implement human capital strategies and practices; and (3)
evaluating human capital strategies and practices to continuously
improve their operations.

GAO noted that: (1) although the 11 organizations in GAO's study had
widely varying business goals for their telephone customer service
operations, they had commonalities in the ways that they employed their
people to meet these goals; (2) three major themes emerged in
discussions at the call centers regarding how human capital needs were
identified to meet missions and business goals; (3) officials in both
public and private sector organizations said that they determined human
capital needs on the basis of clearly articulated service-level goals;
(4) goals for the operation and management of the call centers were
supported by top leadership in many of the organizations--leaders who
understood the role of telephone customer service in meeting overall
organizational goals and objectives and were willing to commit the
resources needed to meet them; (5) managers of the organizations said
that they regularly reassessed human capital needs in the context of a
changing environment, including technology improvements; (6) officials
in both public and private sector organizations cited leadership and
competitive compensation as being most critical to implementing human
capital strategies and achieving business goals; (7) therefore, these
organizations strove to: (a) retain committed, dynamic call center
managers who respected employees and communicated with them extensively;
and (b) offer compensation packages that were at least comparable to
those offered by firms competing in the same labor markets; (8)
strategies for managing the discrete human capital activities of
recruiting and hiring people, training them to do the work, and
evaluating and improving job performance were part of a larger strategic
plan for excellence at most of the organizations; (9) officials
discussed processes for evaluating call center operations, including
human capital management strategies, and using the results to make
improvements; (10) some officials said that evaluation results were used
to make improvements at every stage in the human capital management
cycle; (11) individual telephone customer service representatives at
some organizations were evaluated on many of the same qualitative and
quantitative performance measures as the overall call centers'
operations, linking the goals and performance of the organization to the
work of individual employees; and (12) management information systems
also generated several quantitative performance measures from which
leaders and managers could select those most meaningful for evaluating
call center performance.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-00-161
     TITLE:  Customer Service: Human Capital Management at Selected
	     Public and Private Call Centers
      DATE:  08/22/2000
   SUBJECT:  Customer service
	     Telephone
	     Private sector practices
	     Strategic planning
	     Performance measures
	     Personnel management
	     Human resources utilization
	     Personnel evaluation

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GAO/GGD-00-161

CUSTOMER SERVICE

Human Capital Management at Selected Public and Private Call Centers

United States General Accounting Office

GAO Report to the Chairman, Subcommittee on Oversight, Committee on Ways and

Means, House of Representatives

August 2000 GAO/ GGD- 00- 161

United States General Accounting Office General Government Division
Washington, D. C. 20548

Page 1 GAO/ GGD- 00- 161 Human Capital Management at Selected Call Centers

B- 282816 August 22, 2000 The Honorable Amo Houghton Chairman, Subcommittee
on Oversight Committee on Ways and Means House of Representatives

Dear Mr. Chairman: Since most Americans use telephones as their principal
mode of contact with government agencies, call centers and the people who
work in them shape perceptions about the quality of government's overall
customer service. A frontline measure of how government meets the needs of
its customers is how successful it is in answering its telephones- and
answering them promptly, accurately, and courteously. The challenge of
providing quality telephone customer service is greatest for government
agencies, such as the Internal Revenue Service (IRS), which must respond to
calls dealing with a variety of complex subjects.

As you requested, this report discusses strategies for managing human
capital- that is, people- in telephone customer service operations at
organizations that were identified to us as having noteworthy or innovative
strategies and practices, and that handle calls dealing with subjects of
comparable complexity to those at IRS. 1 Specifically, our objectives were
to discuss what common approaches, if any, underlie the practices that
selected public and private sector organizations used to (1) identify human
capital needs as part of developing management strategies and practices to
meet missions and goals; (2) implement human capital strategies and
practices; 2 and (3) evaluate human capital strategies and practices to
continuously improve their operations. We also observed certain practices
and strategies that were important to the organizations in all stages of
human capital management. Figure 1 illustrates the continuous human capital
management cycle as we address it in our objectives.

1 To assist you in your oversight of IRS, we will also issue a follow- up
report discussing human capital management issues in IRS' telephone customer
service operations. The follow- up report will discuss how IRS might benefit
from practices we have observed at these organizations as it implements
major changes to meet its productivity and service goals.

2 We addressed the overall implementation of human capital management
strategies and practices, and we addressed specific strategies and practices
for managing recruiting and hiring, training, and evaluating and improving
job performance.

B- 282816 Page 2 GAO/ GGD- 00- 161 Human Capital Management at Selected Call
Centers

Source: GAO analysis of available literature.

To address our three objectives, we visited or telephoned the following 11
public and private sector organizations that were recommended to us by
industry experts or identified in the literature as having noteworthy and/
or innovative telephone customer service operations: Allstate Insurance
Company (Allstate); California Franchise Tax Board; Canada Customs and
Revenue Agency; General Electric (GE) Appliance Company; HewlettPackard
Company Executive Customer Advocacy Group; Illinois Department of Revenue;
International Business Machines, Inc. (IBM), Product Sales and Service
Division; Kaiser Permanente; Social Security Administration (SSA); United
Parcel Service (UPS); and Utah State Tax Commission. We examined
documentation and did interviews at each location using a structured data
collection and interview instrument. We also attended an Arthur Andersen,
LLP, seminar on best practices in contact center management. Appendix I
provides detailed information on our objectives, scope, and methodology.

Figure 1: Human Capital Management Cycle

B- 282816 Page 3 GAO/ GGD- 00- 161 Human Capital Management at Selected Call
Centers

We did our audit work between May 1999 and June 2000 in accordance with
generally accepted government auditing standards. We asked the
representatives of the outside agencies, with whom we consulted, to review a
draft of this report for accuracy and clarity. Their comments are
incorporated as appropriate.

Although the 11 organizations in our study had widely varying business goals
for their telephone customer service operations, they had commonalities in
the ways that they employed their people to meet these goals.

Three major themes emerged in discussions at the call centers regarding how
human capital needs were identified to meet missions and business goals.
First, officials in both public and private sector organizations said that
they determined human capital needs (the numbers and skill mixes of staff)
on the basis of clearly articulated service- level goals. 3 Second, goals
for the operation and management of the call centers were supported by top
leadership in many of the organizations- leaders who understood the role of
telephone customer service in meeting overall organizational goals and
objectives and were willing to commit the resources needed to meet them.
Third, managers of the organizations said that they regularly reassessed
human capital needs in the context of a changing environment, including
technology improvements. For example, a manager in the SSA Office of
Telephone Services said, “We see our telephone service as a living,
breathing operation Right now, we are focusing on improving our automation
options to give customer service representatives 4 the time to deal with the
calls that really need to be handled personally.” 5

3 Service level is a measure of how promptly calls of all types (e. g.,
Spanish language calls and general information requests) are answered. It is
expressed as a percentage of calls that are answered within a given time
period (e. g., 80 percent of incoming calls answered within 20 seconds).

4 The organizations in our review used different job titles for their
telephone customer service representatives. For example, they were called
“revenue tax specialists” at the Illinois Department of Revenue
and “client service agents” at the Canada Customs and Revenue
Agency. For simplicity and clarity, we use the title “customer service
representative” generically throughout this report.

5 See Social Security Administration: More Cost- Effective Approaches Exist
to Further Improve 800- Number Service (GAO/ HEHS- 97- 79, June 11, 1997).
This report reviewed how well SSA's 800 number provided service to the
public. The report noted that SSA had been recognized for its service to the
public and recommended telephone customer service improvements, including an
expansion of automated services to handle routine calls. Results in Brief

B- 282816 Page 4 GAO/ GGD- 00- 161 Human Capital Management at Selected Call
Centers

Officials in both public and private sector organizations cited leadership
and competitive compensation as being most critical to implementing human
capital strategies and achieving business goals. Therefore, these
organizations strove to (1) retain committed, dynamic call center managers
who respected employees and communicated with them extensively and (2) offer
compensation packages that were at least comparable to those offered by
firms competing in the same labor markets. For example, a manager of an
Allstate call center said that the company had a long tradition of valuing
and respecting employees and prided itself on providing open and honest
communication. Strategies for managing the discrete human capital activities
of recruiting and hiring people, training them to do the work, and
evaluating and improving job performance were part of a larger strategic
plan for excellence at most of the organizations. For example, several call
center managers considered themselves recruiters for their entire
organizations since telephone customer service was a key entry point.

Officials discussed processes for evaluating call center operations,
including human capital management strategies, and using the results to make
improvements. Some officials said that evaluation results were used to make
improvements at every stage in the human capital management cycle.
Individual telephone customer service representatives at some organizations
were evaluated on many of the same qualitative and quantitative performance
measures as the overall call centers' operations, linking the goals and
performance of the organization to the work of individual employees.
Examples of the types of qualitative assessments conducted included internal
monitoring of selected calls and surveys of external customers to determine
their levels of satisfaction with the service received. Management
information systems also generated several quantitative performance measures
from which leaders and managers could select those most meaningful for
evaluating call center performance (e. g., the percentage of abandoned calls
and average time in a queue (waiting to speak to a representative)).

In addressing our three objectives, we observed commonalities in the
management of the call centers that could be useful for IRS to consider as
its modernization and restructuring are planned and implemented.

B- 282816 Page 5 GAO/ GGD- 00- 161 Human Capital Management at Selected Call
Centers

An organization's human capital- that is, people- defines its character and
capacity to perform. Two principles are central to the human capital idea.
First, people are assets whose value can be enhanced through investment.
Second, an organization's human capital policies must be aligned with and
assessed by the standard of how well they support the organization's
mission, core values, and strategic goals. 6

People are the largest operating cost of most federal agencies. This fact
notwithstanding, human capital management has lagged behind efforts to
strategically manage other federal resources (e. g., information and
financial systems). The Government Performance and Results Act of 1993 was a
key impetus for bringing management principles to the government. The act
set timetables for federal agencies to begin implementing strategic
management principles. Agencies were to develop their first strategic plans
by fiscal year 1998; set performance goals for fiscal year 1999, and for
each year thereafter; and issue their first reports on actual performance
toward achieving those goals in March 2000. As a result, we found that some
agencies have improved performance and become more resultsoriented by
implementing strategic management principles. However, we also have found
that in their management improvement efforts, agencies often have not
adequately developed plans for strategically managing their human capital. 7

In June 2000, the President issued a memorandum to the heads of executive
departments and agencies directing them to take actions to assess their
human resources management. The President directed that agency heads fully
integrate human resources management into their planning, budgeting, and
mission evaluation processes; clearly state human resources management goals
and objectives in their strategic and annual performance plans; and renew
their commitment to effective recruitment, development, and management of
their workforces.

The checklist we published in September 1999, contained a five- part
framework against which federal agencies could measure human capital
management systems. The five elements were as follows:

6 See Human Capital: Key Principles From Nine Private Sector Organizations
(GAO/ GGD- 00- 28, Jan. 31, 2000), Human Capital: A Self- Assessment
Checklist for Agency Leaders (Discussion Draft) (GAO/ GGD99- 179, Sept.
1999), and Human Capital: Managing Human Capital in the 21 st Century (GAO/
GGD- 00- 77, Mar. 9, 2000).

7 See Managing for Results: Opportunities for Continued Improvements in
Agencies' Performance Plans (GAO/ GGD/ AIMD- 99- 215, July 20, 1999).
Background

B- 282816 Page 6 GAO/ GGD- 00- 161 Human Capital Management at Selected Call
Centers

ï¿½ Strategic planning (establishing the agency's mission, vision for the
future, core values, goals, and strategies).

ï¿½ Organizational alignment (integrating human capital strategies with the
agency's core business practices).

ï¿½ Leadership (fostering a committed leadership team).

ï¿½ Talent (recruiting, hiring, developing, and retaining employees with the
skills for mission accomplishment).

ï¿½ Performance culture (enabling and motivating performance while ensuring
accountability and fairness for all employees). 8

At the same time that federal agencies have been working to strategically
manage their operations, they have focused on improving service to their
customers. Studies by the National Partnership for Reinventing Government
(NPR), which is a governmentwide initiative to reinvent government,
documented a lack of customer focus in government operations and was
instrumental in efforts to improve government customer service. Noting that
government agencies rarely get their funding directly from the public, an
NPR report stated that, lacking the direct link to their real customers,
agencies often focused instead on powerful stakeholders, such as Congress or
higher level management. In the process, the government's focus moved
further and further from public service. The NPR also found that customer
service provided by government agencies lagged behind what customers had
come to expect in their dealings with private organizations. A February 1997
NPR report also noted that improvements in providing customer focus and
involvement in strategic planning were under way at several federal
agencies. 9

Clearly, human capital management and customer service should be focuses of
the federal government in the decade ahead. Our study of strategies for
managing human capital at noteworthy and/ or innovative telephone customer
service operations was requested to offer insights and perspectives that
could be useful to government call centers, including IRS', as they strive
to meet new human capital management and customer service goals.

8 GAO/ GGD- 99- 179. 9 See Serving the American Public: Best Practices in
Customer- Driven Strategic Planning, A Federal Benchmarking Consortium Study
Report (National Performance Review, Feb. 1997) and From Red Tape to
Results: Creating a Government That Works Better and Costs Less, Improving
Customer Service (Accompanying Report of the National Performance Review,
Sept. 1993).

B- 282816 Page 7 GAO/ GGD- 00- 161 Human Capital Management at Selected Call
Centers

Three major themes on how human capital needs were determined emerged in
discussions with officials from most of the organizations we studied. First,
officials said that they determined human capital needs (the number of staff
and skill mixes) on the basis of clearly articulated servicelevel goals-
that is, measures of the percentage of calls of all types that they wanted
to answer within a given time period. Notwithstanding the importance that
the call centers placed on the quality of responses to telephone inquiries,
service- level goals come first because they drive call center staffing and
budgeting levels. 10

Second, these officials said that call center goals were embraced by the top
leadership of the organizations, who understood the role of telephone
customer service operations in meeting overall organizational goals and
objectives and were willing to commit the resources needed to meet them.
Third, they said that managers regularly reassessed human capital needs in
the context of a changing environment, using a strategic planning process to
predict changing conditions for the long and short term and respond to these
changes in a positive manner.

According to officials from the organizations we visited, a key to
determining the number of telephone customer service representatives and the
mix of skills and expertise they needed was to have clearly articulated
service- level goals for meeting customer needs. Various organizations chose
different service levels for different reasons. The following are examples
of service- level goals that were reported by officials from the
organizations we visited or telephoned:

ï¿½ SSA's goal was for 95 percent of callers to reach its national 800 number
within 5 minutes of their first attempt.

ï¿½ UPS had a goal for 90 percent of calls to be answered within 15 seconds,
Monday through Friday.

ï¿½ GE Answer Center's goal was for 100 percent of calls to be answered within
90 seconds.

According to a book that provides guidance on call center management for
practitioners, there is no “industry standard” service level.
Each organization must determine a service level for its call centers,
taking into account its own unique circumstances. Factors that organizations
should

10 Service- level goals are not the only goals that are important for call
centers to establish. For example, these goals do not address the quality of
the telephone service provided. Certainly, an appropriate service- level
goal could be met at a call center and customer service could still be poor,
with callers receiving inaccurate information, discourteous treatment, or
answers to questions that they never asked. This fact notwithstanding,
service- level goals are the first goals that call centers need to set.
Human Capital Needs

Were Based on Goals, Supported by Leaders, and Regularly Reassessed

Staffing Based on Clearly Articulated Service Level Goals Was Key

B- 282816 Page 8 GAO/ GGD- 00- 161 Human Capital Management at Selected Call
Centers

consider include (1) the costs of answering the call (labor and telephone
equipment costs), (2) the value of the call to the organization, and (3)
caller tolerance (how long the callers are willing to hold for service). It
is also helpful for organizations to benchmark (formally or informally) with
competitors or similar organizations. 11

The following are two observations from officials about lessons learned and
factors to consider when determining appropriate service- level goals:

Social Security Administration. In discussing lessons learned about setting
goals, an official noted that on average business days, the call center must
exceed its service goals to make up for the inevitable high callvolume days
when the goal will be missed. SSA's historic trend data show that Mondays
and days following holidays are the busiest telephone days, and that the
first week of the month and the first 3 months of the year are busier than
other weeks and months. Thus, officials said that they knew on certain days,
such as the day after New Year's Day, they would be overwhelmed by calls and
would not meet their access- level goal.

Allstate. Officials discussed pitfalls of setting service- level goals too
high or too low. If an organization seeks a very high service level, large
numbers of customer service representatives will have idle time while they
wait for calls. However, low service levels, with callers constantly waiting
in a queue, can create employee stress. Time is also added to the length of
calls because customers complain about waiting to speak to the
representative, thereby exacerbating an already undesirable situation.

At many of the organizations we visited, officials noted that support from
top leaders was necessary to meet call center goals. Three examples follow
of comments we received on the importance of having the support of
organization leaders for call center plans and operations:

California Franchise Tax Board. An executive said that following U. S.
Senate hearings in 1997 and 1998 on instances of poor treatment of taxpayers
by the IRS, “ our Board became willing to move resources and commit
funds for a quality call center operation.” A consultant was hired to
look at the operation, and a major reorganization took place. The executive
noted that she was recruited from another state agency in part because of
her strong background in human capital management. She said that another
strong manager was given responsibility for day- to- day

11 Brad Cleveland and Julia Mayben, Call Center Management on Fast Forward:
Succeeding in Today's Dynamic Inbound Environment (Annapolis, MD, 1997).
Call Center Goals Were

Supported by Top Leaders in Many Organizations

B- 282816 Page 9 GAO/ GGD- 00- 161 Human Capital Management at Selected Call
Centers

operation of the call center and was empowered to make changes. Systematic
planning to meet improvement objectives replaced crisis management.

One senior customer service representative described the transition from her
perspective as follows:

“The changes started at the top. They got rid of poor supervisors,
they got personal computers for employees, and they gave us a half hour
every day off of the phones Before, we were expected to be on line for 7
hours, and our pay would be docked for time away. The atmosphere improved
immediately. Managers seemed more like partners. There was less criticism
directed at employees. Managers also welcomed communication from on- line
employees about what was working well and what was not working well.”

Illinois Department of Revenue. This department did a complete reassessment
of its human capital requirements, which resulted in an increase in the
number of customer service representatives, an upgrade of the qualifications
for the positions, and steps taken to make the jobs more desirable. A
manager said that a key to successfully implementing human capital
improvements was that senior department leaders understood the unique
demands on telephone customer service representatives. Senior executives and
managers came to the call center, sat down with employees, listened to their
concerns, and then delivered on promises they made for improvements. She
noted that workspace was reconfigured so that it is among the best space in
the department. Better workspace helped to build pride among staff regarding
their unit and reinforce its obvious value to the organization.

She also said that several other steps also helped to reduce the stress of
the jobs. Senior managers supported policy changes that supplemented call
center staff with trained volunteers from other departments during lunch
hours and when call volume was high. They created opportunities for call
center employees to cross- train in other areas during slow periods on the
telephones.

Kaiser Permanente. A director of the California call centers said that top
leaders have understood the importance of the call centers' providing
“extraordinary customer service” since they first opened in
1995. Top leadership made an up- front investment in staffing, training, and
technology that, from the beginning, resulted in call centers' employing
well- trained and empowered staff who had a strong customer service culture
and available modern technology. The director noted the following:

B- 282816 Page 10 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

“ today, employees at all levels, from customer service
representatives to senior managers and everyone in between, know the call
centers' goals to continually build customer loyalty and create a customer-
driven culture through exceptional service.”

The importance of having top leaders' support for call center goals was
documented by the findings of a team of employees who evaluated the
California call centers' operations and recommended improvements. The team's
work was part of a broader initiative that focused on reengineering major
business processes- with one of its primary goals being “to create
flexible processes and systems that position Kaiser to respond effectively
to customers in a changing marketplace.” In focus groups and
interviews that the team held with customer service representatives,
managers, and key executives, leadership was cited as critical to the
success of call centers in meeting goals. Interviewees said that leaders
with a clear sense of vision and those who encouraged change and innovation
created a call center environment that was conducive to success.

Changes in service communications technology, caller demographics, and
service goals changed expectations for customer service representatives.
Some call center managers said that they were challenged to identify and
prepare for long- and short- term changes before they occurred. For the long
term, they studied how certain factors, such as communications technology
improvements, changing customer demographics, and changing service goals
would impact on expectations for their call center employees. For the short
term, they needed to understand that call levels vary by time of the month
and year, day of the week, hour of the day, and what was on the morning
news. They strategically planned to give themselves the flexibility to
adjust staff levels to take calls according to these ever- changing demands.

Three examples of our discussions on long- term planning for changes follow:

Arthur Andersen, LLP. In a seminar on best practices in contact center
management, Arthur Andersen, LLP, presenters noted that a major change for
call center managers is an evolution from traditional call centers to
“contact” centers that provide customer service in any medium
that the customer chooses. Methods of contact included not only telephones,
but also electronic mail and faxes as well as traditional correspondence and
walk- in interactions. Contact center managers would need to assess how
increases in customer demand for electronic mail service would affect
service goals for telephone customer service. Human Capital Needs Were

Assessed in the Context of a Changing Environment

Long- Term Assessments Prepare for Changes in Technology, Caller
Demographics, and Service Goals

B- 282816 Page 11 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers Social Security Administration. A manager in the Office of
Telephone

Services explained how technology was changing expectations for customer
service representatives:

“We see our telephone service as a living, breathing operation. It is
not something that managers can set up and leave. Improvements and
refinements are ongoing, and they change what we expect our customer service
representatives to do. Right now, we are focusing on improving our
automation options. With more of the responses to routine calls being
automated, customer service representatives will spend more of their time on
more difficult calls that really need to be handled personally. Callers may
also include more elderly customers and more non- English- speaking
customers who are uncomfortable with the automated system. Thus, customer
service representatives will need different skill mixes to handle fewer
calls that are more complex and longer than they are now.”

Allstate. Corporate officials described how service goals changed human
capital requirements for call centers. When call centers came into being in
1996, they represented a major change in the business norm for a corporation
that prided itself on providing customers with personal attention from
insurance agents who live and work in their communities. More changes were
ahead as Allstate planned to integrate its telephone centers into all of its
operations during 2000, to meet its goal of being there whenever the
customer wants to call.

The first call centers were charged with providing a basic level of support
to local agents when they were away from their offices. Customer service
representatives took messages for agents and handled some simple adjustments
to customers' policies, such as taking name or address changes. They did not
quote insurance rates or take claims information.

Almost 4 years after the first call center was established, Allstate leaders
announced plans to expand the role of customer service representatives to
make a full range of insurance sales and service available by telephone as
well as on the Internet or through a local agent. Under the new plan,
customer service representatives would handle all of the needs of existing
policyholders and potential customers.

In announcing the expansion of the customer service representatives' work,
officials were planning several human capital initiatives, including hiring
new staff, increasing the number of specialists, revamping training, and
increasing compensation. For example, the director of field services said
that several outside firms had been hired to help provide expanded training
on all aspects of Allstate's sales and service operations.

B- 282816 Page 12 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

For the short term, call center managers said that they were involved in a
constant exercise to keep the correct number and mix of customer service
representatives on the telephones to respond to an ever- changing volume of
calls. To do this effectively, managers needed data on what call volumes
might be expected for the weeks ahead. They needed to know how many calls
were in a queue at any given time. They also needed options for flexible
staffing to handle particularly heavy or light call volumes. As discussed in
the following examples, organizations we visited had developed different
ways of achieving staffing flexibility:

Social Security Administration. According to an executive for telephone
services, SSA used spike employees on the telephones to meet service levels
when call volume was heavy. Spike employees work in program service centers
on specific jobs, such as processing benefit claims, but are cross- trained
to answer telephone inquiries and can be diverted from their regular work to
answer telephones when call volumes are high.

The official thought that the use of spike employees allowed the Office of
Telephone Services to have needed staffing flexibility. However, he noted
that overreliance on spike employees as a substitute for a full cadre of
dedicated telephone customer service staff was undesirable. He said the
challenge he faced was to meet service- level goals using as few spike
employees as possible.

The first spike unit was formed in 1989. Since that time, the SSA official
said that spike employees have been used more and more frequently to help
with telephone calls. In September 1999, SSA had about 3,100 fulltime and
700 part- time customer service representatives on its toll- free lines.
Additionally, up to 60 percent of approximately 4,100 trained spike
employees were available to assist on telephones during busy times.
According to the officials we interviewed and a September 1999 Social
Security Advisory Board report, one of the disadvantages of overrelying on
spike employees was that they fell behind in their critical primary jobs.
Also, dedicated telephone customer service staff were less expensive and
better trained for the telephone position than spike employees. 12

12 How the Social Security Administration Can Improve Its Service to the
Public (Social Security Advisory Board Report, Sept. 1999). Flexible
Staffing Options Were

Used to Handle Short- Term Changes in Call Volumes

B- 282816 Page 13 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers Illinois Department of Revenue. To facilitate the use of cross-
trained

employees for flexibility in covering telephones, position classifications
were broadbanded as part of a major reorganization. Customer service
representatives became part of a banded group of tax specialists, which
included employees doing a variety of taxpayer service functions. Officials
said that the change made it easier to cross- train people to help answer
telephones during busy periods and provided opportunities for telephone
customer service employees who were interested in learning other positions
during slow periods in the call center. They also noted that former customer
service representatives who were in other positions in the organization were
offered overtime work in the call center during busy periods.

Canada Customs and Revenue Agency. Officials described other innovative
methods of building staffing flexibility into call center operations. The
manager of the Toronto Call Center said that she contracted with a private
employment agency to bring on temporary employees during the 1999 tax filing
season to supplement the regular workforce and seasonal hires. Call routing
technology was used to direct less complex inquiries to the temporary
employees, freeing the more highly skilled representatives to respond to
calls that required specialized knowledge.

Hewlett- Packard Company Executive Customer Advocacy Group. A hotline
manager said that a pool of retired employees worked part- time to answer
inquiries, providing customers with technical information and support after
they had purchased personal computers or technical workstations and systems.
He noted that this strategy worked well because the retirees had a wealth of
technical and organizational knowledge and experience with which to assist
callers.

Many officials in both public and private sector organizations cited
effective leadership and competitive compensation as most critical to
implementing human capital strategies and achieving business goals.
Specifically, officials said that the keys to successful human capital
management were (1) retaining committed, dynamic managers who respected
employees and communicated extensively and (2) offering customer service
representatives pay, benefits, and advancement opportunities that were at
least comparable to those offered by firms competing in the same labor
markets. At the five unionized call centers we visited, officials said that
respect and good communication with employees extended to managements'
working relationships with labor unions. Effective Leadership

and Competitive Compensation Were Cited as Keys to Successful Human Capital
Management

B- 282816 Page 14 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

Regarding three specific aspects of human capital management- recruiting and
hiring, training, and managing the performance of telephone customer service
representatives- management strategies were part of a larger strategic plan
for organizational excellence. For example, since telephone customer service
was an entry point into their organizations, several call center managers
saw their roles as recruiters for their entire organizations and used tools
including skills testing, role- playing, and interviewing to evaluate
applicants' skills and abilities. At some organizations, officials said that
customer- service training programs were valued for the broad overview that
they provided of operations, missions, and goals. Qualitative and
quantitative measures were used to evaluate employees' performance on at
least a monthly basis and as often as weekly at some organizations.

The following are examples of responses from officials who were asked what
factors they thought contributed to successful human capital management in
their call centers:

Allstate. The manager of the Roanoke, VA, Call Center noted that the company
had a long tradition of valuing and respecting employees. He said that at
the call center, they pride themselves on providing open and honest
communication.

When the Roanoke facility opened in 1996, as Allstate's first dedicated call
center, the manager said that corporate leaders made a decision to extend
the Allstate culture to the new hires. The customer service representatives,
a predominately part- time workforce, including students and people working
second jobs, were offered the benefits of full- time workers after
completing 1 year of service and 1,000 hours. In this “regular part-
time status,” customer service representatives received sick and
vacation pay, health insurance benefits, and up to $5,200 per year in
tuition assistance. Pay rates were based on the consumer price index and
salary levels for the insurance industry and the geographical area.
Advancement opportunities as trainers in the call center or in other
telephone or claims processing positions outside of the call center were
available to those interested in pursuing careers with Allstate. Corporate
managers said that current call center employees would also have
opportunities for better pay and more complex jobs when the expanded call
centers begin offering customers a full range of insurance products and
services by telephone 24 hours a day.

Canada Customs and Revenue Agency. The manager of the Toronto Call Center
cited “good open communication between employees and managers and
throughout the entire agency” as a contributor to effective Leaders
Who Respect

Employees and Communicate Openly and Competitive Compensation Were Factors
Needed to Manage Call Centers

B- 282816 Page 15 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

management of telephone customer service employees. Another positive she
cited was her management team of people who see themselves as problem
solvers and who are energetic, competent, and attentive to the needs of the
employees. Also, customer service representatives were allotted 15 minutes
each day to bring themselves up to date on developments within the agency
that impacted on their work. The agency also had a system in place that
allowed the customer service representatives to communicate problems outside
of the call center that impacted their work. Customer service
representatives who identified problems that were increasing call volumes
advised their office's Service Enhancement Program representative, who
notified a headquarters counterpart. At headquarters, steps were taken to
resolve the problem and to prevent similar reoccurrences.

An executive with the Agency's Client Services Directorate said that pay and
benefits, including health insurance, paid vacation, and sick leave, were
attractive to employees. He also noted that the agency had a budget for
funding outside education expenses for customer service representatives. The
executive described his frontline telephone staff as being critical to
organizational success. He said that these employees are “at the
bleeding edge” where the agency meets its clients, and that they are a
rich resource on what prompts clients to call and how they can be satisfied.
He saw as a future challenge the need to make a business case for not
putting the lowest cost personnel on the front line. Strategic plans
included investing in customer service representatives to provide them with
the right tools and compensation to do their jobs.

Kaiser Permanente. A director of the California call centers said that a
main factor contributing to a positive environment in the call centers under
his jurisdiction was “consistently treating customer service
representatives right.” He said that these employees are his
customers, and he consistently recognizes outstanding service. The director
said that respect for customer service representatives is demonstrated by
empowering them, encouraging their suggestions for changes to make the call
centers more efficient and effective, and asking them to “think
outside of the box.” He also noted that managers and leaders model
exceptional service, rather than just telling others to provide it.

An important part of the compensation package for telephone customer service
representatives was an incentive plan that each month awarded the top-
performing telephone customer service representatives with an extra 10
percent of their base monthly wages. Established in October 1996, the
incentive plan was designed to motivate and reward employees for

B- 282816 Page 16 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

individual and team contributions to the call centers' performance goals,
tie cash compensation to organizational performance, and foster teamwork.
Awards were based on the following factors:

ï¿½ quality of calls (determined by supervisory monitoring);

ï¿½ quality of system entries (the extent to which information entered into
the computerized system detailed the caller's question, the representative's
response, and any follow- up action that was needed, as determined by
supervisory review); and

ï¿½ call handling time (the average length of time spent on calls, as measured
over the month).

In addition, some team measures (e. g., whether the call center met its
goals for service- level and percentage of calls abandoned) were considered
in recognizing individuals. Quality was emphasized over quantity.

At the five unionized call centers we visited- the four public sector
organizations and Kaiser Permanente- officials said that they had generally
maintained good communications and working relationships with union
representatives. However, they also noted that the union negotiations were
time consuming and involved concessions on human capital issues by both
management and unions.

Examples of how management at three organizations described their working
relations with labor unions follow:

Illinois Department of Revenue. Officials said that they achieved union buy-
in regarding major personnel system changes, including broadbanding and
eliminating narrowly defined position descriptions, because they
communicated effectively on why changes were necessary and treated employees
fairly in the transition. Business plans that were shared with union
representatives showed that the automation of many job functions was
changing the work environment and eliminating some functions, while creating
needs for others. Some clerical employees had the opportunity to be promoted
to entry- level professional positions on the telephones when their clerical
jobs were eliminated. A workforce reduction was necessary, but it was
accomplished with no layoffs. Officials said that the Department was reduced
by more than 1,000 employees- from about 3,500 to 2,400 people- between 1985
and 1995 through attrition. Officials also noted that, due in large part to
strong union influence, pay increases continued to be based primarily on
seniority rather than performance, and that any proposed schedule changes
for customer service representatives were subject to union negotiation.
Organizations Maintained

Effective Working Relations With Labor Unions

B- 282816 Page 17 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers Canada Customs and Revenue Agency. An executive said that
unions

had an impact on human capital issues, including staffing processes,
training, and job security. She also noted the following:

“We have made a significant effort to seek union buy- in on management
changes. As a result, change has been achieved at a slower pace than would
otherwise have been the case, and management did not put in place some
changes it might otherwise have sought. Two key efforts- establishing
dedicated call centers and monitoring the quality of calls- were discussed
and negotiated with national union management for 2 years prior to
implementation. In the end, however, we maintained good communication with
our unions and moved ahead on the efforts that are most important to us.

“Union concerns that dedicated call centers would be unpleasant,
highly- regimented workplaces were alleviated by creating attractive office
space with good technical equipment and establishing reasonable expectations
for customer service representatives. We emphasized the benefits of
automated response units responding to simple inquiries, computers that make
client- specific mainframe data available, comprehensive training and an
opportunity to be part of something new and different. We provided all of
those things, as promised.

“Union concerns that monitoring the quality of calls would result in
unfair evaluations of the performance of customer service representatives
were alleviated by creating a unique system of peer monitoring on a
voluntary basis. Customer service representatives volunteered to complete
training and serve as monitors. The monitors listened to calls and prepared
reports on the results of their monitoring, which assessed specific aspects
of the calls, such as whether an appropriate greeting was made, the
information provided was accurate, and the representative was courteous.
Monitors gave the reports to supervisors to discuss with their employees. We
did not require that customer service representatives be monitored. However,
if they agreed to be monitored, they were offered the strong incentive of
receiving training for identified skill gaps to enhance their performance
and promotion potential.” 13

A manager also noted that union concerns over changing the work hours of
customer service representatives to meet expanded call center hours were to
be alleviated by filling undesirable shifts with new hires and volunteers.
To make up for an experience gap during evening hours and on weekends, plans
called for assigning more supervisors to the late shifts.

Kaiser Permanente. Officials told us that they had a good working
relationship with their union because the company considered the needs and
desires of employees. The relationship was formalized in the call centers'
labor- management partnership vision, which stated “we aspire to build
effective partnerships with all our internal customers through fair
treatment of all concerns, continual communication, and understanding.

13 At the time of our visit to the Toronto Call Center in December 1999, an
official said that 70 percent of the telephone customer service
representatives were participating in the monitoring program.

B- 282816 Page 18 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

We stand in our customers' shoes during the decision- making process.”
The call centers' strategic plan also had as a goal “to be the
employer of choice in our local communities, as measured by employee
satisfaction and voluntary turnover rate.”

Call center managers worked closely with the union in making key decisions
regarding working conditions for customer service representatives. Officials
said that salaries were negotiated with the union, as were decisions on
mandatory overtime, promotions, and training. When managers had problems
scheduling customer service representatives to work overtime, which occurred
only infrequently, the union contract required that those with the least
seniority would work. The contract also specified that promotions were to be
based on length of service, and it stated that new customer service
representatives would receive 4 weeks of training and a 75- day probationary
period.

Some call center managers saw their roles as recruiters for their entire
organizations and had comprehensive processes for evaluating applicants'
skills and abilities, including skills testing, role- playing, and
interviewing. Officials noted that call centers need to recruit and hire
regularly because attrition from customer service representative positions
is generally high. At the organizations we visited, officials said that
attrition from the call centers was usually to other positions within the
organization. As such, some call center managers said that it was important
to the entire organization that good candidates be recruited and hired for
customer service representative positions. Specific examples of recruiting
and hiring strategies and processes, as described at three organizations,
follow:

California Franchise Tax Board. Officials said that an in- house recruiting
and hiring effort took place twice a year at the call center. About 100
positions were filled annually in an organization of 250 customer service
representatives. New hires were generally assigned to work the swing shift
with hours until midnight during filing season and until 8 p. m. during the
rest of the year. About half of the new hires were from outside of the Tax
Board. An executive noted that call center management took the hiring
process very seriously, because once people are on board in the civil
service system, it is hard to terminate them. She said that call center
supervisors devoted up to 90 percent of their time for several weeks each
year to evaluating and selecting candidates for customer service
representative positions.

Internal and external candidates were identified from registers of people
who took competency examinations that were ranked by the state Some Call
Center Managers

Recruited for Their Entire Organizations

B- 282816 Page 19 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

personnel department. The call center generally sought to interview
applicants who scored in the top three ranks on the examination.

Interview questions were developed on the basis of an informal best
practices study of call center interviewing techniques. On the basis of
their best practices' research, a team of telephone customer service
representatives developed questions that were designed to measure
applicants' customer service focus. For example, applicants were asked why
they were seeking careers in customer service. Interviewers were seeking
answers such as the applicant had previous experience in this line of work,
enjoyed the diversity of customer service contacts, and was challenged to
resolve difficult issues. Applicants also listened to a prerecorded
telephone call and were asked to determine whether the call represented
quality customer service and to make suggestions regarding how the call
could have been improved. Call center supervisors checked job references of
applicants who successfully completed the initial interview with particular
attention to whether previous employers had found them to be reliable. They
did background checks and interviewed candidates one final time before job
offers were made.

Kaiser Permanente. At the two California call centers, in- house recruiting
and hiring efforts were ongoing. A director for the 2 call centers noted
that about 135 positions were filled in the last 6 months of 1999 in centers
with a total workforce of about 475 customer service representatives. It
took about 4 weeks to bring new hires on board. They were usually hired in
classes of 18, so that recruiting and training efforts could be combined.
In- house recruiters also served as trainers for new hires.

Because of policies to promote from within and encourage employee mobility
throughout the organization, officials noted that hiring for customer
service representative positions also indirectly impacted on the quality of
candidates available for more senior positions elsewhere in the
organization. The director said that he tells new hires that “from day
one they should be deciding what their next job is going to be, and they
should use their customer service positions as vehicles to future
dreams.”

The director said that interest in the customer service positions was high.
Usually about 50 people applied for 18 positions. Most applicants were
referred by current employees or they were working in other parts of the
Kaiser organization. Externally, call center managers had contacts with
local high school and college placement services, and they attended job
fairs and did some selective newspaper advertising. Minimum

B- 282816 Page 20 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

qualifications were a high school degree and previous customer service
experience. Strong candidates also should have basic computer knowledge and
typing skills. Most importantly, the director said, he looked for
individuals with good people skills, a strong work ethic, and an ability to
adapt to changes.

During the 4- week recruiting period, candidates went through a series of
one- on- one interviews, panel interviews, and role- play scenarios designed
to assess their skills. They also completed written tests on grammar,
spelling, problem- solving, and analytical ability, and they completed
health screenings.

Officials in some organizations said that customer service training was
valued for the broad overview it provided of organizations' overall
operations, mission, and goals. They identified training programs for new
and experienced customer service representatives as critical elements for
effective management of their call centers. Training for new hires lasted
approximately 4 to 8 weeks and included coursework on programs, services, or
laws about which customers would be calling as well as instructions on how
to use information systems and on effective communication skills. Officials
in many of the organizations noted that in good call centers, training never
stopped. In addition to classroom training, customer service representatives
received mentoring and on- the- job training. Excerpts from two discussions
about call center training follow:

Illinois Department of Revenue. Entry- level training was critical in this
organization where most of the customer service representatives were college
graduates hired externally for entry- level professional positions. Formal
classroom training for new hires was about 8 weeks. The training included
information on specific state taxes as well as 1- or 2- day sessions on
general topics, such as personnel issues and ethics awareness. Officials
said that telephone customer service training was open to tax specialists
from other departments and was valued for the broad overview it provided of
the mission, goals, and operations of the entire department.

Supervisors developed and taught the training. Officials noted that changes
in the course content and/ or delivery were easily made on the basis of
feedback from students. For example, student feedback was responsible, in
part, for establishing a training room designed to simulate workstations.
Trainees had available to them all of the equipment and reference materials
that they would find at their desks. They could role- play, listen to live
calls and evaluate them, and take live calls and have responses played back
and discussed in the classroom. The introduction of call routing Training
Was Valued by

Some Organizations for Providing a Broad Overview of Operations

B- 282816 Page 21 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

technology, which makes it possible to direct specific types of incoming
calls to specific customer service representatives, also changed the
delivery of training. New hires were able to learn and become comfortable
handling calls dealing with one type of tax at a time. Before the call
router was in place, new hires needed to complete training for taxes on
personal income, business income, and sales before they could answer calls.

Experienced customer service representatives were offered year- end training
sessions and refresher courses. They were asked each year by supervisors
what topics they would like to have covered in the training. After a 1- year
trainee period, customer service representatives were not required to attend
training, unless it was to convey changes in policy or procedures. However,
officials said that almost all customer service representatives took
advantage of training opportunities.

Social Security Administration. New customer service representatives
received about 8 weeks of classroom training. Most new hires had on- thejob
training between sections of the formal coursework, and they were assigned
mentors for at least 2 to 6 months after completion of their initial
training. Coursework was designed primarily to teach customer service
representatives the technical aspects of the wide variety of programs
administered by SSA (e. g., eligibility factors for Social Security
retirement, disability, and Medicare) and how changes that take place after
entitlement could affect benefits, providing a broad overview of operations.
It also covered how to access, interpret, and make input to the databases
associated with SSA programs. Additionally, about 15 percent of the initial
training period was devoted to teaching interviewing skills and doing
exercises to prepare new hires to deal effectively with the public.

According to training officials in Philadelphia, PA, and Baltimore, MD, most
new hires were successful in mastering the coursework. Only 1 to 2 percent
resigned during or immediately following training due to performance issues.
To determine whether necessary knowledge and skills were mastered,
supervisors monitored statistics, calls, and mentoring reports on new
employees. If the data showed that an employee needed extra help,
supervisors and mentors promptly provided it.

Officials said that a headquarters Office of Training was responsible for
developing the content of entry- level customer service representative
training. The training was delivered by supervisors and experienced customer
service representatives in the districts.

B- 282816 Page 22 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

Training of experienced customer service representatives was scheduled
regularly because of frequent changes in legislation, policies, procedures,
and software. Experienced representatives were to receive 27 training hours
a year, delivered during the nonpeak period between April and December.
District officials noted, however, that the amount of training was adjusted
as needed. They said that 24 hours of training was delivered in a recent 2-
month period on major systems changes. Refresher training was coordinated
nationally, regionally, or locally, as needed, but officials said that
training materials were circulated so that no office “reinvented the
wheel” on a particular program. Officials were exploring new methods
of delivering refresher training, including interactive videos with quizzes
and evaluations and several computer- based training courses. They had also
contracted with vendors for courses in stress management and customer
sensitivity.

Performance standards for individual customer service representatives at the
organizations in our review were clearly defined and included qualitative
measures (e. g., accuracy and clarity of information provided) and
quantitative measures (e. g., time available to take calls). Some officials
noted that the quality of customer service provided was emphasized over the
quantity of calls taken. Organizations assessed quality on the basis of
monitoring by remote quality analysts, supervisors, or peers of a sample of
calls taken by each customer service representative. They rated the quality
of calls according to a standard set of criteria. Some officials cautioned
that quantitative measures needed to be within full control of individual
customer service representatives.

Discussions on performance took place frequently at the organizations we
visited, although scales used for formal rating of performance varied
widely. Supervisors met with telephone customer service representatives at
least monthly and as frequently as once a week to discuss performance that
was based on clearly defined performance indicators. Since performance
feedback was provided so frequently, formal annual performance ratings
should not contain surprises. Rating scales used at organizations we visited
varied from four- level scales to a narrative rating with no rating levels.
In some private sector organizations, performance ratings determined the
levels of annual salary increases that customer service representatives
received, while officials in public sector organizations said that time in
the position and satisfactory performance determined salary increases.

The following are excerpts from discussions at two organizations on
evaluating employees' performance: Individual Performance

Standards Were Clearly Defined and Included Qualitative and Quantitative
Measures

B- 282816 Page 23 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers United Parcel Service. Whether they were employed by UPS or by

contractors retained to manage seven of UPS' nine call centers nationwide,
customer service representatives were expected to meet the same performance
standards. Customer service representatives were evaluated on quantitative
measures of their call handling, availability, and timeliness. In addition,
they were evaluated on qualitative measures of teamwork and accuracy,
completeness of information provided, and professionalism in interactions
with customers.

An independent UPS quality measurement group conducted silent monitoring and
test calls. Test callers used scenarios that typical customers might have
and called into the centers posing as customers. Both individual customer
service representatives and call centers received quality scores that were
based on the silent monitoring and test call results. The results were
immediately shared with call center managers and passed on to customer
service representatives in informal discussions and coaching by supervisors.
Results for the year were incorporated into employees' annual performance
assessments.

Quality scorecards were linked directly to pay. If a call center received a
score of 7 or higher of a possible 10 for its quarterly performance, it
received extra funds to pay customer service representatives' salaries. If
the call center received a score of five or lower, it lost funds for
salaries.

California Franchise Tax Board. Officials said that formal ratings were
prepared once a year. Since supervisors gave customer service
representatives written reports on their statistics (e. g., availability,
idle time, and call length) at least monthly and monitored at least three
calls a week for quality, ratings should not have contained surprises. An
executive noted the following:

“We actually use all of our rating levels (exceeds expectations, meets
expectations, needs improvement, or does not meet expectations). Our
customer service representatives accept the ratings because they are honest-
based on objective statistics that they have received all year.”

She also said that supervisors were committed to helping employees improve,
noting that “supervisors have been on line themselves. They know that
the customer service representatives have a tough job.”

Job elements on which customer service representatives were rated were broad
categories used for all Franchise Tax Board employees (e. g, quality of
work, interpersonal skills, and job knowledge). A narrative section allowed
supervisors to comment on job performance specific to telephone

B- 282816 Page 24 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

customer service. There was no standard for the number of calls answered,
but customer service representatives were shown how their statistics
compared with others answering the same type of calls. Customer service
representatives wrote sections on their future performance objectives, on
which they received supervisory comments, and they completed self-
assessments.

Officials said that performance ratings were considered when customer
service representatives applied for promotions. Ratings documenting
performance that was not meeting expectations could eventually lead to
employees' dismissal. However, annual salary increases were based on service
anniversary dates as long as employees were performing satisfactorily.

Officials discussed processes for evaluating human capital strategies in
their call centers. Individual telephone customer service representatives at
some of the organizations we visited were evaluated on the same qualitative
and quantitative performance measures as the call centers operations,
linking the goals and performance of the organization to the work of
individual employees. Examples of the types of qualitative assessments done
included internal monitoring of selected calls, surveys of external
customers to determine how satisfied they were, and surveys of the customer
service representatives to determine how satisfied they were with the
organization and their jobs. The call centers we reviewed were not lacking
in quantitative data on their operations. Management information systems
generated several quantitative performance measures that leaders and
managers could use to evaluate operations (e. g., the percentage of
abandoned calls and average time in a queue waiting to speak to a
representative). Leaders and managers were tasked with selecting the
quantitative indicators most meaningful for evaluating call center
performance. In addition, formal and informal benchmarking studies against
competitors and/ or organizations with similar missions evaluated
performance using both qualitative and quantitative measures. Some call
centers did internal quality evaluations, while other organizations had
staff employed outside of the call centers to do these reviews.

Evaluation results were used to make improvements. They were used by
managers and shared with employees. Results of evaluations were incorporated
at every stage of the human capital management cycle (i. e., identifying,
implementing, and evaluating) for continuous improvement. Human capital
investments initiated on the basis of evaluations included hiring more
people, changing training course content and delivery, Performance of Call

Centers and Individual Customer Service Representatives Were Evaluated on
Many of the Same Measures

B- 282816 Page 25 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

improving recruiting and hiring strategies, and doing evaluations of call
centers differently. In one instance, efforts to evaluate and improve call
center human capital management resulted in improvements throughout the
organization.

Examples of how organizations in our review evaluated their call centers,
including human capital management strategies and practices, follow:

Kaiser Permanente. The strategic plan for Kaiser Permanente's California
call centers required that the centers evaluate their performance using
qualitative and quantitative measures. Specifically, the performance of call
centers and individual telephone customer service representatives were
measured against the following goals:

ï¿½ quality assurance scores of 92 percent on the basis of the results of
monitoring a sample of telephone calls,

ï¿½ customer satisfaction scores of 90 percent,

ï¿½ 90 percent of calls answered within 30 seconds,

ï¿½ 3- percent abandonment rate, and

ï¿½ call handling time of 4 minutes and 45 seconds. Call center performances
were also evaluated through regular surveys of customers and employees.
Customer satisfaction was evaluated through telephone surveys of a random
sample of callers and postcard mailings. At the time of our visit, a
contractor had recently completed more than 2,000 telephone interviews of
customers who had telephoned 2 California call centers in August and
September, 1999. The surveys were analyzed to provide information on

ï¿½ the demographic profile of customers,

ï¿½ how well caller expectations were being met,

ï¿½ caller satisfaction with the automated voice response system,

ï¿½ satisfaction with telephone customer service representatives' performance
in core competency areas, and

ï¿½ factors most important to achieving caller satisfaction. Officials said
that postcard mailings to customers helped to measure telephone customer
service representatives' professionalism, courtesy, knowledge, and problem
resolution skills.

Customer service representatives were surveyed annually to determine how
satisfied they were with their jobs, and they participated in quarterly
forums with management to address any issues they wanted to raise,
Performance Measures

Used to Evaluate Call Center Operations

B- 282816 Page 26 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

ranging from allocation of parking spaces to work schedules. Eight telephone
customer service representatives, two managers, and the call center director
served on each forum. The results of the surveys and forums were provided to
all call center managers and employees.

Social Security Administration. SSA's Office of Telephone Services evaluated
the performance of its 36 toll- free call centers. Within the Office of
Telephone Services, managers tracked and analyzed specific performance data
on service indicators, such as average speed of answer, access rates,
service accuracy, and caller satisfaction. They shared results to (1)
identify best practices and assess causes for low scores and (2) try to
improve. Each call center also did on- site monitoring of calls taken by
telephone customer service representatives to determine training needs and
to obtain information on site- level accuracy.

In addition, a headquarters office, the Office of Quality Assurance and
Performance Assessment (OQA), conducted broader evaluations of call center
operations overall and made recommendations for improvements. OQA (1) did
semiannual customer satisfaction surveys, with assistance from a contractor,
of 1,200 to 1,500 randomly selected customers who had called SSA's toll-
free telephone operation during the survey period and (2) did silent
monitoring of calls to evaluate the accuracy of SSA's toll- free telephone
service and to obtain data on specific performance indicators, including
employees' job knowledge, helpfulness, and clarity of explanations. Results
of OQA's customer surveys and call monitoring are performance indicators
that are reported in an annual SSA accountability report.

SSA also benchmarked its performance against other public and private sector
organizations. In 1995, SSA worked on a major study of best practices that
focused on the following three major areas: (1) identifying customers and
their customers' needs, (2) improving telephone access, and (3) empowering
frontline telephone customer service employees. The team produced a report
on the best practices that they had identified at private sector companies.
14 SSA participated in another study in 1997 on best practices in one- stop
customer service. 15 The study found that worldclass providers listened to
their customer and listened to their employees who delivered the service.

14 Putting Customers First, Serving the American Public: Best Practices in
Telephone Service (National Performance Review, Feb. 1995). 15 Serving the
American Public: Best Practices in One- Stop Customer Service (National
Performance Review, Nov. 1997).

B- 282816 Page 27 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

The following are examples of improvements that officials said were made as
a result of evaluations of call center human capital management strategies
and practices:

Illinois Department of Revenue. The Customer Service Bureau and its Taxpayer
Assistance Division spent more than 2 years doing a detailed analysis of
staffing needs, which included benchmarking studies of call center
operations at other state tax agencies. Officials said that after it was
released in February 1999, the study was used as justification for hiring
more customer service representatives and upgrading the qualifications for
the position to require a bachelor's degree or 8 years of tax- related
experience.

Since training was developed and delivered within the call center by
supervisors and senior staff, training coordinators told us that the system
for evaluating and improving training was informal. They said that
supervisors often made minor adjustments from one session to the next on the
basis of feedback that they received. Feedback from students was partially
responsible for the decision to establish a training room to simulate
workstations.

A committee of customer service representatives and managers developed a
computer program for coding incoming calls by type of transaction. The
program was put in place in February 1999. A manager told us that the
program was to be used to make customer service improvements throughout the
tax agency. For example, one letter was found to be very confusing to
taxpayers, and data showed that the letter resulted in frequent calls. The
manager said that it was to be revised.

United Parcel Service. Officials said that on the basis of the results of
benchmarking studies of companies considered the best in the industry, in
1995, UPS consolidated its 61 districts into 11 districts, with a call
center in each district. The locations of the call centers were also based
on the information obtained during the benchmarking studies. The changes
were made to help meet customer expectations and to improve customer service
overall.

UPS officials said that one reason for deciding to change how call centers
were evaluated was analysis of quality performance indicators. In 1998, a
quality assurance group of 20 staff was established in Salt Lake City, UT,
to provide consistent, objective evaluation results and improve quality at
each call center. Leaders, managers, and staff could compare results Results
of Evaluations Were

Used to Make Improvements

B- 282816 Page 28 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

among centers and identify best practices to improve call center operations
overall.

UPS had consultants to help design its customer satisfaction model to
determine what key elements make a satisfied customer. By compiling survey
information on why customers called and what questions they asked, officials
said that they believed that they could not only achieve first call
resolution for more customers, but they could also take proactive measures
to reduce the reasons for customers' having to call.

At the time of our visit, the results of training evaluations had prompted
UPS to consider centralizing its telephone customer service training
programs.

Allstate. A unit within the marketing department has special expertise in
conducting benchmarking studies. It performs benchmarking studies for the
customer service operations as well as studies other insurance industry
practices and policies.

Allstate officials said that the benchmarking studies are incorporated into
decisionmaking throughout the corporation. A senior field operations manager
noted the following:

“When we think we need to build five call centers, or we need a
certain type of telephone technology, or an investment in human capital, a
study of what others are doing will be included as part of the corporate
decisionmaking process.”

In addressing our three objectives, we observed commonalities in the
management of the call centers that could be useful for IRS to consider as
its modernization and restructuring are planned and implemented. Quality
telephone customer service was essential to meeting the organizational goals
of both the public and private sector service- oriented organizations in our
review. Key to providing quality customer service was the identification,
implementation, and evaluation of human capital strategies for telephone
customer service operations.

To assist you in your oversight of IRS, we will also issue a follow- up
report discussing human capital management issues in IRS' telephone customer
service operations. The follow- up report will discuss how IRS might benefit
from the commonalities that we observed in the management of call centers
included in this report. Concluding

Observations

B- 282816 Page 29 GAO/ GGD- 00- 161 Human Capital Management at Selected
Call Centers

As agreed, unless you announce the contents of this report earlier, we plan
no further distribution until 30 days from the date of this letter. At that
time, we will send copies of this report to Representative William J. Coyne,
Ranking Minority Member of the Subcommittee on Oversight, House Committee on
Ways and Means; the Honorable Charles O. Rossotti, Commissioner of Internal
Revenue; and other interested congressional parties. We will also make
copies available to others on request.

If you or your staff have any questions about this report, please contact me
at (202) 512- 9110 or Alton C. Harris at at (404) 679- 1900. Key
contributors to this report are acknowledged in appendix II.

Sincerely yours, Margaret T. Wrightson Associate Director, Tax Policy

and Administration Issues

Page 30 GAO/ GGD- 00- 161 Human Capital Management at Selected Call Centers

Contents 1 Letter 32 Objectives 32 Scope and Methodology 32 Selection of
Organizations to Visit 33 Appendix I

Objectives, Scope, and Methodology

38 Appendix II GAO Contacts and Staff Acknowledgments

Table I. 1: Telephone Customer Service Operations in Organizations We
Visited or Telephoned

35 Tables Figure 1: Human Capital Management Cycle 2 Figures

Abbreviations

GE General Electric IBM International Business Machines, Inc. IRS Internal
Revenue Service NPR National Partnership for Reinventing Government OQA
Office of Quality Assurance and Performance Assessment SSA Social Security
Administration UPS United Parcel Service

Page 31 GAO/ GGD- 00- 161 Human Capital Management at Selected Call Centers

Appendix I Objectives, Scope, and Methodology

Page 32 GAO/ GGD- 00- 161 Human Capital Management at Selected Call Centers

To obtain information useful for the oversight of the Internal Revenue
Service (IRS) modernization, the Chairman of the Subcommittee on Oversight,
House Committee on Ways and Means, asked us to study the human capital
management strategies that were used in selected telephone customer service
organizations identified as noteworthy or innovative. Our intent was to
learn about human capital strategies and practices at the organizations that
may have applications at IRS as the agency revises its management processes.

Specifically, the objectives for this report were to review how selected
public and private sector organizations

ï¿½ identified human capital needs that form the basis for developing
management strategies and practices to meet their missions and business
goals,

ï¿½ implemented human capital strategies and practices, and

ï¿½ evaluated their human capital strategies and practices and used the
results of the evaluations to continuously improve their operations.

As agreed with your office, we will issue a follow- up report discussing
human capital management issues in IRS' telephone customer service
operations and discussing how IRS might benefit from practices we have
observed in the course of this review.

To address our three objectives, we examined documentation and conducted
interviews using a structured data collection and interview instrument. The
instrument covered the topics of identifying needs and implementing and
evaluating human capital strategies and practices. It included open- ended
questions to provide interviewees with opportunities to offer broad
observations and perspectives on human capital strategies that might not
have been forthcoming in a narrowly focused interview instrument. We
pretested the instrument with telephone customer service officials at the
Illinois Department of Revenue and the Social Security Administration (SSA)
and made revisions on the basis of the pretest results.

We did not independently verify the organizations' responses regarding their
specific human capital strategies and management practices. We did not
assess in detail how the call centers used technology to manage the flow of
inbound calls and to provide telephone customer service representatives with
on- line access to information they needed to assist customers. Perhaps more
importantly, we responded to this request with the recognition noted in the
literature that neat solutions for complex Objectives

Scope and Methodology

Appendix I Objectives, Scope, and Methodology

Page 33 GAO/ GGD- 00- 161 Human Capital Management at Selected Call Centers

puzzles would not be found in quick calls or visits to other companies. 1 We
recognized that effective human capital management involves an enduring
commitment to a set of basic beliefs, traits, and operating strategies.

At each of the seven organizations that we visited, we interviewed a key
executive who was responsible for the coordination of telephone customer
service operations with overall organizational missions and goals. We also
interviewed telephone customer service managers and officials who were
responsible for recruiting, hiring, and training telephone customer service
employees. At some locations, we toured call centers, observed customer
service representatives at work, and talked with individual telephone
customer service representatives.

We telephoned four other organizations and asked managers of the telephone
customer service operation several of the key structured interview questions
related to each of our objectives.

We judgmentally selected the organizations to visit and telephone by
reviewing literature on innovations in human capital management and by
obtaining opinions from experts on what organizations they thought provided
noteworthy or innovative human capital management in their call center
operations. We chose telephone customer service operations that dealt with
tax questions or specific subjects, such as benefits, investments, and
installation and operation of technical equipment, that were comparable in
complexity to tax issues addressed by IRS customer service representatives.
(See table I. 1 for a list of the organizations we contacted.)

Specifically, the director for Workplace Quality at the U. S. Office of
Personnel Management identified the SSA telephone customer service operation
as a public sector organization that is known for effective human capital
management. We visited the Illinois and California state tax agencies and
telephoned the Utah State Tax Commission on the basis of recommendations of
an official from the Federation of Tax Administrators. The Canada Customs
and Revenue Agency was cited in literature as having an internationally
recognized reputation for high- quality taxpayer service and had
participated along with IRS and the tax agencies of Australia and Japan,
members of the Pacific Association of Tax Administrators, in a benchmarking
study of customer service best practices.

Two private sector companies we visited- Kaiser Permanente and Allstate
Insurance- were selected in consultation with the executive director of

1 Jac Fitz- enz, The 8 Practices of Exceptional Companies (New York, New
York, 1997), p. 9. Selection of

Organizations to Visit

Appendix I Objectives, Scope, and Methodology

Page 34 GAO/ GGD- 00- 161 Human Capital Management at Selected Call Centers

the Private Sector Council. The Council, with membership including about 50
major U. S. corporations, seeks to improve the productivity, management, and
efficiency of government through cooperation with the private sector.
Members volunteer expertise to government agencies by participating with
them in projects that are coordinated through the Council. The other private
organization we visited, the United Parcel Service, was selected in follow-
up to our participation in a congressional delegation and IRS visit to its
Atlanta, GA, headquarters to discuss human capital and telephone customer
service issues.

The private call centers we telephoned- General Electric Answer Center,
Hewlett- Packard Company Executive Customer Advocacy Group, and
International Business Machines Business Product Division, and/ or their
parent corporations- were cited in best practices literature for their
effective human capital management. The results of our survey of these
organizations cannot be generalized to the universe of all telephone
customer service operations. The selection of a different group of
organizations might have yielded different results.

We supplemented our discussions with representatives of innovative or
noteworthy telephone customer service operations by reading literature on
human capital management, management practices of outstanding companies,
telephone customer service management, and federal government efforts to
improve management and customer service. These sources are cited as
appropriate in this report. We also attended a presentation sponsored by
Arthur Andersen, LLP, on best practices in contact center management.

We did our work between May 1999 and June 2000 in accordance with generally
accepted government auditing standards. As agreed with the requester, we
have shared the results of this review with IRS management and with our
other teams that are conducting reviews of the federal government's human
capital management. We also asked the representatives of the outside
agencies, with whom we consulted, to review a draft of this report for
accuracy and clarity. Their comments are incorporated as appropriate.

Table I. 1 lists the public and private sector organizations we visited or
telephoned. The table also provides information on the organizations'
missions and descriptions of their telephone customer service operations.

Appendix I Objectives, Scope, and Methodology

Page 35 GAO/ GGD- 00- 161 Human Capital Management at Selected Call Centers

Organization Mission Telephone customer service operation

Allstate Insurance Company Multinational public company selling

insurance products. It has a customer base of more than 14 million
households in the United States and Canada.

Three call centers in Roanoke, VA; LaBrea, CA; and Jackson, MI, staffed by
about 1,150 customer service representatives, most of whom worked part-
time. The call centers provided after- hours support to insurance agents
nationwide. Toll- free telephone lines were open from 6 p. m. to 9 a. m. for
general information and to leave messages for agents. Allstate officials
said that they plan to expand call center operations to handle customer
sales and service in 2000.

California Franchise Tax Board

Administrator of California's personal income and bank and corporation tax
law. Also responsible for nontax programs, such as the homeowners and
renters assistance program and political reform act audits.

One centralized call center in Rancho Cordova, CA, was staffed by more than
300 telephone customer representatives, including supervisors. They were
assisted during busy times by cross- trained employees from the
correspondence section of the center and by former telephone customer
service employees working overtime. Toll- free telephone lines were open
from 7 a. m. to 8 p. m., Monday through Friday, and from 7 a. m. to 4 p. m.
on Saturday. During filing season, the hours were extended from 6 a. m. to
midnight, Monday through Friday, and from 7 a. m. to 4 p. m. on Saturdays
and holidays. The call center provided taxpayers with information on return
preparation, filing requirements, forms, refund status, and general tax law.

Canada Customs and Revenue Agency

Canadian tax, customs, and trade administrator. Also charged with
redistribution of income through the delivery of social and economic
benefits.

Four call centers in Toronto, Montreal, and Vancouver, and the national 1-
800 Overflow Call Center in Ottawa, that responded to about 40 percent of
the general inquiries. Telephones were also answered at 42 other sites
throughout Canada where agents handled both telephone and walk- in
inquiries. Officials estimated that about 2,600 full- timeequivalent
positions were dedicated to telephone client services, providing taxpayers
with general and account specific information on the programs administered
by the Canada Customs and Revenue Agency. Toll- free telephone lines were
open from 8: 15 a. m. to 5 p. m., Monday through Friday, for individual
taxpayers and from 8: 15 a. m. to 8 p. m. for business taxpayers. During the
2000 filing season, calls from all taxpayers were also taken from 9 a. m. to
1 p. m. on Saturdays and Sundays, and lines for individual taxpayers were
open until 10 p. m.

Table I. 1: Telephone Customer Service Operations in Organizations We
Visited or Telephoned

Appendix I Objectives, Scope, and Methodology

Page 36 GAO/ GGD- 00- 161 Human Capital Management at Selected Call Centers

Organization Mission Telephone customer service operation

General Electric Appliance Company a One of 11 core businesses of General

Electric. Manufactures appliances, including refrigerators, ranges,
dishwashers, microwave ovens, washing machines, dryers, water filtration
systems, and heating systems. Also provides repair and maintenance services
on appliances, operating a nationwide fleet of service vans.

A telephone hotline that provided consumers with product information and
responded to questions about repairs. The answer center, located in
Louisville, KY, handled about 2 million calls each year. About 200 telephone
customer service representatives responded to inquiries 24 hours a day, 7
days a week.

Hewlett- Packard Company a Designer, developer, and manufacturer of computer
products, including personal computers, printers, computer workstations, and
a range of hardware and software.

The Hewlett- Packard Company Executive Customer Advocacy Group provided
support for customers contacting Corporate Headquarters regarding issues or
concerns with products and services. The hotline was located in Palo Alto,
CA. It operated from 8 a. m. to 5 p. m., Monday through Friday, with a staff
of about 22 full- time- equivalent employees who were Hewlett- Packard
Company retirees in part- time positions.

Illinois Department of Revenue

Collects taxes for the state and its local governments, including income and
business taxes on individuals and businesses, income and sales taxes, taxes
on public utilities, tobacco and liquor, motor fuels and vehicles. The
department also administers tax relief programs for the elderly and disabled
and provides property assessments among the state's counties.

One call center in Springfield, IL, was staffed by 34 full- time telephone
customer service representatives who were assisted during busy times by
cross- trained employees from other areas within the taxpayer assistance
division. Toll- free telephone lines were open from 8 a. m. to 5 p. m.,
Monday through Friday, with extended weekday hours and one Saturday opening
during filing season. Automated service was available 24 hours a day, 7 days
a week. The call center provided taxpayers with help in completing their
returns and answered questions about taxes, returns, bills, and notices that
had been filed. International Business

Machines, Inc. a Designer, developer, and manufacturer of information
technologies, including computer systems, software, networking systems,
storage devices, and microelectronics.

In the Product Sales and Service Division, about 6, 900 telephone customer
service employees provided information on product sales and service. Call
centers operated 24 hours a day, 7 days a week.

Kaiser Permanente America's largest not- for- profit health maintenance
organization, serving over 8 million members in 17 states and the District
of Columbia. An integrated health delivery system, Kaiser Permanente
organizes and provides or coordinates members' care, including preventive
care, hospital and medical services, and pharmacy services.

Kaiser Permanente had 17 call centers nationwide, with 12 centers located in
California, the largest region. Regional call centers operated
independently. The California region, where we visited, had 5. 9 million
members, while other regions had fewer than 1 million members each. The two
largest call centers were located in Stockton and Corona, CA. Together, they
employed about 475 telephone customer service representatives and about 80
management and support staff. Hours of operation were 7 a. m. to 7 p. m., 7
days a week. The member service call centers provided answers to questions
on health plan- related topics, including benefits, copayments, claims,
Medicare eligibility, available services, and physician information.

Appendix I Objectives, Scope, and Methodology

Page 37 GAO/ GGD- 00- 161 Human Capital Management at Selected Call Centers

Organization Mission Telephone customer service operation

Social Security Administration

Manages the nation's social insurance program, consisting of retirement,
survivors, and disability insurance and supplemental security income
benefits for the aged, blind, and disabled. Also assigns Social Security
Numbers to U. S. citizens and maintains earnings records for workers under
these numbers.

Thirty- six call centers nationwide were staffed by 3,100 fulltime, 700
part- time, and up to 60 percent of about 4,100 spike employees who were
available to assist at busy times. b Toll- free telephone lines were open
from 7 a. m. to 7 p. m., Monday through Friday, to answer callers' questions
about Social Security benefits and programs.

United Parcel Service World's largest package distribution company, it
transports more than 3 billion parcels and documents annually.

Nine call centers nationwide were staffed by over 6,800 customer service
representatives. Eight centers were open from 7 a. m. to 9 p. m., Monday
through Friday. One center in San Antonio, TX, operated 24 hours a day, 7
days a week. Seven of the nine call centers were staffed by contract
employees. The Newport News, VA, call center, which was a contract facility
we visited, had 230 representatives who handled calls related to pick- up,
tracking, and claims.

Utah State Tax Commission a Coordinator of Utah taxes and fees,

including taxes on income, sales, property, motor vehicles, fuel, beer, and
cigarettes.

Three call centers- a main call center, motor vehicle center, and collection
center- operated weekdays from 8 a. m. to 5 p. m. with about 35 telephone
customer service representatives. The call centers responded to about 15,
000 to 20,000 inquiries a month dealing with a range of questions on
programs administered by the Commission.

a For these organizations, we conducted a telephone interview in which we
asked managers of telephone customer service operations several key
semistructured interview questions. However, we did not have detailed
discussions with officials and employees at various levels of the
organizations. b “Spikes” are employees who work in program
service centers on specific jobs, such as processing

benefit claims, but who are cross- trained to answer telephone inquiries and
can be diverted from their regular work to answer telephones when call
volumes are high.

Source: GAO compilation of data provided by the organizations visited.

Appendix II GAO Contacts and Staff Acknowledgments

Page 38 GAO/ GGD- 00- 161 Human Capital Management at Selected Call Centers

Margaret T. Wrightson (202) 512- 9110 Alton C. Harris (404) 679- 1900

In addition to those named above, Michelle Bowsky, M. Grace Haskins, Deborah
Knorr, and Carrie Watkins made key contributions to this report. GAO
Contacts

Acknowledgments

Page 39 GAO/ GGD- 00- 161 Human Capital Management at Selected Call Centers

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