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.
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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
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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 representatives4 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
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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.
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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 21st 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
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• Strategic planning (establishing the agency’s mission, vision for the future,

core values, goals, and strategies).

• Organizational alignment (integrating human capital strategies with the

agency’s core business practices).

• Leadership (fostering a committed leadership team).

• Talent (recruiting, hiring, developing, and retaining employees with the

skills for mission accomplishment).

• 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).
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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:

• SSA’s goal was for 95 percent of callers to reach its national 800 number

within 5 minutes of their first attempt.

• UPS had a goal for 90 percent of calls to be answered within 15 seconds,

Monday through Friday.

• 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

10Service-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
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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

11Brad 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
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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:
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“...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
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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.
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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
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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
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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
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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
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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:

• quality of calls (determined by supervisory monitoring);

• 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

• 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
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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.

13At 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.
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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
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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
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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
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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.
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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
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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
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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
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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:

• quality assurance scores of 92 percent on the basis of the results of

monitoring a sample of telephone calls,

• customer satisfaction scores of 90 percent,

• 90 percent of calls answered within 30 seconds,

• 3-percent abandonment rate, and

• 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

• the demographic profile of customers,

• how well caller expectations were being met,

• caller satisfaction with the automated voice response system,

• satisfaction with telephone customer service representatives’ performance

in core competency areas, and

• 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
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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.

14Putting Customers First, Serving the American Public: Best Practices in Telephone Service (National

Performance Review, Feb. 1995).

15Serving the American Public: Best Practices in One-Stop Customer Service (National Performance

Review, Nov. 1997).
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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
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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
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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

Appendix II 38

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

• identified human capital needs that form the basis for developing

management strategies and practices to meet their missions and business

goals,

• implemented human capital strategies and practices, and

• 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.1We

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

Companya

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 aDesigner, 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

Commissiona

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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