Receivable/Accounts - Information for Credit and Collection Issues

Tuesday, September 10, 2013

Five Ways Collection Agencies Destroy Morale

So, I was recently talking to a former staff member of mine who moved on to another collection agency, and she was telling me about how her company deducts a portion of all the staff members' paycheques to cover their collection licenses.  She was pretty upset about this, and I told her that I knew of at least two other companies that did the same thing.

This shouldn't surprise me after all these years, but there are so many small ways that companies unthinkingly destroy the morale of their staff every day, and shouldn't.   Collections isn't an easy job -- the very least an agency can do is make their staff as comfortable and effective as possible.  Morale is a significant factor in productivity, attendance, and staff retention, yet many companies think that scrimping and saving a couple of hundred dollars a year is worth the risk and instability they bring to the company.  Let's look at some of these questionable 'cost saving measures':

1. Charge Staff For Necessities

In the example above, the agency was deducting a portion of the staff members' pay every pay period.  This, I don't agree with.  Yes, there is a cost to setting up a staff member, including licensing them in the province(s) they will be collecting in, but the cost of the license pales in comparison to the cost of the wages of that person, or their expected revenue.  In most provinces, it is the agency's responsibility to license their staff, so that responsibility and cost should rest with the company.

If you must have a clawback on a staff member's initial license fees if they fail to meet their probationary period expectations, that's one thing, but to deduct something every month from your productive staff is sending the message that your employees aren't worth what you are paying them, and that the costs they incur to successfully fulfil their collection role (licensing, telephone costs, internet, postage, etc) are somehow their burden, not the company's.

2. Set Different Rules For Staff and Managers

I kid you not -- I know many collectors that get a 30 minute lunch break, but the supervisors and managers get an hour.  What message does that send to the employees?  To me, it states that they are not valued.  If you are so pressed for manpower that you can only spare your staff 30 minutes for lunch, don't you think your supervisors and managers should be working just as hard as the people they depend on to get the job done?

Without creating an environment of "haves" and "have-nots", encourage everyone to work towards common goals.  If you are going to offer a perk to a group of staff based on some sort of seniority or authority level, think about what that does to the majority of your staff that aren't receiving these fringe benefits.

3. Fail to Provide Decent Amenities

I worked in an office where the upper management, in their infinite wisdom, decided to change the rules and start charging the staff for coffee.  When the announcement came out, I heard my team grumble about it for months.   I really couldn't blame them, and I had to do a lot of damage control to shore up team morale.

As a ballpark estimate, an average staff member costs their salary, plus about $3,000 in postage, $800 in licenses, $3000 in telephone service and internet, and is ideally returning 300% of their salary, and receiving a bonus above and beyond that, and you think it's efficient to save $250 a year in coffee?

4. Offer Ridiculous Incentives

Early on in my career, I worked in an agency that had a contest to have the collectors go up to a wall of balloons and pop one every time we got a PIF account.  Inside the balloon was a slip of paper giving us a $1 to $5 bonus.  This wasn't an incentive -- the staff joked about 'the competition' after hours, and that showed we felt belittled and insulted.

In a perfect world, you can offer your staff options for profit-sharing, fringe benefits that are given to the whole team when their hard work wins more business or the praise of clients.  But not all companies are set up to do that.  If you need or want to give an incentive, make it worthwhile.  A DVD player or $5 is not going to significantly benefit anyone -- a $50 gift certificate to a restaurant, dinner out for the team, a laptop or a trip somewhere are better options, if you rely on that sort of thing for motivation.

Do you know what also works?  Get rid of the balloons, and instead don't make the collectors pay for their own licenses or coffee.  You just gave them money, as well as their dignity.

5. Negativity

This is the big one.  People need to feel appreciated and encouraged to be everything they can be at work.  If you yell at staff all day because they are failing to meet expectations, all you are doing is discouraging them from trying to do their job.  It is the role of management to educate, train, and develop their staff.

If your company environment is toxic, you need to know that this costs the company money -- real, tangible amounts of revenue.  Staff will leave, and discourage capable acquaintances and friends from applying.   A negative environment breeds additional negativity, creating collateral problems with absenteeism, office politics, apathy over company policies or following work plans, and more.

For a collection agency, your staff is your greatest asset -- it is also your greatest portion of your overhead.  It is certainly worthwhile investing in your team's wellbeing and peace of mind at work.

I read quite a bit on workforce morale -- the software development industry has some remarkable ideas to foster the best environment possible.  I would encourage anyone who is interested to read up on ValvE or Hubspot.  But for the more moderate managers and owners out there, I might start with these articles:

If anyone has questions about work environment or the role of morale in a collection agency environment, I'd be happy to share my opinions -- I'm sure you can tell I feel strongly about this.  Feel free to reach out to me at Kingston Data and Credit by telephone at 226-946-1730 or by email at

Thanks kindly,

Blair DeMarco-Wettlaufer
Kingston Data and Credit
Cambridge, Ontario

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