At Fair Trade Outsourcing, salary increases are not automatic but based on individual merit. In fact, we have made tenure raises obsolete in our compensation policies. It’s a bold move. It may appear, at first glance, like we’re very selective in who gets a raise or that we’re trying to be cheap and keep more money for ourselves. Some readers may even argue that favoritism and nepotism could get in the way of our good intentions.
But, the reason for refusing to tie higher pay to the length of stay in our company isn’t a miserly attempt at saving money. That’s totally incongruous to our socioeconomic anti-poverty mission, which is to put as many people as we can from the developing world into the middle class through a BPO job.
Why We Chose to Implement a Merit-Based Pay Structure
Rather than give our Agents an annual raise for staying longer at their jobs, we encourage them to take part in capacity building programs that will fill their skills gap and help them acquire new ones — so they can get higher paying work with us and our clients.
Other companies in the Philippines give all employees the same amount of money for reaching their first anniversary as additional compensation. A thousand pesos a month more for reaching their first anniversary, for example. But this amount is capricious and not based on economic reality. But, that’s not what employees want. We’re breaking away from the mold and challenging our employees to think, “Why stop at a thousand pesos? Why not take the chance of earning twice more than that every month?”
Tying the compensation structure to the Agents’ skills and their capacity to improve them and acquire higher level skills ensures their economic security. We know from experience that economic stability is a major hurdle in the developing world (or low income populations in the US). There’s always the threat of losing economic power due to an uncontrollable inflation rate, the volatility of international markets, and the risks of doing business in a nation with an unstable political climate.
What Fair Trade Outsourcing has done is to eliminate the limits on how much an employee can earn in a year. With two thousand more in the pocket, an Agent’s income has the chance to catch up with the nefarious effects of rising inflation and offers the opportunity to save and invest that money into a small business (and our zero-interest micro-lending programs help facilitate if that’s their dream).
All of these are good intentions but without a stringent set of rules that govern this endeavor, we would have failed the first month we implemented this. Yet, we didn’t; we prevailed and the proof is in the pudding.
How Our Merit-Based Pay Structure Works
Every person who comes through the doors of FTO goes through a benchmarking process where their skills are evaluated. So, an Agent who scores between 80% and 86% in the benchmark exam is a Junior — someone who speaks English well but makes noticeable errors and speaks with an accent.
Enrolling into the English Proficiency (EP) program gives the Agent a chance to move into another level of proficiency. If the Agent took the evaluation exam and scored 94% or higher, then he or she would get to level up from junior to Senior (2 levels) and receive double the reward. In this case, an Agent receives two thousand more as monthly compensation — a thousand every time he or she goes up a level.
Note that this is just our award to the agent for leveling up in English. This says nothing about that Agent’s ability to now earn a higher paying job. In fact, a junior agent earns about 60% of what a senior level agent makes. So by leveling up, that agent can almost double their salary.
So far, we have had positive results in how we reward our Agents. Sixty-five percent of employees who signed up in our English Proficiency Up-Leveling Program completed their intensive, 2-hour daily classes with our English trainers for a month. Of those who graduated, ninety percent upleveled. And, 15% of them were able to progress two levels higher in the same amount of time.
Getting Paid More for Higher Level Work
Yet, that compensation policy isn’t exclusive to our English Proficiency program. Rethink has launched another Learning and Development program that aims to develop the programming skills of our local software developers and web developers. Agents who signed up for this program and complete it would have a chance to get hired for a web developer or software developer position, and receive a much higher pay.
Unlike our EP program, however, there’s no prescribed amount to how much an Agent receives as additional compensation for becoming a developer. There’s no amount that may be equivalent to how many levels the Agent has progressed. In this case, the employee didn’t just improve that one skill, but acquired a new skill — one that is highly prized and garners better wages and possibly some perks.
What About Bonuses, Overtime Pay, and Promotions?
Managers are encouraged to recognize excellence in the workplace. We give out bonuses for Agents who did their very best and made their teammates proud.
While a bonus is just a one-time remuneration that an employee may not receive the next time (someone else may break the record and reap the rewards), it holds a unique attraction to Agents. This kind of reward isn’t part of an employee’s basic income and, thus, it’s non-taxable and it adds to how much an Agent earns as consumable income.
There’s another way to get a salary increase. A promotion to a higher position will certainly give an employee a bigger compensation package. We prefer to pull up Agents into higher positions rather than hire someone new.
We see many advantages more than disadvantages to hiring internally, the least of which is strengthening the Agent-manager relationship. Our Agents trust their managers because they know each other well; some have been friends for a long time.
Overtime pay is another way to earn more at Rethink and it’s just as rewarding as our merit-based pay increases. While it drums up images of employees working late into the night or on a weekend, it’s not as exhausting as you may think.
At Fair Trade Outsourcing, our Agents are willing to work more hours because their jobs are not as stressful as in other call centers. With more than 80% acceptance rate when overtime hours are offered, our Agents prove that they want to do it. They can certainly achieve more than when they work regular hours. And, it’s a great way to make more money, which adds to their monthly budget and helps them do more things in their lives.
The Decision to Provide for COLA
In 2018, the inflation rates in the Philippines rose two to three times higher than expected. That means the compensation our Agents are receiving may have become weaker in value compared to the income they earned in 2017. We certainly don’t want that to happen if we wanted to continue creating economic impact on their lives.
The alarming rise of the prices paid by consumers for a basket of goods and services alerted us to the possibility that our Agents may be losing the economic power they gained through their employment with us.
So, we placed our compensation structure under scrutiny and consulted our finance team. We determined that we should have a COLA policy of our own to help our Agents cope with the economic challenges in their lives.
Unlike the government-mandated COLA, which is stuck at fifteen pesos and paid across the board, our version of the COLA will be a dynamic adjustment to the economic power of our Agents. That means, while the amount will depend on the Agent’s basic monthly pay, it will not remain the same. Every six months there will be adjustments made after a thorough review of certain economic factors, such as the country’s inflation rate and CPI.
None of these compensation changes would have been possible without the social and economic impact measures we have in place. We’re already focused on making such a remarkable difference on our Agents’ lives that it’s a natural response for us to take action as soon as we saw what’s happening to our Agents’ economic stability.