Mike Dershowitz
Oct 15, 2018 · 8 min read

“It’s going to be another hot day,” Mark (not his real name) thinks to himself, as he begins his three-part journey from his family’s home in their Barangay, 10 km from the center of the town. Mark wishes he can afford to stay at a boarding house closer to work, but the $40/month that will cost — that money is needed for his father’s heart medication. So it’s trike, jeepney, and another jeepney for Mark today, and most days.

Mark has to leave two hours before work, just to ensure he gets there on time. It’s the same in reverse. Four hours a day. But it still makes sense to commute. As the youngest brother, his family relies on his salary for food and medicine for his mother, father, and sick brother, and he likes being at home to be there for everyone.

Before Mark got this job, his father couldn’t afford the vital medication he needed. At 60, Mark’s father had to stop working as a laborer after 45 years because of his heart problems. His body was giving out. Luckily, Mark was graduating at the top of his class at a government university and could get a job to help replace his father’s income.

Mark was one of 200 agents at this call center, answering calls for a major Canadian florist company, in a call center that has 1,000 agents, in a company that has 10,000 agents around the world. The environment is stressful and the managers yell at you to meet your stats. But his father feels better than he has in a long time. Mark thinks about this during the daily journey to work.

Mark swipes his badge and walks through the door into an office building that could be anywhere in the US, even though it’s in the Philippines. As he heads to his assigned seat for the day, everyone is crowded around the Operations Manager’s station, who is standing on a chair. He’s delivering the news: The Canadian florist has pulled out the account and moved it to India. Today is everyone’s last day.

Mark panics. As an employee of fewer than 6 months, he’s not “regularized” yet, and thus, not entitled to severance or other transition benefits. His last, partial paycheck is next Friday. He starts making mental calculations and quickly realizes that he may not have enough money for his father’s medication for next month.

In the developing world, like the Philippines, a job is life. This is not a metaphor and not the result of a writer’s histrionics; this is the reality for millions of Filipinos and their families.

More than 9.8 million Filipinos (or around 8.1 percent of the population subsisting as best as they can) live in the World Bank’s definition of abject poverty. Nearly 12 million live just above that, earning the government-defined poverty incidence rate of 21.6 percent. Being poor in the developing world is all about insecurity: Food insecurity, health insecurity, personal safety and of course, income insecurity. A job helps you defend against those insecurities.

In Mark’s case, his job means life because of his father’s medication. Most young Filipinos at work in the developing world contribute to the family in various ways. Because of gaps in the Filipino national health insurance system “PhilHealth” (such as it is), prescriptions for chronic conditions are all out of pocket expenses — there’s no coverage. Literally, Mark’s father’s life is now at greater risk because Mark no longer has a job.

But, we need to look deeper into this story to see the real tragedy here, which is that Mark didn’t have to lose his job. In a 200-person account in a call center, especially in a large call center/outsourcing (BPO) company, there are always other opportunities with other accounts. Most, if not all, BPO employment in the Philippines exists in BPO companies with greater than 5,000 employees globally. Simply put, if the company wanted to, they could have moved Mark to another account.

Why don’t they? Mark’s been well-trained and performed well during his almost half-year tenure. He has a history of good performance and meeting his stats. To understand this, we have to understand the economics of what’s going on between the BPO supplier and their customer.

Large BPO companies pay for the time it takes to train Agents, not the clients. A big BPO company attrition rate is so high (industry average in the Philippines is more or less 50 percent per year) that clients just won’t pay for training, knowing that the majority of Agents don’t stick around for even a full year. (There are other causes for this that the rest of the ABORs — Agent Bill of Rights — address, but that’s not for discussion in this post).

Thus, the BPO supplier must make an investment now to earn money later. Every time a new account starts or a new person starts in an account, the BPO supplier is losing money.

Since the BPO company pays for training, and not the client, you would think that there’s value to them in keeping a performing person around because they already made the investment. But that’s not the case, because of the problem of how tenure is treated in the Philippine labor code and consequently, within the cultures of the big BPO companies.

The Filipino labor system rewards tenure. Laws give workers with longer tenure greater protection than those with shorter tenure. Laws also require employers who must lay off an Agent with long tenure to pay much more in mandated separation pay. Furthermore, agents are only entitled to benefits when they are “regularized,” meaning when they become a regular employee.

Between tenure and regularization, and the end-of-account separation costs that suppliers incur, they are highly motivated to minimize those costs — through minimizing tenure and regularization. To the supplier, minimizing these costs means the difference between profit and loss on each Agent within the account.

Of course, this is at cross-purposes to what the Agents want. They want regularization and prefer tenure. They’ll even compromise in order to get it. Consider that most Agents typically earn the minimum wage during training (the supplier is minimizing its investment), get a raise when they get into production (since the supplier is now billing the client for their time), and a further raise when the special day of regularization comes.

The result of this wage strategy? The supplier is forcing the Agent to assume as much of the financial risk as they can for the profitability of the Account, on an Agent-by-Agent basis.

The supplier structures their raises this way because they are recouping their investment, and that Agent is going from producing a loss for the supplier to producing a profit. The Agent accepts it because they know that, on average, 75 percent of all new hires make it to regularization. So they take that 1 in 4 chance of not making it, and the attendant risk, and see where it leads.

For Mark, he was on his way to regularization, but his time ran out before he got there. Now he must restart the cycle all over again: minimum wage, a small raise at production, and a chance at regularization. On average, he will do this four times before landing somewhere that will regularize him, and make him a valuable employee.

As long as his father holds out…

At Rethink Staffing, we believe this is the absolutely wrong way to treat tenure and regularization. We promise our clients “outsourcing that outperforms.” How can we do that when we have Agents that are taking so much financial risk by just coming to work every day?

If you think about it, this is insane. BPO suppliers are asking the least financially viable persons within our society — Agents who start out making the minimum wage — to take on the financial risk of the entire BPO business. If you’re rich, it’s like asking the poorest person you know for a loan — and them giving it to you — further destabilizing their lives, but making you richer. Like I said, insane.

No wonder greater than 50 percent just quit every year — they decide the job is no longer worth the financial risk.

Any person, no matter the job they’re in, cannot concentrate or perform well in their job if the pressures of their life are persistently bearing down (or crushing) them. Do you think you could problem solve well for a customer on the phone if you’re sitting worrying about whether or not your father will get sick or die because you can’t afford his heart medication?

That’s why ABOR #1 — As long as we have business, you’ll have a job — is a critical right to guarantee. If their job is eliminated due to account closure, Rethink Staffing will put them in a job with another account, if available. We promise this to our Agents, and we back this up with Action. Since the beginning of 2017, we have placed more than a dozen people into new jobs because of ABOR #1.

It eliminates a core risk for Agents — income insecurity. Sustainable income is absolutely necessary to help someone lift themselves out of poverty, help them save, and eventually become capital owners. As any good investor or economist knows — money over time (cash flow) is really the only economic security in society.

Agent performance is inherently improved because they know that the company wants them there for the long-haul, and they know that the company is not afraid of their regularization. They can come to RTS for a career, and build themselves up from there (more on that later in this series).

Have we always been perfect? No. Earlier this year, we had a client that was in financial trouble and had to eliminate a sizable percentage of their headcount (jobs — compared to our overall headcount), and we had to close a remote facility we opened up, after just a few months. In those cases, the second part of ABOR #1 “As long as we have business…” kicked in — we didn’t have the business; so we followed Philippine law, paid generous severance, and wished people well.

But more than anything else, ABOR is about helping people, and creating an environment of success for both Agents and the company; if we do that, we can easily deliver on our promises to clients. Any person, including our Agents, can perform well if they’ve eliminated the risk in their lives. That’s why we call it “Outsourcing that Outperforms.”

We work very hard to make sure it does.

Author’s note: This is the first article in a series about the Agent Bill of Rights, why it exists, and what it does for people and the BPO industry. Please click here to read the next article, “ABOR#2: You will have programs to fuel your success.”

Agent Bill of Rights

A primer on the Agent Bill of Rights, written and developed by fair trade entrepreneur and social economist, Mike Dershowitz, in collaboration with the Rethink Staffing team.

Mike Dershowitz

Written by

Mike is the CEO of Rethink Fair Trade Outsourcing, a company that makes use of free markets for good and not evil. Visit www.rethinkstaffing.com for more info.

Agent Bill of Rights

A primer on the Agent Bill of Rights, written and developed by fair trade entrepreneur and social economist, Mike Dershowitz, in collaboration with the Rethink Staffing team.

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