Job Importance and Reward Assessment

The Payday Loan industry is a thriving business, and growing rapidly based on projections reviewed by this author, who is employed in the industry that grants loans to individuals over a pay period. This paper will focus on the collections department, a vital component of the pay day loan business, because about 30% of all loans will default and be forwarded to the collections department. Motivating collection agents to realize their job importance in recouping monies loaned and strategies used are hereby examined for effectiveness.

Goal-Setting

Most businesses and industries set goals, whether it be a production number as in couches or chairs, radios, televisions, etc. Setting a goal is one thing, reaching it is another. However, setting a goal may be half of the battle in attaining a goal. Generally speaking, people with goals do outperform those without goals (Locke, 1996). People who think to set goals for themselves, and accept the goals set by others, perform better than those who do not create or accept such goals (Reeve, 2009).

Setting goals is essential in increasing production and productivity among employees.The collection department has a goal of collecting on average at least $50 per hour per agent as a department team. At this level of production the reward for the individual agents would be 5%commissions on their individual dollars collected. If the production level increases to $90 per agent per hour the reward would be 10%commissions on individual dollars collected.

The system described thus rewards on first a team effort, and then on individual efforts as well. The important aspect of this reward system is that a team effort is needed first in order for any individual to collect commissions, fostering a team spirit in the department. Some employees first complained of the difficulty in acquiring the team goal of at least $50 per hour per agent. Easy goals result in stimulating little effort, medium goals stimulate moderate effort, and hard goals stimulate high effort (Earley, Wojnaroski, & Prest, 1987 ; Locke & Latham, 1984, 1990, 2002).

Tasks and Responsibilities

Agents tasks are to be both customer service agents and collection agents. If a customer calls the agent to check balances owed or other questions regarding their loan, that's customer service.

Another aspect of the collection agents job is to schedule payment arrangements for the customer and receive immediate payments from the customer to service the debt owed. Calling both the customers job and home or cell number with the automatic dialer simplifies the outbound responsibilities for the agent, relieving them of the task required in looking up and dialing numbers manually. Once customers are reached by the agents, other customer service aspects of their job is to update the customers personal information, whether it be an email address, banking information, or employment data.

Self Management and Intrinsic Value

Agents are given some self management responsibilities such as keeping to their allotted break and lunch periods without the supervisor timing their absences. Another important self management tool for the employees is authority to adjust outstanding balances owed if a customer wants to pay off their loans, including waiving various fees. This gives the employees a sense of competency and job importance plus nurtures intrinsic value which they associate with their job responsibilities.

Performance Evaluations

All employees in the collection department receive evaluations of their performance, not just every few months but literally every week when production numbers are presented to the team. At the beginning of the week those production numbers are presented in the form of various reports that show individual and team efforts.

This allows the supervisor to review not only the team effort but the individual effort required of each team member. If the team lagged behind in any given week and did not make quota in order to receive commissions, individual team members that were short on production vis a vis other team members were reprimanded in the form of a one on one coaching.

Workplace Rewards

Collection agents need rewards in order to be productive. Incentives precedes behavior and in doing so they create within the person an expectation that attractive or unattractive consequences are forthcoming (Reeve, 2009). This statement was especially true in the collection department before commissions were authorized. The behavior among the employees was different before commissions. The team and department were less productive than after commissions were authorized. To this day commissions are the main incentive for the collection department.

Praise Recognition Motivating Effectiveness

As mentioned earlier part of the reward mechanisms in place for the collection department is the weekly review reports on individual and team production numbers. An extra reward system in place is simple praise given by the supervisor to the team members regarding their individual efforts at securing commissions for the team.

Employees are encouraged to signal immediate cash revenue from a cleared credit card payment, so they may receive individual recognition. This serves as a motivating stimulus for the rest of the team. The negative aspect of this practice is when individual members cannot seem to get immediate monies. The author has seen this negative aspect happen more than once among many members of the department. Fortunately it's a rare occurrence, and is certainly not part of the norm in any way.

The Goal

These particular goals were set based upon the number of employees in the collection department along with the average hours worked, plus the wages paid both hourly and on a commission basis. These goals are reached every week, but not every day. The definitive numbers are the weekly numbers, so it does not matter if the daily quota is not met as long as the department can make up for that day sometime later in the week.

Conclusion

As the Pay Day Loan industry grows so do the number of accounts sent to collections. The environment in which agents must excel is hostile at times, because people do not generally want to pay back loans. Agents must be motivated at all times and see job importance in what they do. New strategies for motivating the team is essential in this industry. As new strategies develop to motivate so must the means to analyze those strategies for effectiveness.

References

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of how goals influence performance. Journal of Applied Psychology, 72, 107-113.

Locke, E. A. (1996). Motivation through conscious goal setting. Applied and Preventive Psychology,

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Locke, E. A., & Latham, G. P. (1984). Goal-setting: A motivational technique that works! Englewood

Cliffs, NJ: Prentice Hall.

Locke, E. A., & Latham, G. P. (1990). A theory of goal setting and task performance. Englewood

Cliffs, NJ: Prentice Hall.

Locke, E. A., & Latham, G. P. (2002). Building a practically useful theory of goal setting and task

motivation. American Psychologist, 57, 705-717