Pooling Agents for Customer-Intensive Services

Abstract

In customer-intensive services where service quality increases with service time, service providers commonly pool their agents and give performance bonuses that reward agents for achieving greater customer satisfaction and serving more customers. Conventional wisdom suggests that pooling agents reduces customer wait time while performance bonuses motivate agents to produce high-quality service, both of which should boost customer satisfaction. However, our queueing-game-theoretic analysis reveals that when agents act strategically, they may choose to speed up under pooling in an attempt to serve more customers, thus undermining service quality. If this happens, pooling can backfire and result in both lower customer satisfaction and agent payoff. We propose a simple solution to resolve this issue: pooling a portion of the performance bonuses (incentive pooling) in conjunction with pooling agents (operational pooling).

Keywords: quality-speed tradeoff, pooling, pay-for-performance, strategic server, customer satisfaction, agent payoff