When providing call center services to a client company, a contracting company can use a type of bonus-malus system to satisfy the client’s position in different results.
A bonus-malus system is an umbrella term for a wide range of systems that include both positive and negative incentives. These systems are widely used in different types of contracts and business relationships, as well as in specific industries such as insurance. Bonus-malus systems allow for specific results based on a positive or negative outcome.
An excellent example of a bonus-malus system is a contractual agreement between two commercial parties. For example, when providing call center services or advertising to a client company, a contracting company can use a type of bonus-malus system to satisfy the client’s position in different results. The companies will use specific criteria in the contract to provide a credit or a debit to the client, depending on the provision of the services during a certain period.
In the insurance world, bonus-malus systems help insurers and other parties differentiate between policyholders based on their claims history. Generally, this type of system helps to implement different results in insurance premiums and other aspects of the policies. With a bonus-malus setup, the company can do this based on how the policyholder has used the contract in the past. One of the most general examples of this is when an insurer creates a payment change, or charge-for-service change, that is based on the number of previous claims or the total dollar value of previous claims.
In some cases, a company may use a bonus-malus system for employees. In such cases, the employee will receive a bonus for good performance and a reduction in compensation for poor performance. Experts point out that while bonus systems are common in many types of businesses, including sales, a bonus-malus system is not as common. One reason for this is that companies sometimes have difficulty recruiting employees with a model that includes negative reinforcement.
Many argued that different industries and fields would benefit from the use of bonus-malus systems to drive increases in worker performance. As many business leaders and government officials have seen, these systems are difficult to implement in many industries. This is largely due to a common aversion to attributing negative incentives to job performance, which can also result in low worker morale in general. Resistance to bonus-malus systems provides insight into how people in general feel about what should and shouldn’t happen in the world of work.