I need help with a case study:

I'm studying the importance of equity theory. This is not for a test but for better understanding of the material and how to critically think when applying different managerial mechanisms. There are no "Correct" answer per se, however, I do need to understand the information in its entirety.

Case Studythe Need for Efficiency and Equity in Customer Care Center

There were three owners of a small internet service provider (ISP) named Fastlink. Fred Smith, an

owner with 51% of the shares was president; Michael Franks, an owner with 30% of the shares was chief

operating officer; and Bill White owned the remaining shares and was serving as director of

engineeringresponsible for all the routers, servers, and other technology relating to delivery of services

the ISP sold to its customers. The owners knew the call center had problems, and they knew that the

solutions to these very costly problems would require the talents of an excellent Customer Care Director.

Fastlink was bringing in a good deal of monthly revenues from multiple sources of income, including

a menu of basic dial-up services, high-speed digital connections, and wide area networks and local area

networks to residential customers as well as high-end clients. Fastlinks business was expanding and

industry growth had not yet tapered off nor declined. Thus, many mom-and-pop ISPs were emerging,

and a good deal of Fastlinks growth was attributed to its strategy of acquiring smaller ISPs for as little as

$10,000. Some of these ISPs were desirable to Fastlink because they had only one owner, very few

employees, 300 to 1,000 customers, and an established point-of-presence (POP) in a desirable location.

Fastlink went from having 300 customers in 1998, the year it was founded, to more than 80,000

customers, serving six states in December 2002.

Fastlink was growing rapidlya bit too rapidly; it was on par with the growth rate of similar size

ISPs but slower than the major players at the time, (e.g., Roadrunner, Earthlink). Nonetheless, business

revenues were very good. However, profitability from those revenues was declining. And, the owners

knew exactly what the problem areas were and where the problems were located. The call center was

costing Fastlink its customers nearly as fast as it could sign them up. The call center operations could not

keep up with customers demandscosting Fastlink $100,000 in monthly lost sales and 5,000 customers

were leaving each month; the new customer contracts had also declined from 20,000 to 10,000 per month.

By 2002, the owners had hired and lost five people in the job of Customer Care Director, and in the

past six months had just lost another. Fastlinks poor organizational structure, a lack of formal policies

that guided processes and procedures, and some offensive bullies among the technical support employees

whose behaviors and threats intimidated the previous five Customer Care Directors, prompted them to

leave almost as quickly as they came. The owners knew that a solution for the call center operations was

to hire a good person to run the department. Along comes Joe Parson.

When Joe was interviewed by Fred Smith, president, Fred promised Joe that he would have the full

support and backing of the owners of the company. Parson was a no-nonsense manager whose reputation

preceded him. Although very expensive, demanding $100,000 salary plus other perks and benefits, the

three owners agreed to pay Joe that salary because it was much cheaper than $1.2 million in lost annual

sales revenue. The most amazing thing Joe did before he accepted the job was to negotiate a budget that

he controlled, basically making him signatory on pay increases and incentives. Another thing Joe

negotiated was that he be given authority to run the center without interference from the owners on all call

center policy matters.

With these agreements in place Joe started on a Monday in January 2003, a high-volume time for

Fastlink whose business was seasonal because of enrollment in the 30,000 student university located in

the small Missouri town where Fastlink was headquartered. The first thing Joe did was to identify the

bullies in the technical support area; he knew about them through candid discussions with the three

owners during his interview. Many of these employees were also the workers who had made sacrifices for

the owners when Fastlink was a fledgling business, working cheaply in 1998. The owners could not bring

themselves to terminate the employment of these problematic employees. Nonetheless, Joe had no

problem with terminating any employee whose behaviors jeopardized the goals of the call center. After

terminating three of the worst offenders, the 40 other call center employees fell in line. This was still not

enough.

Although these employees were not trouble makers, they still needed motivation. Joe motivated the

staff by offering them incentives to go beyond what he called just order taking motions! Joe explained

to his employees the call center was losing money and customers and they were the only people who

could turn it around. The employees, trusting Joe because he was new, confided in him that they all did

not trust the owners of the ISP very much. These feelings not only hurt sales, but when employees merely

take orders, it gives customers the option to discontinue their service each month with little to no

switching cost; the employees were selling only monthly dial-up connections when customers called to

order internet service.

The employees were not motivated to sell more expensive services because they felt only the owners

of the business were getting rich! Joe decided to offer hourly workers a bonus for selling services

beyond their personal monthly sales averages. By offering hourly workers a bonus for selling internet

services beyond their individual monthly averages, Joe was able to give hourly employees an incentive to

sell everything Fastlink offered. They became hyper motivated under Joes new policy.

For example, a typical employee working in the sales area sold $15,000 in monthly internet

connections. They also sold mostly monthly contract services to customers. Joe trained all the employees

that to become bonus eligible they would need to sell more than $15,000 in services, but once they met

the minimum for the month, they would become eligible for 2% of their entire months sales. The most

incentives came if employees focused on selling the annual service contract, which reduced Fastlinks

customer churn by locking its customers in for an entire year. Joe was known to preach, Each time you

pick up the phone sell an annual contract!

Because Joe got rid of the trouble makers, and taught the employees that every time they picked up

the phone they needed to focus on selling the annual contract, he was able to double the call centers sales

revenues twice within his first six months as director. Also, employees benefitted from being efficient

because bonuses for their monthly sales were 2% of their total monthly sales over $15,000. Many of the

college students working in the sales area were cashing bonus checks for as much as $400 each month, in

addition to their hourly rate of $8.50. Technical support and billing staff had similar incentives; however,

theirs were mostly related to reducing customer churn by keeping Fastlinks customers connected to the

internet.

I'm studying the importance of equity theory. This is not for a test but for better understanding of the material and how to critically think when applying different managerial mechanisms. There are no "Correct" answer per se, however, I do need to understand the information in its entirety.

1. How did managerial communication play a major role in the turnaround strategy?
2. What personal communication style worked for this situation?
3. What general management areas needed attention?
4. What were the top three managerial communication functional areas that were addressed?
5. What criteria was used to identify the top three functions?
6. What channels, levels, and forms were used, and why?
7. What one action, or decision, made the biggest impact on the call center, and why?

For bullet point 7 I am having issues deciding whether or not the one action was firing the initial employees or improving monetary incentives.

I am unsure of how to express Bullet point 3

As for bullet point 6, I'm looking for clarity of whether or not "Channels, Levels, and Forms" refer to reward systems or other applicable information.

I would greatly appreciate some guidance on all points of this case study, Even if you provide sources for me to look at to evaluate further myself.

-Thank you.