A good debt collector is hard to find, said the CEO of debt buyer Asset Acceptance, which continues to struggle with high collector turnover. But though the company reported a diminished bonus plan and an increase in turnover – up to 76 percent for the quarter – it also saw an increase in collector productivity.
On average, Asset’s full-time account representatives collected $42,515 for its most recent quarter ending June 30, 2006, rising 1.3 percent from $41,987 in the same period last year, CEO Brad Bradley said in a recent conference call with analysts.
Oddly, productivity rose for inexperienced collectors but was down for more experienced collectors, said CFO Mark Redman. “Account representatives with more than a year of experience saw their average quarterly collection decline by 4.3 percent year-over-year to $49,629 in the second quarter,” said Redman. But for collectors with less than a year experience, the average collection was $32,819, an increase of about 1 percent from the same period a year ago.
Of Asset’s 995 collectors — a decrease from the 1,054 it employed last year — 574 had a year or more of experience, said Redman.
Last quarter, Asset blamed high operating expenses on an unexpectedly high amount of bonuses and benefits doled out after changes in the company’s incentive plan. So executives changed the plan again, this time making it more difficult for collectors to earn bonuses. Salaries and benefits dropped 11.9 percent for the quarter compared to the same period last year.
“What's particularly encouraging about this decline in compensation expense is the fact that productivity actually increased while the payment of performance incentives declined," said Bradley.
But turnover continues to plague the company. For the quarter, turnover was up to 76 percent, an increase from 62 percent from the first quarter, but a drop from the historic high of 84 percent for the first quarter of 2005.
This quarter’s 76-percent turnover includes a rate of 54 percent for collectors with a year or more of experience and 107 percent for collectors with less than a year of experience. Bradley, while saying he is not concerned with the high rates, noted that many people don’t realize how tough the job is until they're in it.
“The job of debt collector is challenging, and a lot of people are not cut out for it, and they don’t realize that until they've joined an organization like ours and given it a try,” he said. “I think the challenge is still getting people interested in a career in debt collection, getting them trained appropriately, and then giving them the tools and the opportunities that they need in order to be successful. And that’s what we will continue to try and do.”