Experts in Compensation Plan Design
We are committed to providing the best compensation design services, custom and industry surveys, and implementation support to companies who want to strategically align compensation with organizational goals.
We apologize for the inconvenience, but the content you are trying to access is no longer available. We hope that some of our excellent content below might be of interest instead. Thank you in advance for your time.
Compensating Managed Transportation vs Transactional Brokerage is one of the most perplexing problems for a 3PL provider. How do you deal with different types of accounts from both an organization structure and a compensation perspective?
As compensation consultants who specialize in the transportation and logistics industry, one of the most common questions we are asked is “What is the standard freight broker commission rate?” While this question is posed with the best of intentions, it is unfortunately off the mark. The truth is that commission rates, like any form of incentive, should be a reflection of a company’s business strategy, freight profile, and organization structure. A better question to ask would be “What is the best commission rate for my organization, given our unique circumstances, strategy, and goals for the future?”
Many sales leaders and CFOs believe paying company sales representatives as if they were agents (100 percent variable pay) strengthens alignment between a company’s objectives and sales representatives’ focus and results; however, the absence of a base salary often has an adverse effect with significant unintended consequences: Lack of Control, Complacency, and Limited Flexibility.
Upside is the amount of pay that a top performer can earn, and downside…well…you can guess that one…it’s how much risk there is on the downside for a poor performer. Leverage refers to the plan design ratio of the top 10 percent (decile) performer relative the median performer, and dispersion refers to the amount of leverage that a plan actually achieves. So let’s unpack these one at a time.
Most organizations use some kind of pay for performance program for their employees. There are cash incentive plans and non-cash incentive plans. The non-cash incentives include trips and recognition programs.
Whenever you implement or change your incentive plan, you should use the best performance measures possible. A “performance measure” is the metric by which you are gauging an employee’s results, such as revenue, profit dollars, profit percentage, net income, EBITDA, number of new customers, number of customer calls, number of invoices processed, etc.
…you need to be very careful how you design your incentive plan or you just might end up dealing with some unexpected consequences, and possibly paying out more than you intended, or worse, getting no measurable return (or negative return!) for dollars you are spending.
“If you provide products and/or services to the foodservice and convenience distribution industries, this is the one conference of the year to meet with executives who have purchasing authority for forklifts, transportation assets, other hardware, technology, and services supporting distribution center and transportation operations.” This snippet from the IFDA website sums up the opportunity this event presents, perfectly! P
Make sure to swing by our booth and say hello!
3PL Technovations is designed for 3PLs whether in domestic or international transport. Technovation Showcases and thought leadership sessions will focus on technology affecting domestic surface transportation, cross border, cross ocean, air, and intermodal logistics. Sessions are designed to be high level strategic presentations for CEOs, CIOs, and Senior Management of 3PLs.