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For those of you who remember, in 2016 the DOL created quite a stir by proposing a raise to the salary test for overtime exemption. The raise was quite high, more than 2x the current rate, and caused many companies to seriously reevaluate whether they needed to raise salaries to meet this new standard or reclassify employees as non-exempt (meaning they must be paid overtime). The new salary threshold that will go into effect January 1, 2020 is…

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.