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Many trucking companies use incentive plans for their sales reps and recruiters and the trend is toward increased use of pay for performance programs for drivers, driver managers and other roles throughout the company. This article will provide the four rules for ensuring your plans provide the right balance between motivation and business results.
Developing compensation plans for an organization is a bit like cooking up a gourmet meal for a group of people with very particular tastes. Some people might like their meal spicier with more exotic ingredients; while others are strictly “meat and potatoes” folks who like to keep things simple and straight-forward.
Creating a great incentive plan is not as easy as many people initially think. With the guidance of compensation expert, Beth Carroll, this 4 part guide will walk you through best practices for creating a great incentive plan while avoiding many of the common pitfalls.
The recent Food Shippers of America conference in Palm Desert, California had plenty of highlights. One of which was the panel on compensation and the total rewards framework led by compensation expert, Beth Carroll. Make sure to catch this part of the panel with topics including compensation levels vs the local market and how compensation practices affect staffing.
Get your thinking caps on and make sure to check out all 5 parts of Beth's presentation. Each one contains valuable compensation insights, best practices and some fatal mistakes to avoid. Click on the post title to access all the videos!
This is a good and welcome change as straight commissions provide ZERO flexibility to deal with fluctuations in the economy, types of accounts, or capacity crunches that create higher freight rates. On a straight commission, the payout is the same percentage, regardless of the CAUSE of the volume increase. Using a tiered approach…
On November 6th, Beth Carroll presented at the TIA Technovations Showcase. Check out the video here. During her presentation she discussed the benefits of using the MeasureUp compensation survey, recent updates and best practices. Beth also walked attendees through the search process and how to refine their searches for the best results.
Did Freight Broker Pay Increase from 2016 to 2017? After much anticipation, the 2017 edition of the MeasureUp Freight Broker survey is finally ready. We had 118 companies provide data. That is a RECORD. We have never broken 100 participants before.
Should I pay support roles incentive? The answer is a very qualified “yes.” Incentive pay CAN be good for these roles but it is different in relative amount and in the nature of how it is calculated and delivered.
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?
At the recent TIA conference, I was asked many times how my business is going. Many of you have known me from nearly the start and I’m always touched by the genuine interest and support so many of you give. I explained to some of you that I’ve been doing more work with driver pay, and more than once I was met with a bit of a puzzled look and the question…”aren’t they just paid by the mile? How hard could it be to raise that a penny (or five)?”
There is ONE universal compensation plan that does not depend on or affect your organization structure and allows you to change your structure, roles, responsibilities, and workflow pretty much at will, and that is a “salary only” plan where there is no incentive tied to individual performance. You could also have pretty much complete org design freedom if you did salary plus company year-end bonus. Neither of these approaches is affected at all by the structure or flow of work. An individual would earn the same amount if they were working cradle to grave or only as carrier sales (the salary levels might need to be adjusted but that is all). Consider the opposite extreme – the version that I consider to be THE WORST change to make…
I recently returned from my 10th TIA conference in beautiful Palm Desert, CA, and it was one of the best shows I’ve been to. There was a theme that I heard over and over again at the show…what a fantastic year 2018 had been so far, following on a pretty strong Q4 for 2017. Freight rates have been rising and business has been booming, but this has not come without its challenges – chief among them, from my perspective, is what I’m calling the “January Overpayment Syndrome.”
There are many different ways to compensate and reward employees: commissions, goal-based incentives, bounties, MBOs, time-off, pizza parties, etc. In some organizations a pure commission model works the best, whereas in others, a goal-based incentive model works best. What makes the difference? How can one be “right” for one organization and another right for a different organization?
It may come as a surprise that managers do not have complete freedom when it comes to how they pay their employees. Mostly everyone knows you must pay minimum wage for most positions, and now we are all more familiar with the overtime rules of FLSA than we ever wanted to be. But did you know there are other rules, and these rules vary by state, or even by city, so if you have employees in multiple states you need to really understand the local laws, or you could find yourself in a heap of trouble.
However, there is one thing that I’ve bumped into repeatedly that is puzzling. For most brokers, compensation expense takes up 30% - 50% of the total gross margin generated by the company. More money is spent on compensation than is spent on the TMS system, the website, insurance, displays for trade shows, or pretty much ANY other single area of expense. However, it is not uncommon for me to be asked something along the lines of, “Can’t you just tell me how so and so does it?” or “Just tell me the answer. I just want the quick fix.” or “How does everyone else do it?” or “This is how we did it at my old company, why can’t we just do that here?”
The employment rate reports from the summer indicates the US is approaching “full-employment” with almost as many willing and able workers as there are jobs. Compensation professionals like me pay careful attention to these statistics – whichever way they are moving – as they indicate the need for companies to re-examine their total rewards packages to adjust to the changing market conditions.
The most crucial task for successfully driving growth in any organization is to provide crystal clear role clarity to the staff. This goes far beyond what is typically found in an HR “Job Description” and must really address the nature of the role. Time must be spent interviewing the sales force, perhaps even riding along with them on sales calls or otherwise spending “a day in the life.” In our experience the reps’ perception of their company’s sales strategy and business objectives are never 100% aligned with that of the management team.
Gamification is coming to the trucking industry, and Variable Compensation is the medium. What are Gamification and Variable Compensation? Gamification is the use of game thinking and game mechanics in non-game contexts to engage users in solving problems. Variable Compensation is non-salary pay which is generally adjusted up and down based on the (ideally measureable) performance of the payee.
One of the most vexing challenges when transitioning from one compensation plan to another is how to handle payouts for deals that occurred under the old plan. So, if your new plan starts on July 1, then all deals that close on June 30 should be paid according to the rules of the old plan. Things can get tricky when the crediting point or payout timing changes from the old to the new plan.
The US is the only advanced economy that does not require employers to offer paid holidays or time off and when employees are given time off, 61% of employees keep working even when they are not at work due to a sense of obligation, fear, or unwritten employer expectations. While Prosperio Group focuses on compensation design and management, we are often asked questions around best practices in benefits.
And performance-based pay will increasingly become part of carrier pay packages, she said, pointing to more sophisticated pay structures that put drivers’ income in their own hands as coming mainstays. Such pay incentives are “here to stay,” she said. (link to full article inside post)
In recent years there has been a steady increase in the number of companies that offer software solutions which can handle your payroll, incentive plan calculations and reporting. Among them are many web-based solutions as well. These solutions tend to come with dashboards that deliver the results to your employees with frequent updates, or even live data feeds. If you have more complicated plans or a small pool of participants, then you may need to do some shopping to find the right fit, take on an in house project, or stick to Excel.
For some this is exciting, as it means the opportunity to earn more money. But for most it's an event that is met with skepticism and even dread. In some cases this fear is well-founded. If the reps work or have worked for an organization that has changed compensation negatively in the past, they might have developed a conditioned response to the communication of a new comp plan. If the reps have been treated badly enough in the past, and have gone through several negative changes, then the fear likely has morphed into indifference, disregard, disrespect and disdain.
I was recently asked by a medium-sized freight broker to provide a list of the things we look for when assessing the health of an incentive plan. That prompted the following list of key items that we consider when determining if a compensation plan may need to be revised. While this list has items specific to freight brokers, you can easily substitute your roles and economics in place of the broker specifics mentioned.
Success is not about the revenue generated, as we've seen small companies be far more successful on many dimensions than some of the largest publically traded companies. Nor is success (at least the way I measure it) based on the size of the bank account of the CEO. To me, success is about how employees feel about an organization. Do they feel a sense of "ownership" – is it something they have been entrusted with to care for, and do they take their duties seriously, acting with passion and dedication? This creates sense of loyalty and ownership of any company initiative creates success.
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?”
Truck driver pay for performance programs are flying fast and furious and truck driver pay is THE hot topic at the 2014 ATA MC&E conference . You can’t walk by a single group of attendees without hearing them bring up truck driver pay within 15 minutes of the conversation starting.