The Impact of the Montgomery Decision on Freight Broker Incentive Compensation
I’ve been thinking a lot about how the Montgomery decision will impact the T&L companies I have served for over 20 years. I’m not worried about the future of brokerage; collectively, Brokers are as adaptable as they come. Most will survive and many will thrive, but not without significant changes to how a brokerage is run.
I view this decision through the lens of compensation. I’ve spent almost 30 years building incentive compensation systems, with clients including over 300 transportation companies. I see three areas where Montgomery will materially change how Freight Brokers compensate their employees.
1. Carrier Sales Incentives
Remember when Domino’s incentivized drivers to deliver in less than 30 minutes, and then abruptly stopped when it became clear this was at odds with safe driving? What legal risks could you be running by the way you are paying your Carrier Sales reps?
2. Overall Compensation Spending
What are going to be the implications of increased insurance costs and liability risks?
3. Mergers and Acquisitions
Compensation may be a help or hindrance in M&A, which are undoubtedly going to kick into high gear because of the Montgomery decision as companies seek safety in scaled operations.
