Why Compensation Survey Data Matters More Than Ever in Today’s Freight Market
In the 20 years I’ve been working with transportation companies, I’ve seen at least 3 cycles of boom and bust, with the cycle seeming to repeat every 3-4 years. I don’t need to tell anyone in this industry that we are now overdue for a recovery!
While we are starting to see some upward movement in freight rates, it’s not happening as quickly as we would like, and freight broker margins remain tight. Growth is much slower than many companies planned for just a few years ago.
Ironically, many of my customers and friends in the industry are reporting that employees are leaving for offers of higher salaries from other brokers or from outside the industry.
For leaders trying to maintain pay for performance compensation models, this can be frustrating as highly variable incentive compensation has always been a hedge companies used to manage costs through the boom and bust cycles.
But in today’s market, the risk/reward equation has shifted in the minds of employees.
The Risk/Reward Equation Has Changed
When freight volumes are strong and margins are healthy, incentive-heavy compensation structures provide greater reward for employees. High performers can dramatically increase their earnings and have less concern with (relatively) smaller salaries.
But in a soft freight market, when the opportunity to buy and sell freight at reasonable margins is reduced, the salary becomes much more important to the employee because they know it is something they can count on (and use to buy a house, etc).
Prosperio’s recommendation has always been for companies to use a reasonable and market competitive salary for ALL roles, in conjunction with a solid pay for performance incentive program that rewards true top performers (not just dumb luck), regardless of market conditions.
In boom times, such as 2022, many companies came to us because their “salary light / commission heavy” plans were providing far greater reward to employees without a commensurate increase in volume or effort. They were making more money simply because rates increased. In some cases, the high freight rates and high earnings (of everyone) masked a underlying degradation in volume and in customer relationships. In this case, more money was not necessarily a good thing, because it wasn’t rewarding the behaviors that create lasting relationships and long-term success.
In recessions, having market competitive salaries allows companies to keep top talent through the trough and attract talent from competitors who are still trying to sell the old risk/reward equation (which is not really good for EITHER employer or employee).
Compensation Survey Data is Critical at Any Time, but Especially Right Before a Recovery
After Covid, salaries increased quickly in nearly every industry. While 3% merit increase or COLA budgets had been the norm for what seemed like decades, suddenly salary jumps were in double digits. I’m sure you all remember the most common carrier sales rep salary quoted prior to Covid…” $36,000” – easily divisible by 12. We are 25% higher than that now, with some places reporting even higher values.
Without reliable compensation survey data, companies are left guessing or relying on hearsay from employees who have a vested interest in finding numbers as high as possible.
Good survey data relies on validated incumbent-level data (not self-reported “averages”) and provides objective insight into:
Market salary ranges for comparable roles
Typical pay mix between salary and incentives
Total target compensation levels across the industry
Geographic differences
The ability to do custom cuts based on defined peers (usually for an additional fee)
This information allows leaders to determine whether they are truly below market—or simply experiencing normal competitive pressure.
Separating Perception from Reality
The freight broker world historically suffers from myopia in regard to compensation. The conversation seems to revolve around EITHER the amount of salary that is offered OR The commission rate, but it rarely adequately captures both. This is why Prosperio always directs attention to Target Total Compensation or Actual Total Compensation. It doesn’t matter as much HOW the pay is delivered as the total that is received.
Another question we are asked often is about the relationship between pay and GM$ production. After working with over 300 freight brokers we can definitively say there is no single answer to this question (other than ensuring that overall brokerage economic fundamentals are working in aggregate for the company). Different types of freight, more or less automation, organizational models such as cradle to grave or pod or split, all drive different economic realities for how much a given role should make as percentage of GM$ produced. In aggregate, total W2 expense for all employees should be less than 45% of your GM$ (this would equate to about 7% of revenue in a 15% margin world). This allows for coverage of operating costs and about 5% net income. Other roles besides the core production roles can make or break this relationship, as can an organization structure that is too top or bottom heavy, or imbalanced between shipper and carrier sales.
Compensation survey data helps leadership teams evaluate whether their total compensation positioning remains competitive, even if the structure differs.
Data Brings Confidence to Compensation Decisions
In uncertain markets, compensation decisions can easily become reactive. Leaders hear anecdotes from recruiters, candidates, and employees, but anecdotes rarely tell the full story. Compensation survey data provides the industry context needed to make informed decisions—helping companies balance competitiveness with financial discipline.
And in today’s freight environment, that balance has never been more important.