Freight Broker Structures - Cradle To Grave

Beth Carroll

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…

Q1 2018 Compensation Problems

Beth Carroll

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.”

What Makes Incentive Compensation Work

Beth Carroll

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?

Important New Compensation Laws for 2018

Beth Carroll

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.

Compensation & Company Culture

Beth Carroll

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?”

Forecasting 2018 Compensation

Beth Carroll

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.

Role Clarity & Definition

Beth Carroll

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.

Workplace Gamification

Beth Carroll

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.

Challenges of Changing Compensation Plans

Beth Carroll

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.

Increase Employee Engagement With PTO

Beth Carroll

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. 

Performance Based Pay for Drivers

Beth Carroll

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)

Excel Vs. Incentive Plan Management Software

Beth Carroll

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.

5 Steps for Communicating New Sales Compensation Plans

Beth Carroll

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.

Assessing Compensation Plans

Beth Carroll

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.

Great Design Teams Create Great Compensation Plans

Beth Carroll

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.

Freight Broker Commission Rate

Beth Carroll

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 During Shortage

Beth Carroll

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.

Selling Your Sales Compensation Plan to Management

Beth Carroll

An important step in many sales compensation design projects is the executive review. At this meeting the plan designs that you and your design team have worked so hard to develop during the past several months will finally be presented to the senior leadership team (sometimes called the steering committee or the executive committee). Ideally, the executives will ask a few pointed questions, conclude that you and your team have done a great job, and approve the plans as recommended. But sometimes an influential executive will challenge the fundamentals of the design or, even worse, the need to change the compensation plans at all, and the work of the design team seems to vaporize right there in the room.

Overpaying Sales Staff?

Beth Carroll

When done well, it enables companies to develop the right mix of individual motivation and team-work while balancing the needs for both short-term financial gain and long-term strategic positioning. When done poorly, however, companies can end up creating at best a culture of complacency and entitlement, and at worst a culture where sales representatives are working to maximize their own incomes to the detriment of the company.

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