Third-Party Logistics (3PL) Compensation

Third-Party Logistics Compensation

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3PL Compensation

“3PL” is a very generic term that can really mean any 3rd party logistics intermediary – from a domestic TL freight broker to a freight forwarder.  What we refer to here is the more technology enabled play that has existed for years on the LTL (Less than Truckload) side and which is becoming more common on the TL side as more software oriented companies (“Uber Freight”) are seeking to automate the carrier and/or load selection process for Truckload (TL) freight.  Prosperio has helped companies unwind excessively lucrative plans for companies with heavily automated freight that were paying as if it was all TL spot market freight.  We have also worked with companies that have a mix of both contracted/fully managed transportation as well as TL spot market freight. 

Different Roles Need Different Plans

You cannot (MUST NOT) pay for these different types of business the same way.  If you do, you will be overpaying on the managed transportation side or underpaying on the brokerage side.  These are very different animals, from the customer acquisition all the way through to operationalizing the account and how you pay for Logistics Coordinators and Account Managers.  Prosperio has worked with some of the founders in the managed transportation space (and several of their offshoots) and has a deep understanding of the complexities of this world.

some questions to consider:

  1. Are you paying for automated freight on a commission per load basis?

  2. Is your sales rep being paid on deals they sold several years ago without any significant continuing involvement?

  3. Do you have ALL of the LTL freight from some customers, and some of the TL freight from these same customers?

  4. When a new account comes on board, do you feel like Santa Claus when deciding which account team gets the customer because it will automatically drive up their pay?

  5. Are you unable to move a customer from one account team to another because of how it will affect each teams’ compensation?

  6. Are your sales reps unaware of what “good” looks like?  Meaning, do they decide how much money they want to make each year and sell to that level only?

  7. Is there considerable infighting among your leadership team about how compensation should work because of their different backgrounds? 

If the answers to any number of these questions is “yes” – please give us a call.  We’ve been there and done that.  We can help.

Common Project Types

Express Design Project

When your needs span several roles but you have only a few people and will not have much of an issue with change management, our Express Design Project is for you. We’ll spend time with you and your senior leaders in a one-day on-site meeting and complete the rest of the meetings virtually. We’ve successfully executed a number of engagements for small to medium-sized organizations (5 to 20 people) just like yours.

An Express Incentive Design Project includes:
• Compensation plan design for up to 5 roles (salary bands and incentives)
• Market benchmarking of pay levels for the 5 roles
• Plan documentation
• Pro-forma economic modeling (no historical testing)
• Roll-out training
• Strategy and structure review/refinement
• 6 months of post-project support
• Turnaround is approximately 4-6 weeks

1P1P Project: One plan, one role

A 1P1P Project is great for start-ups and small companies, and those with an immediate need for a compensation plan for one person in one role. The 1P1P Project is a virtually delivered program that’s a fast, affordable alternative to big consulting firm fees.

The 1P1P Project includes:
• All plan design details
• Basic market pricing
• Economic testing
• Incentive plan documentation
• Outlining of goals and expectations
• Review of business goals and impact of this role on those goals
• Role clarification
• 3 months of post-project support
• Turnaround is approximately 2-3 weeks

Full Service Sales Compensation Plan Design Project

When you need more in-depth assistance in clarifying business objectives, streamlining your organization structure, improving accountabilities and role definition, and are developing incentive plans for several interconnected roles for a large staff, we recommend a Full Service Incentive Plan Design Project. This solution features on-site meetings with our consultant and your design team, and is often selected by medium-sized to larger companies, or small companies undergoing significant transition.

Full Service Sales Compensation Plan Design Project includes:
• Business goal clarification
• Business strengths assessment
• Compensation plan design for all roles in scope (salary bands and incentives)
• Development of career levels for highly populated roles
• Employee change management
• Extensive pro-forma and historical economic modeling
• Goal-setting guidance
• Sales compensation plan documentation
• Market benchmarking of pay levels for all roles in scope
• More detailed Excel template for use by your staff for doing plan calculations (variable based on your needs)
• On-site roll-out support
• Organization redesign and role change/definition
• 12 months post-project support
• Four+ on-site days
• Turnaround time is at least 90 days, but may take longer depending on size of organization and magnitude of change