Incentive and Reward Program — Ground Rules

Incentive and Reward Program — Ground Rules

The use of incentives and rewards is a powerful safety management tool. They can be used to win strong driver commitment and loyalty, and can positively impact a company’s turnover rate.? However, they also can have a profound negative effect if used incorrectly or improperly.

Since every operation is unique, there is no one-size-fits-all incentive plan. A major cause of reward systems failing is expectations of management and drivers not being the same. To avoid this, consider the following ground rules and suggestions whether you are developing a new incentive package or simply reviewing your current program:

• Keep incentives to the pay package simple. The reward system cannot be so complicated that your drivers won't understand it. Keeping the performance objectives to a minimum (three or four) will help accomplish this.
• The performance reward should be a major piece of the total pay package. Potential big rewards are attention-getters. They need to be big enough to change individual behavior. Performance incentives that make up 20 percent or more of the total pay package are not uncommon in the motor carrier industry.
• The reward system must be fair (and be perceived as fair). The level of performance must be clearly defined and attainable for each objective. If the performance standards to receive a reward are set unrealistically high, drivers will perceive the system as being rigged. Distrust of management and increased driver dissatisfaction will result.
• The reward system must clearly and specifically define acceptable and unacceptable performance. The drivers must understand the principle behind rewarding performance. A bonus based on performance results is a prize to be earned. It should not be considered part of the base pay. A major cause of driver dissatisfaction is bonus reliance.
• The performance objectives drivers are to achieve should involve outcomes they can personally affect. The role of incentives is to align individual driver behavior to company goals, values, and objectives. Consequently, having an incentive for achieving high average weekly miles might have a negative impact on driver satisfaction levels since most drivers do not have control over what loads they're assigned, availability of backhauls, length of hauls, etc. Your incentive plan must be based on results that drivers have the most direct control over. Examples include customer service, mpg, availability, length of service, safety, and log violations.
• Thoroughly explain the reward system to your drivers in a way all will understand. Describe exactly how it is calculated, how bonuses can be earned or not earned (never use the word "lost" - by definition a bonus cannot be lost since the driver does not have it to begin with), what criteria will be used, and how they can impact the outcome of their individual rewards.
• Finally, when developing or reviewing a performance-based safety reward system, involve the drivers in the process. Doing so will help achieve buy-in with the drivers to help ensure commitment.

Reward and recognition is a vitally necessary component of any plan to improve operational safety and reduce driver turnover. Done correctly, a driver/employee recognition system becomes the shining star of your entire safety and driver retention effort.

How many of your drivers would agree with the following statement: "In the last seven days, I have received praise, support, or recognition from my company"?

Many carriers are beginning to realize the value of honest, sincere, and meaningful recognition. Giving an additional penny per mile or holding an annual safety banquet is simply not enough. Your drivers crave personal recognition for the hard work they do.