While hiring drivers is a continuous pain point for the trucking industry, keeping those drivers is arguably more important and even more difficult to accomplish.
As carriers seek ways to reduce turnover, rewards programs have become a popular way to incentivize drivers to stay. Internal rewards programs are a common way for carriers to recognize employees for hitting certain targets. As in any profession, when drivers are recognized for their hard work, they’re more likely to feel satisfaction at their jobs, and it gives them a reason to work toward larger company goals, improve the business, and increase overall employee satisfaction.
“Whether it’s for retention, referrals, longevity, safety or something else, there’s a lot of incentives that carriers are putting in place to try to keep drivers and add a little extra to their pay,” said Brian Runnels, VP of safety at Reliance Partners, a Tennessee-based freight insurance agency that provides safety consulting.
Runnels sat down with FreightWaves to share five key things carriers need to know to implement an effective rewards program:
1. Make goals attainable.
For a reward program to be effective, the requirements to achieve bonuses should be realistic.
“I’ve seen companies trying to incentivize drivers through an operational bonus, but there’s no way the mass can achieve it,” Runnels said.
For example, a company may provide a 2-cent-per-mile bonus to those who drove at least 3,000 miles safely per week and may only pay out an extra 1 cent per mile to drivers who achieve 2,000 miles per week. However, 3,000 miles is hard to sustain for most drivers. If the company brought it down to 2 cents per 2,000 miles, more drivers would be able to achieve it and receive the bonus.
“You still want to have good qualifiers. You don’t want somebody with crashes, violations or citations getting bonuses, but it still needs to be attainable,” Runnels said.
2. Make rewards worthwhile.
If a company is going to institute a rewards program, the prize should be worth a driver’s time and effort. Otherwise, it’s unlikely to garner much driver support. It may even hurt drivers’ perception of the company they work for and have the opposite effect from that intended.
3. Be consistent.
Bonuses or gifts should be paid out on a regular basis, Runnels said. A company could base rewards on time, tenure and mileage, for example, but the important thing is to stay consistent with it. Too often, businesses implement a rewards program only to discontinue it. Rather than giving up on it, he recommends changing the period of time bonuses are paid out, such as switching from monthly to quarterly.
4. Consider how bonuses are paid out.
Rewards are out of the ordinary. They recognize drivers for going above and beyond. Because of this, Runnels advises that putting a monetary bonus on a regular paycheck may not be the best approach. While it requires more effort to cut a separate check or send a gift card, he believes it is more impactful.
“When the paycheck is direct deposited, the driver most likely won’t see the bonus,” Runnels said.
Important to note is that supplemental wages must be taxed. Companies should consider the post-tax amount that employees will end up with and the effect that has. For example, because supplemental wages are taxed at 22%, a driver promised a $100 bonus will feel better about receiving the full $100 rather than $78 after taxes.
Carriers may want to consider raising the pre-tax amount they are paying (effectively covering the taxes for the driver) so the driver can receive the full, promised bonus. In this example, the company would pay around $128 in order for the driver to receive $100.
5. Don’t limit yourself to monetary rewards.
While pay is often a significant issue for drivers, monetary rewards aren’t the only effective way carriers can recognize drivers. Runnels said physical gifts can set a business apart as well.
These may include company swag such as hats, jackets or shirts. Runnels said he’s even seen companies give drivers rings for hitting 1 million miles.
Even putting a driver’s name on the side of the truck after a certain amount of time with the company could help the driver feel more recognized and valued.
Larger incentives might be something like a cruise or trip. Yearly parties or company gatherings can also help employees feel like they are an appreciated part of a team.
“If you put effort in, the driver puts effort in. Hopefully, it starts a good vicious cycle,” Runnels said.