Safety-conscious drivers have fewer collision claims. They also use less fuel. A good safety record keeps insurance, fuel and maintenance costs down, whether your fleet consists of 18-wheelers, box trucks, cargo vans, buses or company cars.
To provide efficient service at a competitive price, transport drivers must achieve safety, productivity, fuel efficiency and other objectives. That’s where incentive programs come in. Properly implemented, they can build morale and motivation while improving driver performance and retention.
Benefits Must Outweigh Costs
From 1997 to 2002, the Canada Safety Council studied fleet incentive programs, focusing on long-haul trucking. The research found that incentive programs can help transport companies improve safety and reduce costs. It looked at why some programs succeed while others fail, and developed a “How To” manual based on best practices. The three-part study can be downloaded free of charge from the Council’s Web site.
Take this actual case from the 2002 Final Evaluation Report:
A unionized truckload carrier with 30 vehicles in Canada and the US started an incentive program in 2000 to improve employee motivation and sense of belonging, and to maintain fuel efficiency in the face of rising energy costs. Cash rewards were offered for various operational objectives, including safety, fuel economy and willingness to leave on a Sunday.
The impact on driver retention was immediate. Turnover dropped by half in 2000 compared to 1999. Based on a cost of $8,000 to replace a fully productive employee, the savings were $56,000 in that first year because fewer drivers left the firm.
Fuel economy was also a major concern. By the first quarter of 2001, the company had achieved a 0.12 miles per gallon (1 litre per 100 kilometres) improvement; about half of the drivers received bonuses. The company was well on the way to its goal of reducing fleet fuel consumption by at least 0.25 mpg (2 litres per 100 kilometers). In 2001, the savings in fuel costs would be $15,000 with bonus payments of $6,100 — a benefit-cost ratio of 2.5 to 1.
The same report also documents the case of a non-unionized LTL carrier with one terminal, 80 vehicles and 120 employees that implemented a safety incentive program using recognition rewards. The program helped reduce the number of events/collisions per million vehicle miles by 35 percent. In 1999 and 2000 the benefit-cost ratio for safety performance alone was 3.8 to 1.
Keys to Success
The bottom line results can indeed be impressive. That’s why so many companies are turning to incentive programs.
The Canada Safety Council’s research identified the common characteristics of successful transport fleet incentive programs. These include:
- A strong management commitment, backed by a policy statement.
- A budget and a coordinator.
- Employee involvement and feedback.
- An incentive team to drive the program.
- Regular evaluation, with adjustments as necessary.
- A communication plan that provides an ongoing flow of information.
What Can Go Wrong?
Incentives are not a magic bullet, nor should they ever be used as a quick fix for a crisis situation. They must be properly implemented or results can be disappointing. The challenges can seem daunting. Fleet managers repeatedly told the Canada Safety Council researchers they need help with administration and logistics.
Enter American Express Incentive Services (AEIS). Its ready-to-go reward solutions are based on incentive program best practices and are compatible with the Canada Safety Council’s research. AEIS addresses the most common implementation problems with products and tools that simplify program administration and support communication initiatives. The turnkey service offers a full line of American Express branded reward cards that can be loaded with incentive points (one point = one dollar in purchasing power) each time a participant achieves an objective. Companies can even maximize promotion by designing their own card.
In-house resources — When your top priority is keeping the freight moving, administration time may not be available for a “non-core” task. AEIS can help solve this problem with an automated program management tool that delivers and tracks rewards.
Perceived fairness — Drivers must have confidence their rewards cannot be compromised due to a lack of objectivity. Resentment can lead to big problems. To start, the fleet operator must put into place well-defined, well-communicated reward criteria. Based on these criteria, the AEIS program management tool makes it easy to communicate and administer the incentives. Built-in controls ensure rewards are awarded appropriately.
Distribution of awards — Unless drivers continuously see the rewards for their efforts, momentum drops and along with it, the added motivation. Successful programs provide timely, and consistent rewards in a way that meets expectations and brings satisfaction.
Rewards that Motivate
The nature of the rewards is very important. They must be attractive, fair and attainable. Moreover, the rules should be clear and simple. The company must specify the parameters for rewards based on business objectives and input from employees.
The research discusses the pros and cons of various types of rewards, as well as criteria and distribution methods.
Cash awards are very popular since cash is flexible and can be used for purchases that fulfill immediate personal needs and priorities. However, recipients often spend the money as if it were salary, and not on a true reward. On the other hand, recognition awards, such as a plaque, pin or other memento can be kept as a record of the achievement. Items that reinforce corporate identity (e.g. a company jacket) can be a source of pride, with a benefit beyond their monetary value.
Merchandise rewards, such as watches, jackets and electronic equipment appeal to nearly every employee and provide long-term recognition.
American Express branded reward solutions maximize the motivating advantages of both cash and merchandise awards. AEIS offers various types of reward cards. Some can be used virtually everywhere the American Express® Card is welcome. Others are accepted at a select list of top retail, travel and entertainment providers, or restaurants – ensuring the recipient receives a meaningful, memorable and motivating reward.
Such flexibility and choice means reward earners can save for that big trip or high-end entertainment system, or spend their points right away on a night out with their spouse. They can choose what they want, when they want, how they want – in-store, online or by catalogue.
Additionally, American Express branded reward cards can be designed to feature the company logo, name or program theme, serving to maximize promotional impact and reinforce employee loyalty. Each time the card is used, cardholders will be reminded of how the reward was obtained and the company that gave it to them. AEIS also makes rewarding easy. Incentive points can be loaded remotely on pre-set dates or as objectives are achieved. Reward timing is the company’s decision.
A Firm Foundation
For a fleet safety and productivity incentive program to achieve its potential the firm must have an overall safety culture. One essential element of this culture is training. The Canada Safety Council’s Professional Driver Improvement Course refreshes defensive driving techniques and shows experienced drivers how they can do even better.
Building on a receptive corporate culture, the best practices identified in the research will enable the company to establish an effective program.
Fleet operators who have or are considering an incentive program often have concerns about handling the ongoing administration. One solution is to use a rewards management service that can provide user-friendly administration, data and ongoing communications — plus highly desirable rewards.
To find out more about AEIS reward solutions, call 1-905-702-9007, or go to www.aeis.com/canada.
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