Truck Driver Incentive Programs

• Safety and Productivity Incentive Programs for Transport Fleets: A Canadian Perspective (PDF) - June 1998

• How to Implement Incentive Programs for Safety and Productivity:
  Guidelines for Transport Fleets (PDF) - July 2001

  Final Evaluation Report (PDF) - March 2002

Safe, efficient, cost-effective trucking is essential to Canada's competitiveness in the global economy.

Just In Time distribution has become common, as companies control their inventories to stay competitive. This means shippers rely on highly efficient transportation, which puts heavy demands on trucking fleets.

Faced with the challenge of improving safety and productivity, transport companies are turning to incentive programs. For many companies, these programs bring benefits. Unfortunately, other companies are disappointed by the results, because they often do not know how to make an incentive program work for them.

Necessary equipment, skills and knowledge must be in place before an incentive program can be successfully implemented. The incentive program builds on these prerequisites, to improve morale and retain employees.

A 1998 Canada Safety Council study funded by the Transportation Development Centre identified a fast-growing use of incentive programs in Canada's trucking industry. Many fleets had implemented an incentive program within the previous two years, while others were in the process of considering or developing one.

The study concluded that there is a need for information to help fleets ensure the success of their incentive programs. Responding to these findings, CSC, in partnership with representatives from the trucking industry, is developing a manual to help trucking companies develop, administer and evaluate incentive programs. The manual will be pilot tested starting this summer.

A solid foundation

Effective incentive programs share a number of basic characteristics. A program will produce the desired results only if the following elements are in place:

• A strong commitment from the owners and top management is absolutely critical.
• Management must put its commitment into a policy statement for all to see.
• A preliminary budget should be set for development and implementation.
• Someone must be in charge of co-ordinating the program.
• Employees must be involved in all aspects of the program.
• An incentive advisory team representing all areas of the company should meet regularly to identify problems, suggest solutions, and develop action plans.
• The incentive program must be evaluated regularly and adjusted as necessary.
• An incentive program must never be used as a "quick fix" in a crisis situation.
• A communication plan is an essential element of a successful incentive program.

Deciding on the incentives

The most popular types of incentives are cash, recognition awards, merchandise, savings bonds, special assignments, advancement within the company, and special events. Many companies use a combination of these. When deciding on what incentives to offer, the following factors should be considered:

• Participants must see the reward as being desirable.
• The value of the incentive should grow with continued good performance.
• Whatever incentives are in place, employees must consider the program fair.
• Rewards must be perceived as being attainable
• Tax implications should not be overlooked; i.e. benefits may be taxable.

Successful implementation

The company must invest time and money to make its program a success. An action plan with clear objectives will help ensure a good return on this investment. The plan should start with a situation analysis and should describe what corrective measures will be taken. It must present ideas or measures that will correct a situation and eventually cut costs/losses for the company.

How a company plans and implements its program is just as important as what it does. Incentive programs that take a team approach typically achieve far better results than autocratic ones. A committed, well-organized, results-oriented team should drive the program.

Communication is unquestionably one of the key components of successful incentive programs:

• An internal manual explains the details of the incentive program.
• Employees feel the communication provides a link with management, and that management is making an effort to keep them informed of news that concerns them.
• Before launching the incentive program, meetings are held with employees, both individually and collectively.
• A bulletin board provides current news and information about the incentive program.
• Ongoing information maintains interest in the program; this could be a regular newsletter or letter from the president.
• A suggestion box, physical or electronic, allows employees to communicate with the company at their convenience.
• Information and training sessions are held as needed.
• Events are held for employees and their families during the year, as occasions to recognize the contributions of employees and to present awards.

Employee turnover is a chronic problem in some sectors of the trucking industry. A well-communicated and well-implemented incentive program can help a company to retain its employees.

External communication is also important. Networking with other companies using incentives can result in ideas to improve a program, and can provide further motivation for employees. By communicating its successes, the company can build a good public image with its community, its shippers, various levels of government, and educational institutions and road transportation training centres that train possible future employees.

Incentive programs must be evaluated regularly to ensure that they are giving the company good value for its investment, and to identify areas for possible improvement. A “ before and after” comparison of costs and benefits is the most straightforward approach. It takes time for a program to become effective - so the longer the time frame used, the better. The evaluation should only use data collected after the program has become fully effective, normally from six to 12 months after implementation.

Incentive programs are innovative and progressive. They can help companies derive significant benefits if properly implemented.

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How to Run a Winning Fleet Incentive Program