The Cost of Risk: What gets rewarded gets done

Anytime a truck driver is involved in a catastrophic accident, potential claimants will look to fatigue as a possible major factor. If you find your operation in this unfortunate situation you can expect a demand for payroll records, driver logs and supporting documents – even satellite-tracking data. But don’t be surprised if attorneys also ask to see copies of your compensation policies, especially your schedules of dispatcher and driver bonuses and incentives.

Plaintiffs in catastrophic accident cases seek to demonstrate that the motor carrier was somehow involved in the chain of events that led to the accident. One way to do that is to argue before a jury that financial incentives to run more miles encourage drivers to drive when they shouldn’t and perhaps to break the rules.

“It’s coming up more and more,” says Michael Langford, a partner in the law firm Scopelitis, Garvin, Light & Hanson. “With driver shortages, there is an operational pressure to get drivers to become more and more productive.” And for many carriers that means offering drivers and their dispatchers bonuses based on achieving a certain number of miles per month or week, for example.

The driver shortage isn’t the only factor, however. Another is the “scorched earth” discovery that plaintiffs attorneys increasingly are using, Langford says. Lawyers will demand just about everything, and copies of incentive policies often are specified in the document request.

Does this mean you should halt bonuses tied to productivity? Not at all. “It’s understandable why the trucking industry would want to have such incentives,” Langford says. “But carriers should always tie incentives to things other than just production.” For example, you might give a driver a bonus for achieving a certain number of miles in a year – provided he remains accident-free and has no traffic or hours-of-service violations, he suggests. And certainly any mileage threshold chosen can’t be beyond what a driver realistically could run and still remain within hours-of-service limits without excessive speeding.

“I have seen situations where mileage thresholds were way high,” says Jeffrey Davis, vice president of safety for insurance services firm Motor Transport Underwriters. Like Langford, Davis has noticed that incentive programs often are scrutinized during litigation. “I have seen it come up multiple times.”

In a Truckload Carriers Association audio conference in December, Davis listed the evaluation of operations incentive programs as one of his 10 steps for bringing safety ownership to the operations department. Carriers should consider whether incentive programs are counterproductive, not just to safety but to operational priorities as well, Davis says. For example, out-of-service orders not only reflect poorly on safety, but they also mean downtime and sometimes even service failures.

Davis recommends that carriers track dispatchers not only on the productivity of the drivers they manage but on their out-of-service rates as well. Dispatchers often aren’t even aware that carriers can obtain detailed out-of-service information on individual drivers from the Federal Motor Carrier Safety Administration, he says.

As long as a productivity bonus is conditioned on safe operation, an incentive program shouldn’t be a liability in court, Langford suggests. But smart carriers would want to tie productivity to safety anyway because the cost of unsafe actions in claims, downtime, reputation and customer service would, over time, outweigh any benefits from pushing a driver too hard.

It’s perhaps a no-brainer that carriers shouldn’t reward productivity to the exclusion of safety and compliance. Unfortunately, some trucking executives don’t notice this obvious point until it’s pointed out in the course of a lawsuit.