Paying attention to pay

Cents per mile has long been the dominant pay scheme in over-the-road trucking, and there are sound reasons why. Mileage-based pay helps trucking companies match payroll directly to revenues so they can manage the ups and downs of freight demand without going broke. And per-mile pay clearly motivates drivers’ to be productive, reducing some of the burden on dispatchers and drivers managers to get drivers to do what they are supposed to do.

Per-mile pay has some drawbacks, however. For starters, drivers can’t depend on a certain income. If freight volume drops and there are fewer miles to go around, it’s not the driver’s fault. And yet, he is the one who bears the brunt. Consider what happened during the last downturn; average weekly pay for truckload drivers dropped 7.6 percent in 2001, according to the Bureau of Labor Statistics.

Sure, your managers might lose out on some bonuses during weak periods, but their base pay typically isn’t at risk. If a truck breaks down, the shop supervisor usually won’t suffer financially. That’s not necessarily true for the driver whose truck is out of commission. Throw in other factors like traffic congestion and delays at docks, and drivers often don’t know what their take-home pay will be from one check to the next.

Many carriers offer special pay for extended layovers, breakdowns and dock delays, but rarely do drivers receive full compensation for lost productivity. Competition for drivers also has pushed some carriers to adopt more favorable terms, such as pay based on practical miles rather than household goods miles. But still, drivers remain the trucking industry’s financial shock absorbers.

Some critics of the trucking industry declare that reforming the pay system would end driver fatigue and fix any number of ills. The claims are wildly overblown, but the fact remains that paying per mile encourages driving even when it might not be the smartest thing to do.

There are broader concerns. Is your ideal driver the kind of person who would put up with uncertain pay? If you want stability, offer stability. And surely you want drivers to be accountable for their actions. But if your pay structure essentially holds drivers accountable even when they are blameless, aren’t you giving them license to treat you and your company the same way?

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In light of these and other drawbacks, some carriers are charting a different course. For example, The Daniel Co. of Springfield several years ago switched to a pay-by-the-day structure. Larry Daniel, president of the 25-truck operation, believes the new approach pays off in retention and safety for the carrier and quality of life for the driver.

For Barry Pottle, president of Bangor, Maine-based Pottle’s Transportation, paying drivers a steady, dependable wage is a crusade. Pottle recently completed a year as chairman of the Truckload Carriers Association, spending much of his time encouraging carriers to guarantee drivers a certain amount per day.

“People tend to look at a truck driver simply as someone who steers a truck,” Pottle said in his farewell address in March. “But this is also the person who picks up and delivers our freight, the person who is responsible for our company’s reputation out there, the person who has to spend time away from his or her family, and the person who deals with all kinds of uncontrollable situations and stress. I strongly believe some companies are gouging our drivers, squeezing what they can out of them, and not treating them with respect or making them part of their team.”

This new pay structure costs Pottle’s Transportation tens of thousands of dollars a year, but Pottle sees it as an investment in retention. And when problems arise, he holds managers, not just drivers, accountable.

Ditching mileage-based pay won’t work for everyone, and there are other ways to cultivate a contented, productive work force. But if you haven’t considered the notion, pay attention.