In 2003, Jim Angel solved what he believed was a major flaw in driver compensation. As a group logistics manager for a dedicated fleet of Ryder Systems, Angel set out to change the company’s policy of giving across-the-board increases in driver pay.
Angel believed that variable, performance-based pay was a better policy.
“What message are you sending to your really good drivers?” Angel says. “The message you have to send is that you will continue to reward positively.” Variable pay was a touchy subject, however, since no human resource department – certainly not one at a large, well-known corporation – would sign off on variable driver pay unless the criteria was purely objective.
Angel designed a driver scoring system that was seen by the company and its drivers as objective. Using Microsoft Excel, Angel created different categories and sub categories for performance – safety, customer service, hours-of-service, DOT compliance, etc. He then assigned points and sub-points to each, weighted by priority for corporate goals. He then created a formula to score each driver based on a 4.0 academic grade scale.
He explained to drivers what the corporate goals were and how points were deducted. The uniform scoring system became the basis to determine which drivers qualified for pay increases and bonuses. To qualify, drivers had to score at least a 3.65 or “B+” and above during the previous review period(s), he says.
The initial spreadsheet application had several shortcomings due to the limited features of Excel, however. For example, the spreadsheet did not allow for multiple users – dispatchers, safety managers, etc. – to input data into a centralized and secure database. Users also lacked the ability to attach supporting documents such as accident photos and repair receipts for accidents and incidents.
In 2004, Angel changed jobs and became the director of fleet operations for Atrium Companies – one of the largest manufacturers of vinyl and aluminum windows in the United States. Last year, Angel contacted Bolt Software, a provider of Internet-based fleet management software, to develop a more advanced, user-friendly driver scoring system and database. Bolt Software made its jointly developed product, called the Driver Performance/Retention Module, commercially available in the second quarter of 2007.
Since the product’s release, Gayle Robertson, owner of Bolt Software, says most of the interest so far is coming from private fleets. “Customers are very receptive; they’ve been looking for it all along,” she says. As with other available modules from Bolt Software, the pricing for the Driver Performance/Retention Module is based on the number of trucks/drivers in a fleet.
One of the most useful new features, Angel says, is the ability to attach photos and scanned documents to an electronic file for each driver.
“We added some bells and whistles for those things that get forgotten about,” Angel says. For example, dispatchers can now attach a T-Check record of the funds sent to a driver that got stuck in mud. This and other preventable incidents, however minor, deduct from drivers’ scores.
The purpose of the scoring system is not to penalize drivers, but to encourage and reward good performance and to improve driver retention, Angel says. At Atrium, for example, once a driver has preventable accidents that total $5,000, he is put on warning. One more incident is basis for being fired. Angel is proposing a new incentive to avoid that scenario.
With a fleet of 84 trucks, Atrium spent $122,000 last year on incidentals. Rather than budget $122,000 for incidentals for the following year, Angel says he would like to set aside $100,000 in an accrual account for an incentive program at the start of the year. When any driver has a preventable accident or incident, the cost of that incident comes out of the fund. Drivers could receive a dividend at the end of the year from the remaining money.
For Atrium, fuel economy is the easiest incentive program to manage with the Bolt system. Fuel mileage for each driver is automatically tracked and input into the system through the fleet’s onboard computers from PeopleNet. Drivers receive a monthly incentive for every mile they achieve the fleet’s mpg goal. Drivers also qualify for an annual cash reward by meeting the fleet mpg goal for 12 months and the fleet hits the goal.
When it comes time for an annual review, Angel and other managers decide where to set the cutoff point for drivers to qualify for an annual performance bonus and wage increase. Out of 200 possible points, the cutoff is typically around 170. Last year, out of 76 drivers, only 11 didn’t qualify for an increase of 4 cents per mile.
“I thought they would all walk in and flip me off, but we didn’t lose a guy,” Angel says. Atrium put the drivers in a 90-day improvement program. If they showed improvement, they received a two cents-per-mile increase. If they continued to improve over the next 90 days, they qualified to receive another two cents per mile.
As of June 2007, 9 out of the original 11 qualified. The other two no longer work at Atrium.
Overall, the biggest benefit of the Bolt system, Angel says, is being able to quickly identify the 20 percent of his drivers that he will spend 80 percent of his time managing and helping to improve.
“This gives you the ability to reward top performers,” Angel says. “You can school or train the bottom performers to the point where one of two things happen. They increase their performance and get better, or you have a discipline trail to weed them out.”
For more information about the Driver Performance/Retention Module developed by Jim Angel and Bolt Software, visit www.boltsystem.net/driverperf.cfm.
