Ditching sign-on bonuses in favor of guaranteed pay could aid driver retention

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Updated Feb 6, 2019

Though sign-on bonuses are an ubiquitous aspect of fleets’ efforts to recruit and retain drivers, these bonuses likely do more harm than good, particularly for carriers trying to incentivize drivers to not jump ship to another carrier.

“Carriers throw sign-on bonuses at drivers like they’re candy, and they create a bit of a sugar high,” says Jeremy Reymer, CEO of DriverReach and a member of the American Trucking Associations’ Workforce Development Committee, who’s tasked with finding answers to the industry’s driver shortage woes. “But that sugar high wears off.”

With so many carriers offering sign-on bonuses, “it becomes a domino effect,” says Reymer, with carriers attempting to poach drivers away from other fleets with their own bonus offers. “It gets built into drivers’ mentality,” he says, to bounce around to continue grabbing sign-on bonuses.

What’s more, the way many carriers structure their sign-on bonus payouts, they’re overly complex and set-up false expectations for drivers out of the gate. “Sign-on bonuses are not the long-term solution to the challenges in the trucking industry,” says Max Farrell, CEO and founder of WorkHound, a driver feedback platform. Miscommunication and “misaligned expectations” are already issues that compound driver turnover, says Farrell.

“There’s so many asterisks in what defines a sign-on bonus,” he says. “And all the data tell us that pay is already too complicated in this industry.”

Instead of sign-on bonuses, carriers should instead opt for pay packages that guarantee a weekly minimum, says Reymer. “The most important thing to a driver is how much they are bringing home every week and on a consistent basis,” he says. “It doesn’t matter if you make 80 cents a mile or 25 cents a mile, at the end of the day, you know how much money you’re bringing home each week.”

Unlike a salary program, guaranteed weekly pay offers a floor to drivers’ pay, still incentivizing them — and their carrier — to be more efficient and productive and continue to strive for more miles. Salary programs can have the opposite effect. By setting a pay maximum, they don’t incentive drivers to strive for more miles but do incentivize companies to try to squeeze more out of their drivers, says Reymer.

Farrell agrees, citing driver feedback data from the WorkHound platform. Though carriers often think pay is drivers’ top issue (and it is, in a sense), it’s not necessarily “I want more money,” says Farrell. Instead, it’s that drivers want more predictable paychecks. “Volatility in pay is polarizing,” he says. “On those weeks when drivers talk about low pay, they think ‘I could make more at McDonald’s and be home with my family’ or ‘I could work for Uber'” and make just as much, he says.

Fleets aren’t just competing with each other for drivers, he says — they’re also competing with opportunities outside of trucking.

Reymer says that, as the need for drivers continues to dog carriers, he’s noticing more fleets switching to guaranteed minimum pay packages. Of the roughly 100 fleet customers that use DriverReach’s applicant tracking system, about a quarter of them now offer guaranteed weekly pay, he says. “You want to set drivers up to succeed,” he says. “If this week they make $1,200 and the next week they make $450 — they can’t live like that.”

“Where can we reconcile what’s in the best interest of the driver and what’s in the best interest of the fleet? If you have a guarantee that you never earn less than X but you’re also rewarded when you go above that — it makes so much sense. It fosters a mutual beneficial relationship between the driver and their employer,” he says.