How Technology is Transforming Performance-Based Driver Pay Programs
Driver shortage and retention, a concern that has been top of mind in the industry for nearly twenty years, remains one of the most important issues facing the U.S. trucking industry today. According to the American Trucking Associations (ATA), if current trends continue, the driver shortage could surpass 160,000 by 2030.
ATA estimates that over the next decade, the industry will have to recruit nearly 1,000,000 new drivers to replace drivers that are retiring as well as the additional drivers that will be needed to support industry growth. For operators and fleet managers, the takeaway is clear — retaining drivers is now more important than ever.
Experienced, well-trained, and qualified drivers are invaluable to a fleet operator’s profitability. To retain them, operators and fleet managers must become more driver-centric through better pay and benefits, better education and training, more career development opportunities, and by leveraging driver-friendly technology.
Failing to Retain Drivers is Costly in Many Ways
Many factors contribute to drivers leaving, with pay typically top of the list. Whatever the contributing factors, the effect is always the same — a negative impact on the bottom line caused by:
- New drivers’ recruitment and onboarding costs
- Time and resources needed to train new drivers
- Lower customer confidence in a company when drivers constantly change
Operators and fleet managers need to do everything in their power to retain their best drivers — profitability depends on it. Better pay and driver-friendly technology are proven methods to keep drivers on board. So let’s take a look at a method that combines both of those —using in-cab technologies to enable performance-based pay programs.
Technology, Data, and Dollars: A Winning Strategy
To remain competitive in an ever-changing labor market, one strategy to improve retention and recruiting that operators and fleet managers are exploring is performance-based pay programs — the gamification elements of which spark driver interest, engagement, and retention.
What is a Performance-Based Pay Program?
Performance-based is a type of financial incentive that allows drivers to earn additional pay if they hit certain benchmarks or key performance indicators (KPIs) that are agreed upon at the beginning of a quarter, year, or another time period.
KPIs allow fleet managers to measure a driver’s performance, compare performance to that of a previous period or to the performance of other drivers. For example, fleet managers can measure and get real-time data on:
- Safety KPIs — including speeding, harsh accelerating and braking, corner handling, and the use of hand-held devices while driving
- Efficiency KPIs —including fuel economy, idle time, and empty miles
How to Collect and Track the Data
The latest in-cab technologies and telematics systems collect real-time driving habit information on individual drivers that fleet managers need for a performance-based program. The data captured on a driver’s driving behavior determine how well they are meeting established company safety and efficiency goals, which determines their bonus takeaway.
Many telematics systems offer more than just data collection capabilities. For example, some systems offer driver training and coaching functions such as highlighting and encouraging driver behaviors that reduce fuel consumption or empty miles.
This real-time feedback, training, and coaching allow drivers to make behavioral corrections immediately, which maximizes their bonuses since they don’t have to wait for monthly or quarterly reports. Quicker rewards mean more stable and predictable income, which impacts driver loyalty. Additionally, predictable income leads to a safer, more relaxed driver who is confident behind the wheel and who is more likely to stay with the company.
Getting Your Drivers on Board
Initially, the presence of in-cab performance measurement technologies was met with resistance from drivers and viewed as something to pick apart their every move. As drivers got more comfortable with their presence and experienced the benefits they provide — as in extra money in their pocket — the big brother is watching attitude became more of a big brother is helping to identify what they are doing well.
When drivers are doing well, so is the bottom line. Paying drivers bonuses to be better drivers is well worth the cost as well as the investment in technologies for insightful data collection. It reinforces safe driving and promotes retention. The more bonuses paid, the better, safer, and more productive the fleet will be as the number of experienced, well-trained drivers on board increases.