Offering the right combination of base pay, variable pay and desirable benefits makes a company more attractive.
A competitive compensation package can be used to attract new drivers and retain existing employees alike. But while compensation typically accounts for about 40% of a fleet’s operating budget, there is clearly no one-size-fits-all package that will work for every organization. The trucking industry’s wide range of schedules, routes, duties, equipment and rates simply introduce too many variables for that.
As unique as the approaches can be, however, every package will include some combination of base pay, variable pay and benefits. A focus on each aspect will ensure that compensation is as competitive as it can be.
Base pay is the basic hourly rate or salary that an individual makes, not including bonuses or incentives. For drivers, this includes mileage pay (rate per mile/kilometre) accessorial pay (for non-driving activities like dropping a trailer) and premiums (based on experience or a specific type of work).
A great way to confirm that a fleet offers a competitive base pay is to conduct a salary survey. In some cases, fleets might share compensation details with a researcher in exchange for a copy of the results. Other options include scanning the internet to see if competing fleets post their compensation packages online, asking drivers approached by other companies to share the nature of any offer, or contacting a third-party provider who can conduct salary surveys for a fee.
Variable pay, meanwhile, is any type of incentive that is linked to performance. Fuel and safety bonuses offer two of the most common examples of this. Just keep in mind that ill-designed or poorly communicated variable pay can backfire. Programs which reward high mileage without a concern for speed or safety can risk drivers, equipment and freight.
Benefits include non-cash compensation on top of base pay and variable pay. Examples include paid holidays, drug plans, pension plans, life insurance, wellness programs, and supplemental health insurance.
Employees can value their benefits as much as the base and variable pay itself. The 2012 Sonofi Canada Healthcare Survey found that 61% of employees see health benefits as a “strong incentive” to stay with their current employers; in 2011 it found that 59% of employees would rather keep benefits than receive $10,000 in cash.
With these factors in mind, there are a few key steps to consider when designing a compensation strategy that works for your company:
Above all, remember that a fair, equitable and competitive compensation package will always reward the behaviors that are critical to any company’s success.
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