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How Effective Incentive Programs Drive Trucking Companies

Trucking companies have a big job to do: Recruiting new truck drivers. Recruiting and retaining top talent is the number one mission of many a fleet manager. With compensation and job prospects rising, trucking companies find themselves working with a smaller and smaller talent pool by the day. As a result of this tightness in availability, fleets must look at innovative new ways to attract and retain employees.

It is important to note the important axiom, “If something cannot go on forever, it won’t.” With the real decline in truck driver wages having gone on for over 40 years, by some counts, at some point the downtrend must reverse. With truck drivers who came on 30 or 40 years ago now facing retirement, the recruitment and retention of the current pool becomes that much more important. This is the task now facing fleet managers.

The fact is, in a very short time, the world of truck driver pay has done a complete 180-degree turn. The downward trend of the past 40 years has begun a major reversal. The question now is will this be permanent or is it a more short-term phenomenon necessitated by the current environment? Will another downturn result in a downturn for real compensation for truck drivers or are these pay rates here to stay?

The fact is, the pay changes the trucking industry has experienced in the past five years has been unprecedented and substantially outside the parameters of normal increases. Trucking companies are now taking out a leadership position in truck driver pay. By increasing overall pay and benefits, operators are getting the compensation they truly deserve, and everyone benefits.

Even in 2018, the numbers have been striking. From January to June of 2018, a huge number of fleets saw their pay and benefits packages rise on average of 6.75 percent. The industry now sees categories of strong payers and very strong payers. Even small- and medium-sized fleets have been getting in on the action. They understand that for them to remain competitive, they must up their game as well.

Sign-on Bonuses Spread

Another big industry development has been the rapid spread of sign-on bonuses. While sign-on bonuses are not a retention tool, they serve a vital function. They exist to bring new employees into the truck driver pool. Yet, even though they are not explicitly a retention tool, their existence predicates the need for strong retention plans. They must be set up well enough that they counter any other offers that a potential new entrant may have on the table as they shop around.

Sign-on bonuses remain in wide use and are spreading to other sectors of the truckload spectrum. One of the widest uses of sign-on bonuses remains the team truck driver segment. Advertised sign-on bonuses in some segments can be as high as $30,000, a truly staggering number. In fact, the percentage of companies offering sign-on bonuses breaks down in the following way:

  • Dry Vans: 58.9%
  • Temp Control: 62.7%
  • Flatbed: 70.9%
  • Tankers: 67.2%

These numbers are far higher than they were in the past. When you include sign-on bonuses, the average truck driver income increases recorded by the National Transportation Institute in 2018 are at near-historical highs. From 2017 to 2018, the net truck driver income change is 11.80% higher, with the Northeast and West Coast seeing the most gains.

Many trucking companies are reporting the largest truck driver compensation change in their entire company history. Sign-on bonuses, raises, mileage pay increases, and more, all point to the fact that demand for trucking is on the rise and the industry is having a hard time keeping up.

Surveying the Trends

In the third quarter of 2018, trucking analytics group FreightWaves partnered with SmartDrive to conduct a survey of nearly 250 respondents regarding how the truck driver squeeze is impacting the industry and what fleets are doing to address it. They asked industry players from across the spectrum, including shippers, carriers, drivers, and just about anyone else who is connected to the movement of freight.

One of the biggest takeaways from the survey was that over 80% of those who responded stated that the search for talent is generally the biggest issue they are facing. Yet, it may be even more surprising that nearly a fifth of those who responded said it was no problem at all. There are definite niches where finding top talent is far less of a problem.

Examples of these include truck drivers who haul pharmaceuticals or hazardous materials and other specialized freight moves. These companies are somewhat isolated from the broader problems impacting the industry and find it easier to hang on to their truck drivers. There are also specific areas around the country that are a bit isolated from the trend.

Yet, overall, the country continues to face a truck driver shortage, regardless of niche or location. Now, the question is, what exactly are fleets doing about it? Sure, sign-on bonuses and pay increases help, but those aren’t the only things the industry is doing to ensure employees come through the door and stay there.

Changing Up the Game

What are fleets doing to improve truck driver retention? When asked about this, it may be somewhat surprising that a full fifth stated they were focusing on revising their routes. This reflects a key point: Younger truck drivers leave the field because they do not want to be away from home for a long time or working difficult routes.

As a result, fleets are revising routes in such a way that doesn’t rely on simply putting together a maximum length of trips and cents-per-mile totals. And that isn’t all fleets are doing. Sometimes the things you may not even consider have an outsized impact on truck driver retention. One example of this is a pet policy.

Some fleets have gone so far as to institute a passenger authorization policy, specifically allowing their truck drivers to have dogs or other pets with them in the cab. Companies without innovative incentive programs are, more than anything else, skimping on a big opportunity.

Fleets have also made big moves when it comes to bonuses. Consider that sign-on bonuses are a double-edged sword. While new truck drivers receive a fantastic bonus, what do current employees receive? In many cases, nothing. As a result, fleets are offering specific performance and longevity bonuses. There is a big push to balance out compensation so that experienced truck drivers do not feel like they are missing the boat.

Fleets are also putting a renewed focus on performance-based incentive programs. Truck drivers are competitive by nature and when an operator sees they are falling short relative to their peers, they generally want to know how they can improve. Fleet safety managers should engage in a partnership that focuses on communication and improvement at all levels of the fleet. When a truck driver has a good safety score, it is incumbent on management to figure out how they can be rewarded for doing a good job.

What Do Truck Drivers Want

Instead of arbitrarily creating new initiatives, motor carriers are asking the people that new initiatives will impact the most. Retention tactics that many truck drivers want to see include referral bonuses, points reward programs, and a customized approach to how safe operation is rewarded. Even family recognition programs for spouses and children have been mentioned.

Yet, the one big common denominator among fleet truck drivers is vacation time. Driving a commercial motor vehicle takes time and dedication, so having more vacation time gives the employee a way to focus on taking some time out for him or herself and their family.

Truck drivers also appreciate data-driven incentive programs. An incentive program that is driven by hard numbers provides an unbiased view of performance. Rather than arbitrarily handing out money and bonuses, focusing on rewarding operators over KPIs that are set in stone, everyone knows where they stand.

Critical to these kinds of data-driven programs are performance-based scorecards. Scorecards should be used to easily measure safety performance across a wide array of metrics. Whether it be speeding, seat belt usage, idling, or otherwise, fleet safety managers and truck drivers can quickly recognize what needs to be done to ensure a rich reward.

In conclusion, it is important to note again that truck driver wages were on a big decline since the 1970s. Yet, truck driver wages relative to inflation cannot go down forever. We are living during the greatest population surge in modern times. There is no reason why the trucking industry should not be able to capitalize on an increasing pool of workers. Although the economy is doing well, by putting their money and incentives where their mouth is, motor carriers will ensure that they find the talent they need when they need it for many years to come.

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