More About Bonuses
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In Contrast to Bonus Schemes Based Largely on Traffic Carried or Related Sales, the Reduction in One or More Items of Operating Costs Can Provide Another Fruitful Objective
LAST week it was stressed that consideration of possible bonus schemes should be tempered with caution, because superficial attractiveness might not be realized in subsequent application. Two main reasons for the failure of such schemes'. to live lip to expectations are either that, although intrinsically sound, the particular scheme was not appropriate -to .the-operator's type of work, or that it was so complicated as to frustrate rather than encourage co-operation betWeen
management and staff. .
Bonus schemes as applied to road transport operation can be roughly segregated into two groups. Whilst in both cases the objective is to achieve greater overall profitability and standard of service, in the first .group attention is concentrated on increasing the traffic carried, and, therefore, revenue earned, during a given working period without resorting to overloading or speeding. Aspects to be considered when introducing this type. of bonus scheme were discussed in this series last week:, Also in this group, and closely related to the problem of increasing tonnages and revenue, are bonus schemes with -the object of reducing or eliminating damage or complete loss of goods. • THE seCond group of bonus schemes could be considered to have a prime objective of reducing one or more of the items of operating cost. It is also convenient to include in this group bonus schemes based on accident records or vehicle appearance, since freedom from accidents should at least limit the amount of insurance premium paid to the basic minimum, whilst at the same time increasing the vehicle's availability for service. -Although forming a small proportion of maintenance costs, .extra cleanliness of a vehicle can have a substantial if indirect monetary value because of the resulting improvement in the driver's whole approach to his job.
All bonus schemes should encourage co-operation between management and employee, and there must obviously be something fundamentally wrong with any scheme which on application achieves the reverse. When dealing last week with bonus schemes in the first group, it was suggested that a good deal of frustration could be avoided if decisions as to the amount of bonus to be paid could be based on fact readily ascertainable by both parties, rather than on the opinion of one man, or even a committee representative of both parties. In either case, and no matter how impartial the intention may be, it is almost inevitable that sooner or later there will be dissatisfaction or even dispute over one or more such decisions.
Those operators who object to any form of bonus scheme often contend that such a bonus is nothing more than a bribe to a driver to complete satisfactorily a job of work which he has already been paid to do. Though not adopting quite such an extreme position, other experienced operators who might previously have been favourably impressed as to possible advantages of incentive schemes have, after practical experience, changed their opinions.
This may have occurred for several reasons. As stated earlier, the fault may have been that the scheme was not appropriate to the operator's type of work or, alternatively, even if basically suitable, was so complicated as to demand almost as much administrative and clerical time to run the scheme as to run the entire undertaking.
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But although a bonus scheme. as applied to road .hau workers is primarily set up to increase the productivity ot existing stiff, in these days of near-full employment even apparently valid premise may cause an otherwise suit scheme to prove unsatisfactory and be ultimately rejected Along with other factors which are conducive to succe operation is the continuity of the undertaking which is i largely dependent upon the continuing ability to recruit suit labour. In these days of relatively high wages, both as reg basic rates and average amounts of weekly pay-packet would be unrealistic to devise an incentive scheme, no m how high the rate of bonuses paid, if the basic rate was too More operators are, in fact, coming round to the opi that a good basic rate has a more lasting incentive tlu generally appreciated. Having paid such a rate they con it is then up to the management to earn its keep by enst an adequate return for that .rate, and not to avoid their res sibilities in the guise of a bonus scheme. It is contended a good basic rate will attract the right type of labour, wit which no bonus scheme is of any use in ensuring contin efficiency.
Whether of not an operator belongs to this latter scho4 thought, there is one type of bonus scheme which, whilst I comparatively simple to. devise and operate, is based al entirely on factual information already normally avail Moreover, the advantages to be derived can be greater, n than less, than might be expected. This is a bonus base fuel consumption.
In such a scheme the amount of bonus paid to the dri,• determined directly in proportion to any economy effect( fuel consumption. As with any other bonus scheme, presupposes that a recognized standard has been devised mutually accepted. In contrast to the situation which confront managements when endeavouring to inaugurate I types of bonus schemes, however, the data for arriving recognized standard for a fuel bonus should be already E able by the extraction of the appropriate information fron running costs which the operator will already keep. More the long-established operator will have such records stretc over a sufficiently long period to give a true average, as as an indication of the possible extent of fluctuations.
WHERE a large fleet of vehicles is employed to cai variety of traffic it would be necessary not only to detcrm standard rate of fuel consumption for the various sizes, possibly types, of vehicle, but also the class of work on wh. was employed. The extent to which more economic rur could be achieved in practice would then have to be detern and, here, the existing fluctuations showing reduced consi tion in contrast to the average rate should provide some g From the employer's point of view, the prime objecti. setting up a bonus scheme based on fuel consumption reduce running costs. But, as said earlier, in these dal relatively high wages the actual amount of bonus paid be a worth-while sum if the scheme is to achieve its obji of higher efficiency. Moreover, as the benefits to be de from any improvement in fuel consumption can readil assessed by both parties, it is obvious that the propc 1. the driver is to share should be both fair and reasonable. re now are a few examples of typical rates of fuel contion and the savings likely to be derived from successive 3.ses in the mileage run per gallon of fuel consumed. In ? Commercial Motor" Tables of Operating Costs a 10-cwt. Wed with petrol engine is shown as having a fuel cost tile of 1.70d. when averaging 400 miles per week and over. is based on the assumption that petrol is purchased in at 3s. 10d. per gallon and that an average rate of contion of 27 m.p.g. is maintained.
28 m.p.g. the cost per mile would be 1.64d., decreasing ;9d. at 29 m.p.g. and 1.53d. at 30 m.p.g. The approximate ; would therefore he 2s., 3s. 8d. and 5s. 8d. per when the rate of consumption was 28, 29 and 30 m.p.g. etively.
th the 7-ton oil-engined vehicle taken as an example, sponding savings would be as follows. With fuel oil lased in bulk at 3s. 10-id. per gallon and an average rate ;nsumption of 15 m.p.g. achieved, the standard cost per as shown in " The Tables" is then 3.12d. If the rate of minion is improved to 16 m.p.g. the fuel cost per mile I then be 2.92d. For this class of vehicle it would be realistic to assume that a higher weekly mileage was ged, and this will be reckoned to be 800. The saving at .p.g. would therefore amount to approximately 13s. 4d. reek.
woving the rate of consumption still further, if 17 m.p.g. iveraged fuel costs per mile would then be 2.75d. and eekly saving £1 4s. 8d. Similarly at 18 m.p.g. the fuel cost tile would be 2.60d. and the weekly saving approximately s. 8d.
naximum load 8-wheeled rigid when averaging 9 m.p.g. I have a fuel. cost per mile of 5.91d., assuming that fuel purchased in bulk at the same price as before, namely id. per gallon. At 10 m.p.g. the fuel cost per mile would i8d. and at 1,200 miles per week (which would not be tional for this type of vehicle employed on trunk work) would be a weekly saving of £2 I Is. Similarly at 11 the fuel cost per mile would be reduced to 4.25d. with lting weekly saving of around £4 14s., whilst at 12 m.p.g. ving would be £6 9s.
jill thus be seen that there can be a very substantial ion in the savings likely to be achieved, and not all of Loses are dependent upon the driver's effort. As shown , such factors as whether the vehicle is fitted with petrol engine, and is of the type of vehicle likely to be employed n.k involving high mileages, can have a substantial effect ty savings. It is therefore necessary to segregate these s from those over which the driver has control if a fair is to be devised on the basis of which bonus payments ubsequently be made.
en a mixed fleet is operated and it is required to devise a rehensive set of targets for the purpose of a bonus scheme on fuel consumption, the first division would of course ween vehicles fitted alternatively with petrol or oil engines. dent upon how wide the range of traffics carried, there would also have to he a division between vehicles engaged on local collection and delivery work and those engaged on mediumor long-distance journeys.
Normally this division could be met on the basis of average weekly mileages; for example, one group with average weekly mileages up to 300, a second group from 300-600 and the third group above that mileage. This is because, with the greater amount of stopping and starting which a lower weekly mileage would imply, a realistic rate of fuel consumption would be appreciably lower than normal. Incidentally, recognition of this fact is taken in "The Tables" by increasing the fuel cost per mile for the lower ranges of weekly mileages.
The schedule of targets would then be further divided relative to the actual size of vehicle. Against each vehicle would be shown, say. three targets in successive steps, for example 16, 17 and 18 m.p.g., as with the 7-tonner, and alongside these the corresponding bonus rate per mile to be paid to the driver on achieving these targets. This bonus rate would, in turn, be derived from the savings thereby achieved, and it would be up to each operator to determine how such total savings were to be divided as between himself and his driver.
After the schedule of targets have been devised and agreed, the subsequent decision as to whether or not bonus is due, and if so how much, could be readily determined. In order to arrive at a fair average, however, it would be in the interests of both parties to arrange for the bonus to be paid on the results obtained over a period of sufficient length, at least a month.
ALTHOUGH a bonus scheme based on fuel consumption is one of the simplest to operate, it is nevertheless necessary to pay special attention to one or two minor points if the scheme is to be successful. It is obviously essential that to coincide with whatever period is decided upon, the tanks of all vehicles must be filled at the end of the last working day. Also, once the amount of bonus has been determined, prompt payment is conducive to the success of the scheme.
In anticipation of possible complaints from drivers competing for such a bonus that their vehicle was not in best mechanical condition relative to fuel consumption, some operators find it advantageous, when undertaking their own maintenance, to arrange for a group of vehicles to be the sole responsibility of a particular fitter, and possibly his mate. A subsidiary fuel consumption target IS. then derived for that group of vehicles with any bonus achieved payable to the fitters concerned. By that means a joint interest is created in achieving the necessary target by both the drivers and fitters.
In addition to the direct saving in the cost of fuel thereby saved, there are subsidiary benefits from the operation of this type of bonus scheme. It is the experience of many longdistance operators that the driver who normally returns a low rate of fuel consumption is almost invariably a good driver. Such drivers are rarely involved in accidents, whilst the mileage life achieved from the vehicle and tyres are above average. This is because a good rate of fuel consumption is to a large extent dependent upon the elimination of excessive speeding and the closely associated habit of heavy and sudden braking, two major factors involving high operating costs. S.B.