Hourly Pay versus By-the-Mile: Which One is Safer?

Reprinted with permission from CarriersEdge, where this was original published on September 19, 2023. For more insights and expert articles from this leading provider of online driver training, visit: https://www.carriersedge.com/resources/stay-connected/blog/.

Roamin’ With Rick is an ongoing travel series that covers industry news, people, and insights from around the trucking world as he travels to industry events across North America. In this installment, Rick visited the National Private Truck Council’s 2023 Safety Conference in Orlando and sat in on a roundtable discussion of how different types of driver pay affect safety.
Rick Duchalski is a Communications Specialist with CarriersEdge.

Does the way you pay your drivers affect safety? As one of the arguments goes, if you pay drivers hourly, they’ll slow down, have fewer speeding violations, and cause fewer accidents because they are less likely to try and grind out extra miles in order to boost their paychecks. Boom. Hourly pay equals a safer fleet.

But is it true? This question was the focus of one of the roundtable discussions at this year’s National Private Truck Council’s safety conference in Orlando. Although the conference itself welcomed almost 400 participants, this particular breakout session had about forty folks including fleet owners, safety managers, drivers and more, and they came from a range of industries. What’s more, the group represented pay structures across the spectrum – some paying hourly, others mileage or piece, salary and so on.

Now, the hourly vs. by-the-mile question seems like a fact question: Put companies into two groups based on pay and just run the numbers on Department of Transportation (DOT) preventables and see what comes out. But it’s actually more nuanced than this, as the group quickly demonstrated. One fleet manager pointed out that as a company that pays hourly, they hadn’t had a speeding ticket or a moving violation in six years. Another had just passed four years without a moving violation (paying their drivers $45/hr). I couldn’t tell if the mood of the room was shock or jealousy. And yet, another fleet owner (whose company paid by piece) also cited fairly good numbers and low turnover (although not as good as the first two). A fourth company that also paid hourly didn’t have great safety numbers at all.

So the question is, why the difference in safety performance, even among companies that structure their pay in the same way? The answer is safety culture.

A day earlier in the conference, Charlie Fetters, VP of National Logistics with Clean Harbors and John Robbins, Senior Director of Operations at Standard Logistics described what it means to have a safety culture at your company. A lot of companies might use the phrase, but to really mean it requires a lot of leadership, vigilance, and the right communication processes with the entire team. Fetters cited three things in particular:

1. Measure it
   Fetters referred to this as the safety score, and it’s about having measurable goals for specific behaviors. You have to make sure you are measuring exactly what you want to change and that the goals for where you want to go are clear and achievable. If you want to focus on speeding, you need to constantly monitor those events and track them down to a granular level so you know where to focus your efforts.
2. Training
   Having expectations about safe behavior is one thing, but you need to commit to giving your drivers robust, ongoing training (beyond the first three months) to make sure they have the skills they need. Following up and constantly refreshing their knowledge and skills should just be a regular part of the culture.
3. See with different eyes
   Fetters referred to this as near-miss reporting, where the team is incentivized to see every work environment with a critical eye—is there congestion in the facility, or unsafe activities in the yard? Whatever it is, the team should know how to spot those risks, report them and be empowered to act, including triggering a work stoppage until the problem is fixed.

This last point seems critical: more than having a from-the-top commitment to safety, an actual safety culture means every employee puts that lens on everything they do.

As the discussion progressed with the roundtable group, it seemed like the things that Fetters, Robbins and many others had been talking about the day before were showing up. The group started pointing out the importance of situating any talk about driver pay in the context of the company’s safety culture. How you pay is less important than the culture of the organization, and less important than the specific things you are incentivizing or compensating your drivers for (safety bonuses, compensation for training, etc.).

As we walked out of the session, I was stopped by one of the participants who hadn’t spoken during the discussion. He told me that many years ago he worked at a company that paid by the mile, and then switched to one that paid hourly. He pointed out that one wasn’t actually safer than the other when you take into account the whole range of possible safety issues: hourly pay did show a decrease in speeding violations, but switching the pay structure just means you have to deal with safety issues in other parts of the job. Drivers may still not be paying proper attention to cargo securement, safety in the yard, or more.

So will hourly pay get people to slow down? Possibly. But if your people aren’t trained, your issues aren’t tracked, and your team lacks the ability to find the potential problems in a situation before they become actual problems, no amount of tinkering with your pay structure is going to translate into better safety numbers across the board. Without a proper safety culture to backstop what you’re doing with pay, making changes like that just means you end up playing whack-a-mole with your problems.

The National Private Truck Council’s 2023 Safety Conference took place in Orlando, Florida from September 06-08.