Driver/Labor Compensation

[vender4321]

All, 

Does anyone have any creative ways in which they pay their drivers that aligns their interest with the business and insures they do good quality work and visit as many machines as possible a day. 

Do most of you pay your help by the hr or salary?  

Views/details on paying labor is appreciated! 

[AngryChris]

I wrote a long post but I decided to start over and get straight to the point.  In my opinion, you need to set standards that the driver has (ie. report problems, clean machines, and stock them properly).  If the driver meets those standards and customers are happy, then the driver should be rewarded.  If the driver neglects to do what is expected of him/her, they should be retrained or replaced.  I see too many people worry too much about how much the driver is making.  I think I can cover most of the bases this way:

-Require drivers to take sales data so you can compare machine data to actual cash sales.  This is to catch a thief.  Mind you, it's about impossible to prove that the driver took a couple dollars from a single machine, but it's very possible to prove that a driver is taking money from multiple machines.

-Don't overburden the driver with slow accounts.  If the accounts are so slow that the driver cannot service any accounts without having to constantly rotate products, then YOU need to get better accounts.  It is a LOT of work to rotate product and no one likes to do it.  A lot of companies get upset because the driver brings back stale chips or soda from accounts that just don't make money.  What is the driver supposed to do? Only put even slower-selling items with longer dates in there? That won't help your profits and even that will need to be rotated.  The customers usually want to see the brand-name stuff.

-Don't overburden the drivers with too many accounts.  I was in charge of a monster account in the past.  My boss would point out that it took me a long time to get this account done.  I would literally get into work by 5:30am, stock my own truck until around 6:30, get to the location by 7:30, and stock something like 18 machines in 2 hours, which took about 20 cases of bottles and 20 cases of cans in addition to about 3 totes full of snacks.  Then, by 9:30 or 10am, I had to do it all over again because the machines were practically wiped out.  The second trip probably took 2/3 as much product but I had to do it both BEFORE the morning break and AFTER the morning break was over.  All in all, it took me about 4 hours to collect about $2,000.  That's right, about $1,500 to $2,000 in 4 hours and I still had to service another location with 9 snack machines (all snacks, no soda) that was located an hour away.  I would usually get back by 6pm and go home.  On a big day, I would bring back over $2,500 in product. Meanwhile, the boss would ask why it takes me so long to service one single account (the one where I would sometimes collect about $2,000 in 4 hours).  Needless to say, I felt underappreciated for the hard work.  People can talk about being fast all they want, I was an in-shape 24-year-old that was sweating at this account every time I went there and the boss was worried about whether I made the extra $12.00 because I took about an hour longer than he expected.

-Don't expect the driver to know everything.  First of all, some drivers are idiots and there's nothing you can do about that.  Second of all, people don't know things unless you teach them.  I have seen drivers slam or over-tighten doors, stock machines wrong, and other things simply because no one taught them how.  You don't simply give someone the keys and say "good luck, do it the right way" do you?  No, you TEACH them how to do things.

-Reward them when customers are happy.  Keep this in mind... if a driver takes 1 hour to collect and restock $200 worth of revenue, and your profit (before wages) is $60, and you pay the driver $15/hour (just throwing a number out), bare in mind that YOU still made $45 in profit.  I am so against when people worry too much about how much the driver is making and NOT worrying too much about how much THEY (the company) is making.  In all fairness, even if the driver stole $10 every day from the machines, but the machines are clean, stocked, and working, and you are making good profits, then why would you ever want to get rid of them?  No one wants to be stolen from, but an honest BAD driver can cause way more havoc to your business than a dishonest GOOD driver.

Run your business with these priorities in mind:

1) Profit.

2) Happy customers.

3) Happy drivers.

If you're making money, your customers never switch because they are happy, then reward your drivers.  If you aren't making money, the first thing to do is figure out why.  Poor accounts, crappy machines, unattractive machines, malfunctioning machines in need of repair, prices that are too high, prices that are too high, etc... they can all cause profitability to go down far FAR more easily than a driver who takes too long.

In short, don't try to nickel and dime the driver, nickel and dime the accounts instead, but prove your worth through your service and make sure the drivers are rewarded for providing such service.  The general consensus is to charge a FAIR price and sell yourself on service.

[Southeast Treats]

Chris has a lot more experience in this area than I do, I like his attitude.  You have to teach you drivers what you want done, inspect to insure they are doing it, have routes that make sense in terms of time and sales, make the drivers feel like part of your team, and pay them well for doing a good job.  What you pay in your area depends on the area, but you can't cheap out on wages and expect good people to stay around.  A base hourly rate gives the driver some security, and keeps you from running afoul of minimum wage laws. Starting pay while training can be a little lower, that gives you the chance to award raises early along the way.  Raises, bonuses for hitting certain goals, and commissions can be added in the mix.  Money is not always the biggest motivator for an employee, but it IS the reason they are working, and a lack of good pay can be a huge demotivator...

[vender4321]

Yes.  I agree with everything that Chris said.   Thank you! 

But I am looking for a actual system to compensate good work, getting machines done------CORRECTLY.   whether its a per machine bonus, sales bonus etc.   anyone have a actual % system they use?

[Bvending]

We pay a small base pay plus 10% commission. This has worked great for us for a long time. The more they pull the more they make, so they are more inclined to pull slow movers and change things up and make customers happy. There are a lot of different opinions from people on here about paying drivers and what works for one company might not work for another. Some say hourly is the best, some say commission, some say salary plus bonuses. But this is what works for us

[Determined]

I recently applied for a job with a vending company. I was offered the job and he agreed I was more than qualified. He only offered me $400/week salary which I felt was very low for me. I told it him it was less than half of what I make currently. He didn't even really counter offer. If you do find someone qualified I would show them the money. 

[AngryChris]

It's true that the whole commission vs hourly vs salary debate is up in the air.  There is no right way but I do believe that hourly is the way to go.  Drivers will get jealous no matter what.  There's no way around it.  You pay them salary and people will get jealous when someone else has an easier route.  You pay them commission and they'll get upset about having slow accounts or not having enough big accounts.  You pay them hourly and they might try to milk the clock.

Personally, I feel hourly is the best and here is why: Even though some may try to milk the clock, what truly matters is that they do a good job.  Let's say you have four routes and four drivers as follows:

-Driver A works fast and does a good job.  
-Driver B works slow and does an EXCELLENT job.  
-Driver C is the fastest driver of all but does a mediocre job.  
-Driver D has an average speed, shows up to work every day, but doesn't do a good job.  

Based off of that Criteria, drivers should be compensated as follows:

-Driver A is your best driver and should get some sort of performance bonuses for keeping customers happy and getting accounts done in a timely manner.
-Driver B is the second best driver because service of the excellent service, even though they work slow (Not unreasonably slow, but just not a fast worker).  Driver B should be given a bonus as well, and probably put on the better accounts and leave them off the lower-volume accounts.  That will help with your bottom line.
-Driver C is your 3rd best driver.  Although he/she is very fast, you COULD lose some accounts when someone offers a better service. You should leave your lower-volume accounts to THIS driver and give them a modest reward (if any) for their speed but keep them off of your big accounts for fear of getting pushed out the door.
-Driver D should ONLY be given accounts that you are not afraid to lose AND be given no bonus.

The point to my post is to show that different drivers work at different paces and you cannot possibly give them all identical accounts.  Some end up with better routes than others.  Paying them commission can be unfair even if each driver is identical in terms of performance as the routes will never be identical.  Paying them Salary is unfair for the same reasons.  At least, paying them hourly means that they'll get paid regardless of the pace they work (as long as it's reasonable) and giving them a performance bonus will make them feel appreciated for doing a good job.  This way, the ones that don't care much won't get the bonus but STILL get a reasonable weekly wage, but the ones who put in the best effort will get a bonus.  

If I were to choose a bonus, I would keep it at $50/week maximum with annual rewards as well.  I think a $400 reward around Christmas time for missing no more than 5 days (not including vacation) the whole year could really make the dependable drivers feel appreciated, while having weekly bonuses of UP TO $50 would make the ones who provide the best service feel appreciated as well.  Time is money in this business... but there are only TWO ways to keep and grow your business.  You either provide the best service or the lowest prices, and proving the lowest prices will make it impossible to maintain a business.

Oh.. and about the "up to $50/week" performance bonus... I didn't put much thought into that, but I feel like the best way to figure it out is to perhaps "give it to them" but take money away when they mess up.  If you find stale product in the machine, it gets counted against the bonus (but not too much as stale products should only happen in SLOW accounts.. YOU need to get rid of slow accounts and replace them with better ones).  If they call in a repair that you were unaware of, then that adds to the bonus (if they lost any part of their bonus).  If you call on some customers and they say they are unhappy about their service for something the driver seriously did wrong (ie. didn't stock mountain dew) then they should lose most of the bonus.  There's a lot to it but the point is that the drivers who provide the best service and do it in a timely manner should get the most bonus.