CEO and founder of HNI, Mike Natalizio, has developed and improved risk management solutions for transportation companies and organizations since 1985. Natalizio is the founder of The Risk Clarity Formula™, a tool used by HNI to help their customers identify risk susceptibility, create and help implement the solutions to these risks in order for executives to grow their business, expand their wealth, and reach their goals for the future.
Transportation companies have been measuring many safety and productivity metrics for years. For most motor carriers, the problem at hand isn’t a need for more data or reports -- it’s information overload. The challenge lies in taking the numbers you have and turning them into something actionable that will have a quantifiable impact on the business.
To solve this industry-wide problem, many companies have come up with driver scorecards and other tools to simplify the information available. 9 times out of 10, these scorecards miss the mark. So what’s the missing ingredient?
1. Driver Scorecards Aren’t Tied to Profitability
The simple truth is this: if scorecard results are improving but your profitability isn’t, your metrics are missing the mark.
If you want a scorecard that works, you have to invest the time to determine what “performance” means at your company. The entire organization needs to align around the key behaviors that drive profitability. Your system should emphasize the things that matter most from a financial perspective and weight safety and operational needs appropriately to keep the overall goal [making money] in mind.
2. Drivers Don’t Buy Into the Scorecard
Before unveiling this system to the drivers, the scorecard should be tested for a couple of months to verify the credibility and effectiveness of the scoring. Performance benchmarks should be established to clearly measure improvement over time. Releasing a scorecard with bugs or with the wrong metrics can be fatal to such a project.
The roll out should start with top management and flow to driver managers before being released to the drivers themselves. In practical terms, this allows you to address any issues before the system reaches the end user, but more importantly, this strategy helps to build excitement around the program and gives it an identity and building a healthy internal competition.
We all know the time to communicate expectations and performance to drivers is often in short supply – but you have to get the message across when it comes to what will be measured and how it will be used.
3. Companies Fail to Act on the Data
When done right, a driver scorecard approach allows you to stop relying on lagging indicators – like sales – to tell you how your company is doing. A true performance management system provides a leading indicator of success that provides the up-to-date insight you need to manage the company toward greater profitability.
For a lot of companies, the process of intervention for those with low scores isn’t formulated in advance. When a bad score comes back on the driver scorecard, the reaction is “now what”?
The very best performance management systems manage to achieve both top-down and peer-to-peer accountability. There is strategic, top-down intervention when driver performance is lagging, but there is also a healthy sense of competition that is reinforced between drivers themselves.
Want to learn what you can do to start to improve your driver performance management system?
A well designed and implemented performance management system is the key to driving increased profitability in transportation companies. A tool that falls short is just one more metric to add to the information overload facing most companies.
To dive deeper into this topic, we held webinar called Profit Driven Leadership: Competing on Analytics in Transportation. Click here to view the webinar recording and download the slide deck if you want more information on this topic!