How to compensate the drivers: even some government officials start getting it

One of the very popular questions I get is: how do I compensate the drivers?

I talked a little about it here: Answering your questions: how should I compensate my drivers?

The idea is very simple: you want to pay your drivers (and all other employees and/or contractors) based the RESULTS, not simply because they show up to work.

The next logical question is: how much should you pay them?

The answer is very simple: you want to be the highest paying employer. Why? Two reasons:
1. So that you can be hiring the best people (who will be delivering RESULTS)
2. So that people who work for you will want to keep working for you and not elsewhere (and be afraid to lose their job)

These two reasons are something that a lot of taxi business owners don’t get. They are constantly looking to rip drivers off a penny here and a penny there and make sure that their drivers don’t make “too much” (almost like President Obama, who thinks that he knows when someone has enough).

It doesn’t work like this, fellas. If you want people to work well, you need to be paying them well. Sure, you can trick someone into working for you for very little money for some time, but that period of time usually isn’t long. After it’s over, you’ll have to spend time, money and effort to find somebody else. It’s really not worth it. It’s much easier and effective to pay well in the first place.

That’s one of the things we talked about with Allan Fels of Australia and New Zealand School of Government, the Chair of Inquiry into the Victorian Taxi and For-Hire Car Industry in my interview with him.

You can read or listen to the full interview here: Interviews With Taxi Experts: Allan Fels

Even the government officials is Malaysia get it:

“Taxi drivers are major contributors to the tourism sector and good service from them can draw more visitors to Malaysia. Therefore, it’s wise to acknowledge their role through a programme which would uplift their profession,” said Information Communication and Culture Minister of Malaysia Datuk Seri Rais Yatim.

Compensation is one of the reasons why I am sceptical of all the apps like Uber and Hailo “taking the US taxi industry by storm.” Drivers are poorly trained and make very little money. What’s the solution according to Uber, Hailo and other app manufacturers? “Drivers spend a lot of time looking for fares, so let’s eliminate it”.

While it is a great idea, it doesn’t solve the problem completely. A driver can drive for 15 hours non-stop, still make very little money and leave customers unhappy. You need to make sure this is not happening in your taxi service.

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