ISSUES IN DELIVERY OPERATIONS – CAN VARIABLE PAY SCHEMES REALLY WORK?

Abstract

Ongoing changes in business objectives increasingly result in implementation of different business strategies striving to improve the workers’ performance. In that context, variable pay schemes have been utilised to increase employees’ motivation and productivity. Unlike the sales and warehouse sector, a number of issues emerge with respect to the variable pay schemes in delivery operations. The paper aims to examine issues and challenges associated with the introduction of variable pay schemes in the field of delivery operations. In this paper, we illustrate and analyse a case study from delivery operations of the FMCG sector in the market of Bosnia and Herzegovina. In this sense, the paper addresses the following research questions: What is the intended purpose of variable pay schemes? Which variables affect delivery operations? Why delivery performance should be carefully monitored? Which external factors influence delivery driver productivity? Can variable pay schemes attract, motivate or retain employees? Can variable pay schemes really work in delivery operations? The discussion presented in the paper has important practical implications related to workforce management and may be useful to managers and other subjects involved in designing pay and reward structures.

Keywords: Delivery operations, variable pay, workforce management, FMCG sector, Bosnia and Herzegovina