As soon as beverage wholesaler Lenox-Martell started tracking business expenses, it became clear the company's 15 drivers needed to be a tad more cost-conscious: For starters, they were racking up parking tickets in downtown Boston. "Our policy was that drivers would get hit in their own pockets only if they parked on a handicap ramp or committed a similar serious offense," explains controller David Nitishin. "Otherwise, getting a ticket for double parking is the kind of expense they didn't think twice about."

But when the cost of parking tickets surged to $1,000 per month, managers decided drivers needed an incentive to break their bad parking habits and set up a friendly challenge. If, by the end of the quarter, the drivers could reduce the cost of parking violations to $300, they'd each receive a share of the savings. Predictably, the drivers became more careful, and within a month, ticket expenses were down to $500. Within two, they were at $350 and still falling.

The drivers were catching on, loving their bonuses, and looking for new ways to shave costs. Another problem area was the high volume of emergency deliveries, so they set up a second challenge to reduce that number. "We offer 24-hour customer service, and we were up to 70 emergencies a month. That means drivers were missing stops or were returning to accounts because they forgot something," Nitishin explains. "It also means more weekend overtime." This time the company agreed to pay drivers $250 apiece if they could get emergency runs to 60 in three months. The result: The drivers beat the goal, set another, and hit that one, too. "It's amazing. In three quarters, we've gone from 70 emergency deliveries to 35," says Nitishin. "Now that we're posting the numbers daily, they're piling the peer pressure on each other."

Copyright 1998 Open-Book Management, Inc.