Applying Private Sector Financial Incentives to Urban Transit

by Gerald K. Miller, Urban Inst, Washington, DC, USA,
Ronald F. Kirby, Urban Inst, Washington, DC, USA,



Document Type: Proceeding Paper

Part of: Managing Urban Transportation as a Business

Abstract:

Financial incentives for both managers and workers are widely used in the private sector to spur increased performance and productivity. Can they work in the transit industry? This paper investigates this question. It discusses the design and implementation issues for incentive plans and describes two new potential applications for transit linking group financial rewards to productivity improvements that reduce costs. In the simplest approach, the public body directing subsidies creates well-defined productivity and cost-saving objectives tied to financial incentives for management. In the most ambitious and complex approach, all employees are challenged to cooperate and improve productivity, and resulting cost-saving productivity gains are shared with them.

Subject Headings: Financial management | Private sector | Urban and regional development | Transportation management | Benefit cost ratios | Public transportation | Urban areas

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