Driver Wages – Part 2 – Win/Win

I have been out and about since the last article; a couple of times to Texas, last week to Toronto for the Surface Transportation Seminar and next week I’m off to Mississauga to the Bridging Border Barriers session presented by the Truckload Carriers Association. I have also been busy as the author of the just released Driver Retention Masterclass series through Vertical Alliance that can be found at: www.infinitiworkforce.com/experts/expert-modules-library/driver-retention-masterclass

I know, this is a shameless act of self-promotion. Oh well, it’s a good program – what can I say.

Releasing this new retention program has granted me the opportunity to talk to many fleets and to facilitate a number of workshops on both sides of the border, which I greatly enjoy. As you may recall, last month I cautiously dipped my toe into the subject of driver wages and I thank many of you for your comments and feedback. I love to hear from you folks. This month I think it would be valuable to any number of carriers and drivers who might read this article to give you some more thinking material on the same subject.

In my workshops I stress that carriers have to know where they are in relationship to the rest of the market on driver wages. It bewilders me when I ask companies what their turnover numbers are and find out that they are much higher than what they would like. My second question is, ‘What are you paying drivers in relationship to the market they compete in?’ only to hear back that they are middle of the road or below the mid-point. And many are not sure how they measure up at all, not a clue. Hey, I’m no Warren Buffet but I think we might have identified where one of the issues might be with your turnover!

With a lot of carriers I think they feel stuck, kind of the chicken or the egg type scenario. If you pay the drivers more than you are currently paying, you might eliminate the thin margin that you currently have (which might not be good but is at least black ink). The problem with that logic is that it misses the very thing that will actually increase your margin. Part of the solution to both issues is a win/win program, a share in the gain opportunity.

I know there are carriers doing this now but not near enough from what I have seen. From the mountains of data that is readily available in today’s world it has never been easier to build a set of metrics; MPG, safe driving, hard braking, clean inspections, accidents and claims to name just a few. Create a reliable scorecard predicated on where your fleet is now on these items and what the potential gain is for your bottom line, and then generously reward the drivers individually on their performance related to each item.

That is what is called a win/win! In addition and to assist the driver, you offer education on each item so that they can learn how to be best in class on each of them. This type of system has the potential for the driver to earn their way to the top of the pay scale in the industry and of course increase the carrier’s bottom line substantially.

A word of warning to carriers is to not go down this road unless you have your act together. There is a lot of base work that has to go into this program. There would be nothing worse than rolling this out if you don’t have a very clear picture for every driver as to exactly what the potential size of the reward is, how you will administer the program and how you will ensure the integrity of the program.

I recommend that companies start slowly and bring in more items as they work the bugs out of the ones you start with; MPG is an obvious one that can easily be measured and rewarded. An example: if you were to set eight miles per gallon as a goal and you are currently realizing seven miles per gallon, you can do the math for yourself, but if you were to use $1.15 per liter, the savings are in the range of eight cents per mile. A hundred thousand miles is $8,000.00 so why not split that with the driver? You get an extra $4K and so do they. Continue with the other metrics and you’re starting to accumulate some serious money as a carrier and the driver is now vested in the results of the truck.

Once you have your numbers rolling in and you are starting to enjoy the win/win results, one could even go further with this type of thing and get your company involved in a benchmarking program so that you can measure your results to other comparable companies to see if you’re as good as you think you are.

The fixed expenses involved with the operation of a trucking company are solidly within the domain of management; equipment cost, facility overhead, plates and on and on. Once these are negotiated for their respective term, that’s it, nothing you can do until renewal and then you start negotiating again. Where the cash is hidden is in how the variables are managed in the things that generally are in the domain of the driver. How do we reward that person? Usually do it by the mile.

Now I’m not suggesting anything here but, aren’t these two ideas diametrically opposed? I want a driver to operate my equipment as efficiently as possible at all times but I will reward the driver solely on production of miles. The balance and the win/win here is for the company to train, entrust and reward the driver in such a way as to operate the equipment as efficiently as possible while at the same time professionally executing the delivery of the customer’s goods.

The use of Speed Governors and Electronic Logging Devices means ‘turn and burn’ is soon to be gone forever and good riddance. Drivers, if you are at a company that still operates that way, you need to be looking around for a better gig, and if I were you I might be looking for one that offers to reward you for your professionalism in a fashion that might resemble the win/win described above.

Safe Trucking

Ray J. Haight
Co-founder
tcaingauge.com