April 2007, TruckingInfo.com - Cover Story
"The worker shortage in a few years will make today's tight labor market look like child's play," says Marc Bailey, CEO of the Atlanta-based firm TamingTurnover.
In 2008, the first of 7.2 million baby boomers will start retiring, and will continue to retire for 18 years, Bailey says – and there are only 4.6 million GenX workers to take their place. This aging phenomenon will hurt over-the-road truckload carriers unusually hard, because the average age of an OTR driver – estimated to be in the mid-40s – is already higher than the workforce in general.
Bailey's concerns are echoed by a 2005 report by Global Insight Inc. for the American Trucking Associations. The size of the white male population ages 35-54 – a demographic group that currently provides over half of all truck drivers – will decline by more than 3 million between 2004 and 2014. In addition, the annual rate of growth of the overall labor force will slow sharply.
Global Insight predicts that the supply of new long-haul truck drivers will grow at an average annual rate of 1.6 percent over the next 10 years, if present trends continue, such as the increasing number of Hispanic truck drivers.
However, the number of new truck drivers needed will grow at a faster pace during that same 10 years. In addition to an estimated 219,000 new truck drivers that must be found to replace drivers who will be retiring, economic growth will give rise to a need for a 2.2 percent average annual increase in the number of long-haul drivers – or an additional 320,000 jobs overall.
That's 539,000 drivers needed to meet economic expansion and replace drivers who are retiring, or about 54,000 a year. There is already a shortage of about 20,000 long-haul heavy truck drivers, notes the Global Insight report. It estimates that if nothing is done to correct the imbalance, that number will rise to 111,000 in 2014.
In addition, as the U.S. workforce overall tightens, over-the-road, truckload carriers will face more job competition from other industries.
Many OTR drivers will likely be drawn to the less-than-truckload market with its more stable lifestyle. Construction is another competitor. Throughout the 1990s, average earnings in long-distance trucking were about 6 percent to 7 percent above those in construction, according to the Global Insight report. But with the recession that began in early 2000, earnings dropped below those of construction. Earnings in trucking have made up some lost ground, but still average slightly below those for construction – a job where you're home every night.
Making the challenge even more difficult are regulatory factors, such as stiffer background checks for hazmat endorsements; an English language requirement that may limit the ability to attract drivers from among the growing number of Hispanic immigrants; and tighter federal health standards for high blood pressure.
"What will an OTR carrier do to hold onto his drivers?" Bailey asks. "Raise pay by 15 percent? Guarantee 20 to 25 nights at home per month? Raise pay and increase home time simultaneously?"
Only the very best OTR operators are going to thrive in the coming years, Bailey says. "OTR executives who take a 'wait and see' attitude will be destroyed by the human resource 'perfect storm' that is on the horizon."
DRIVER RETENTION TENSION
Recruiting and retention are inescapably intertwined. If you don't treat your drivers right, you'll lose them – and other new recruits as well.
Marc Bailey has a trucking company client in the Midwest with 1,700 drivers and a 92 percent driver turnover rate. The client believes each driver who quits costs him $8,000 (American Trucking Associations estimates range from $6,500 to $12,000).
"This client is wasting $12.5 million per year in revolving door recruiting, training and on-boarding," says Bailey, whose Atlanta-based firm TamingTurnover is described as an employee retention software company.
"Think how much more competitive this carrier will be when they cut that turnover in half. That's $6.25 million every year straight to the bottom line – or to marketing campaigns, price cutting to win major contracts, employee benefits to steal the best people from the competition, etc."
In fact, Bailey estimates that driver turnover cost the OTR industry $12 billion last year, based on the ATA's industry average of 120 percent driver turnover and an estimated cost per quit of $9,000.
Most truckload carriers offer similar pay, benefits and equipment. So how do you get a driver or owner-operator to choose your company over another – and stay there?
The answer lies in your ability to address what are sometimes called "soft issues," such as quality of life and how drivers are treated.
Retention and recruiting are inescapably intertwined. How you recruit drivers affects how long they stay. How you treat drivers affects your perception in the minds of potential recruits, as word gets around about companies that treat drivers well.
"The biggest mistake carriers make is not treating drivers and owner-operators as part of the distribution channel," Bailey says. "Picture in your mind a high-quality manufacturer of consumer products. They know the ultimate consumer is the consumer, but they also know the retailer is a type of customer. Carriers have two layers of customers, too – the paying client and the middleman [which is] the driver/owner-operator." And if you don't treat your customers right, you'll lose them.
CHANGING CORPORATE CULTURE
"You cannot do retention from the bottom up," says Louis Capolino, trucking industry consultant and past chairman of the Truckload Carriers Association's driver recruiting and retention committee. "It has to be from the top down. It has to be driven down through the organization and practiced at every level, not by just one person who's a retention manager. Retention has to be corporate policy in your mission and vision statement. You have to be urgent about it, and you have to believe it in your heart and soul. You have to have a passion for it. And seeing that the top doesn't just talk the talk but walks the walk, it gets driven down pretty easily."
For instance, at Schneider National, you'll see something called the Enterprise Foundation posted in many places around the company, explaining the company's four core values: safety, integrity, respect and excellence. New leaders go through training to make sure they understand those concepts and what they mean in terms of everyday decision-making, explains Rob Reich, vice president of enterprise recruiting. This is an approach that can be taken at any size company, he says.
"I think the first part is, [decide] who do you want to be, how do you want to be that, and you have to talk about that a lot. It's just the owner and senior management team saying, 'This is the environment we want, this is why it's important to us,' and start living that way."
At Greatwide Logistics Services, one of the largest owner-operator carriers in the country, the vice president of recruiting and retention reports directly to the CEO of the company. "Ray Greer wants to be in touch and in tune with recruiting and retention," says VP Rob Newell. "He understands that our company depends on capacity and our drivers are our No. 1 resource." At Greatwide, he says, "our motto is, we're owner-operator proud. That's not just like a used car sales pitch. We define it, there's bullet points under it, we go over it with our management. It's a culture within our company, not just an advertising tagline."
Companies that make driver recruiting and retention a focus of the corporate culture know that the departments that deal most with drivers – recruiting, retention, dispatch – need to be treated with the same priority as sales, operations and other areas of the company. They need the right technology and the right training, just like other departments.
"I've always treated recruiting as the No. 1 sales department in the company," Capolino says. He advocates training, especially in areas such as conflict resolution, teamwork and understanding and dealing with different types of personalities. "It's a sales skill set, yet we [typically] don't treat it as such."
One company that is doing that is Craig Transportation, Perrysburg, Ohio, a longtime truckload carrier that runs about 85 owner-operators and 15 company trucks.
"About a year and a half ago, our owner, Lance Craig, came to me and said, 'I need a salesperson in the recruiting area,'" says Eric Stegman, vice president of driver development. Stegman, who had been in sales, adapted his Sandler Sales Institute training to the recruiting process. The Sandler sales technique emphasizes honesty; treating prospects as intelligent, thinking individuals; understanding the true reasons a customer buys; creating a bond with the customer; and getting the buyer emotionally involved in the sales process.
"We want to meet drivers' expectations and want them to meet our expectations as well, instead of just throwing a guy into the truck if he qualifies. We're at about 35 percent turnover right now, so we're doing a very good job."
EMPTY PROMISES, EMPTY TRUCKS
It's no secret: Many drivers and owner-operators are skeptical about what companies tell them.
Allowing unrealistic expectations to develop during the recruiting process is one of the biggest mistakes carriers make, says TamingTurnover's Bailey. "It does no good to hire drivers who will quit when they get surprised by the new carrier's rules, communication style, scheduling/dispatch processes and home time results. It is better to hire and orient 30 new drivers a month and keep 20 for a year, than to hire 50 and keep that same 20. The cost and distraction of hiring and orienting those extra 20 'quick quits' every month is devastating."
As Capolino says, "Don't hire someone that doesn't fit what you have to offer, because you're going to hire your own turnover."
Many recruiters shortsightedly use bait-and-switch tactics and other gimmicks to fill empty trucks, says Jim Richards, COO of Mississippi-based KLLM Transport Services. "If it takes a gimmick to get you here, we're probably better off without you in the first place. If they came here under false pretenses, they probably wouldn't have stayed with us anyway."
KLLM is reducing its turnover rate by being more careful about the drivers it chooses – communicating right up front about the company's and the driver's expectations and making sure it's the right match.
"That may sound a little bit odd, with the times we're in, but we feel hiring a higher quality individual will reduce our turnover," Richards explains. "We'd rather concentrate on a fewer number of people that will turn out to be good drivers for us and stay, as opposed to churning a bunch of numbers through the system and none of them sticking."
They have a similar philosophy at Craig Transport. "We don't blue-sky our applicants," says Stegman. "We tell them exactly how it is." Unlike a traditional recruiting or sales approach, he says, when talking to potential drivers, Craig recruiters find out why the driver wants to leave his current company – before even telling them about Craig Transport. "Most salespeople or recruiters will go right into, 'Let me tell you about Craig,' and don't really find out why they're calling or even if it's a good fit."
Craig's new technique focuses on developing a bond and rapport with a potential owner-operator, in a process than can range from weeks to months. "We try to find the pain in his life as a driver and see if there's a match there."
Because they're only signing on with drivers where those expectations match up, Stegman notes, they're turning down a lot more drivers than they used to. But they're keeping more as well.
Craig and KLLM, like many carriers, have found that the first couple of months after hiring is a critical time in a driver's experience with the company and are revamping their orientation processes and other practices to address that.
KLLM put together a "Zero to 60" team to find ways to reduce the number of drivers quitting in their first 60 days with the company. The company changed not only the information that was shared with drivers during the process, but also how it was shared.
Officers from the company spend time with new drivers, Richards says. "The dispatcher sits down with them and has lunch with them before they go out on the road. We really put a more personal touch on the orientation process."
At Craig, the staff is encouraged to come to orientation and meet the new drivers. Stegman shares information about the new hires with everyone else in the company, so a new driver may hear congratulations on his 20th wedding anniversary or a question about his children, hobbies or pets from the operations people he's going to be dealing with at the company.
"It's going to be operations and the driver that make that marriage work or don't make it work," Stegman says. "It's unfortunate sometimes that a recruiter knows more about the drivers than anyone else. We try to get everyone on the same page."
After orientation, the company makes an effort to "really hand-hold" the contractor for the first month. "When a driver comes, we don't just say, 'Great, good luck,'" Stegman says. " We've got a mentor program, where someone follows up with the driver in a week and in a month to see how he is doing." In addition, for six months, they track miles and income and make sure those match the owner-operator's expectations.
THE RIGHT DISPATCHER
One of the key factors in driver satisfaction is his or her relationship with the dispatcher.
"It has been proven time after time that the No. 1 predictor of long length of service is not money nor home time," Bailey says. "It is the quality of the relationship between the driver and the dispatcher."
To the driver, in many cases, the dispatcher is the company, the only real contact he has with his employer. When a driver doesn't have a relationship with his dispatcher, he tends to feel he's being treated like a number, not like a person.
"If the driver feels like a number, they're going to treat [the company] as a number," says Vince Schott, vice president of safety at KLLM. "As soon as something goes wrong, they're going to go find another number to work for. If they feel like a person, like they're a part of something bigger, they're going to be more likely to work through issues that come up."
KLLM has reduced the number of drivers per fleet manager in order to give the dispatcher more time to communicate with each driver. Like many carriers, KLLM relies heavily on its Qualcomm satellite tracking system to communicate with drivers. But the company now requires fleet managers to speak with each driver at least three times a week by phone.
"This gives the driver an opportunity to vent any frustration or bring up any problems that he might not be able to communicate effectively with the Qualcomm," Richards says.
Greatwide has what it calls a "guardian dispatch system" (as in guardian angel) for its long-haul contractors. "There's a dispatcher assigned to each contractor, and that dispatcher knows everything about that driver," Newell says. "It's much more than just, 'Here's your load and I'll talk to you in a couple days.' These guys stay in touch and make sure they stay loaded and do what they can for them on the road, like checking the weather for them or relaying messages to their families. That guy's kind of his personal assistant as well as being his dispatcher."
A major mistake made by many carriers is not paying attention to the fit between a driver's needs and a dispatcher's capabilities, Bailey says. "Some drivers need constant attention; we call them high-maintenance personalities. If you assign an HM to a dispatcher who has mediocre connecting skills and who gets irritated by personal requests, that HM driver is going to leave."
A dispatcher's true value to retention may show itself when things go wrong – an owner-operator's settlement is messed up, a driver doesn't get home for his daughter's birthday as promised. How you deal with those mistakes can cause a driver to stay or leave.
"Speed is very important," Capolino says. "The good companies don't have heavy layers to get through to get a decision. They've learned to empower their front line people, especially dispatchers, driver managers and customer service people, with the necessary autonomy and data and the latitude to make decisions right on the front line."
Greatwide Logistics emphasizes the sundown rule: "If the contractor comes to you with a problem or question, make sure you get back to him with an answer before the sun goes down," Newell says.
However, in a competitive, thin-margin business such as trucking, it's easy to see how something like getting a driver paycheck issue resolved quickly can take a backseat to getting another load out, says Tim Crawford, president of Tenstreet of Tulsa, Okla., a fairly new company providing recruiting and retention software and services to the trucking industry. So his company is offering what he calls a "break glass" solution – as in, "break glass in case of emergency."
Tenstreet maintains an organizational chart for each client, including who covers for a person on vacation, and an "escalation path" of people to call when they can't get results from someone lower down the chain. Drivers who can't get something resolved through their regular channels can call Tenstreet, which can "escalate" the problem up the chain.
"Drivers, as a rule, are pretty rational people; they understand there's going to be problems," Crawford says. "The company wins huge points when they resolve those problems."
He relates the example of a new driver who got a paycheck for much less it than should have been, right before a three-day holiday weekend. "He was kind of in a bind, he had bills to pay, and we were able on a Friday afternoon to get the company vice president involved, get it resolved and get the guy a check." If the problem had not been resolved quickly, the company could easily have lost that driver.
MORE TIME AT HOME
For many drivers, a big part of being treated right is the company getting them home when they promised.
To accomplish this, many large truckload carriers are reducing long-haul freight volume in order to accommodate drivers who want more time at home, according to the ATA.
"The irregular route carrier is slowly driving off into the sunset," Capolino says. "I think much more regular, predictable, plannable type routes and freight structures are becoming more the norm, because you're not going to attract drivers if you don't. Drivers want to have some regularity and predictability to their lifestyle."
At KLLM, load planners are evaluated on how effective they are at getting drivers home on time. "We penalize the load planners if they get them home too early, because that affects their miles," Richards says. "But they're also penalized if they get them home any later than they requested."
At Schneider National, they've come up with some creative ways to get drivers more predictability.
For instance, for drivers who are willing to make a tradeoff of less income for more time at home, the company offers its Home Run program. A group of three drivers are assigned to two trucks. Each driver works two weeks on, one week off. They'll be home 17 weeks out of the year, and know which weeks those are going to be.
Todd Jadin, senior vice president of operations, explains that the program initially was a response to a few driver requests, but the company has found it to be successful and has expanded it. "It doesn't work for everyone, but for a subset of our drivers, it certainly is very attractive."
Schneider is also finding that for many drivers, it's not necessarily the amount of time at home that matters, but being able to get home when you want and need to. The company recently completed a large pilot program that allowed drivers to schedule their home time in advance using an online calendar. They are working to expand the program to more of the fleet.
"The feedback from drivers was, 'I'm OK with how often I get home, but I want to be able to predict it better for my family,'" explains Reich.
Whether it's being honest with potential recruits, quickly solving payroll problems, or getting drivers home more regularly, it all comes down to the same thing, Capolino says: Retention is attention.
"Retention is really paying attention, and saying, 'If I was in that circumstance, how would I want to be treated?' It's very simplistic, but we forget to practice it every day. Sometimes we take our eye off the ball, and we forget to work on our business because we're too busy working in our business."
ARE LOTTERIES BEST WAY TO KEEP YOUR DRIVERS?
Juan De La Paz had a hard time explaining how it felt to win a million dollars.
"I still can't believe it. It's like you're on a cloud, like you're walking on air," said the 28-year-old driver from Chapparal, N.M., who became a millionaire in January as part of Swift Transportation's second "Thanks a Million" promotion. Another driver took home a million dollars last fall.
In an industry where companies give drivers everything from meals to special jackets to trips to pickup trucks in an effort to improve driver satisfaction, the sheer size of the promotion stood out, and garnered Swift a lot of positive publicity.
Did giving away $1 million to two drivers improve turnover and retention at the company? Swift officials admitted it is impossible to tell. There are so many factors that go into recruiting and retention, there's no way to trace a change back to a single program. The program was enough of a success that they did it twice. They pointed to the excitement of the finalists and their families, and the exuberance of the several hundred Swift employees from the local terminal that came to cheer for the finalists at the awards event, held during halftime of a Memphis Grizzlies basketball game. However, they said at the January event they probably would not do another one, looking for something "fresh."
Drivers are often skeptical of various giveaways and driver appreciation events. Longtime trucker Bob Etherton of Joplin, Mo., puts it this way: "I always thought that the money spent on these programs would be better spent on wages and benefits. I hired on to make a living, and I always did my job well and worked to make more for me and the family. I wouldn't want to play the lottery at my job hoping to win some prize with odds against winning anything. No, spend the money where it will do some real good for the workers."
If you're going to do giveaways, keep in mind that drivers don't necessarily read the fine print. All that goodwill could be lost if the driver doesn't realize the financial implications of his prize, such as having to pay taxes on it – or in the case of a large amount of money, how to deal with the windfall responsibly.
Swift officials emphasized to the finalists at the January ceremony the importance of getting a financial adviser to help them manage their new-found wealth, whether it was the $10,000 given to each finalist or the $1 million top prize. They also strongly suggested direct deposit - one of the finalists in the first event cashed his check at a check-cashing facility that took 10 percent off the top.
A key thing to remember is that driver giveaways, whether it's a new pickup truck, a trip to Daytona or a million bucks, are not a magic bullet for recruiting and retention. They can generate good press and fuzzy warm feelings among drivers, but those won't do much good if you don't pay attention to all the other things that keep drivers happy.
Stephen Hartley, a driver from Swift's Fontana, Calif., terminal who won $10,000 as a finalist in the Swift TAM II event, said while he was of course excited, he saw the giveaway as a natural outgrowth of a company treating drivers right in the first place – good equipment, safety, plenty of miles, good communication. For instance, when he was sick a few years ago and ended up in the hospital, he says, the company checked in with him every day to see how he was doing.
"I've been with Swift a long time, and they've done a lot of wonderful things for us. I've got an open door at the terminal; anything I need, they take care of any problems."
In short, the key is to make every driver feel like he's worth a million.
REDUCING ORIENTATION NO-SHOWS
Here are some real-world ideas fleets have found successful that were discussed during the annual Recruitment and Retention Conference organized by the Truckload Carriers Association and ACS earlier this year:
• Give drivers a "confirmation number" when scheduling them for orientation – just like an airplane or hotel reservation. This gives the orientation a greater sense of importance in the driver's mind.
• Keep drivers in contact in the days before orientation. One company found restructuring its orientation pay allowed it to do this. The original orientation pay was $150. They changed it so the orientation pay was $100 – but the new driver would get a $50 "bonus" if he checked in with the recruiter each day before orientation, even if it was just leaving a voice mail. Not only did this reduce no-shows, but if the calls suddenly quit, that was a sign for the recruiter to reach out and touch base with the driver.
• When talking to the driver during the recruiting process (not on the first call), discuss with them how they're going to handle telling their current company they're leaving. Some drivers don't show up for their new job because they fear a confrontational conversation when they tell their old company they're leaving, or the old company convinces them to stay. Giving the new recruit an opportunity to rehearse the conversation and resolve issues in his mind can help.
• Have a senior person in your company – a vice president, maybe even the president – make a quick call to drivers the week before orientation to welcome them, say he's looking forward to meeting them.
• Assign fleet managers/dispatchers to the drivers the week before orientation, and have the fleet manager call the driver before orientation to welcome them. People commit to people, not to companies. (Make sure dispatchers and recruiters are on the same page when it comes to the information that drivers are getting about the company.)