While most trucking companies prefer to pay their drivers by the mile, Dupre Logistics has been taking a different approach, compensating by the hour. In light of National Driver Appreciation Week, the company decided to highlight its hourly pay structure and celebrate the initiative's benefits to its 700-plus drivers as well as the company as a whole.
Not many fleets have committed to this type of pay structure, especially in this economy, but the Louisiana-based carrier is finding that the alternative method is paying off in terms of retention, safety and efficiency. The pay structure produces better schedules and safer drivers, the company says. It also attracts higher quality drivers that want to stay, something that may give Dupre a leg up once the recovery shakes out.
"We need the high caliber driver," said Tom Voelkel, president. "At Dupre Logistics, we strive to recruit and retain the best team in the industry. It's an initiative with benefits that far outweigh the cost to our bottom line."
The idea is to pay drivers for all that they do, including pre-trip inspections, wait time and unloading. The system is meant to make the driver feel they are appreciated and valued, as they are paid for their time. "We have said, 'the driver is important,'" Voelkel said. "They know that we're in that with them." According to the company, the structure often results in happier drivers because they are paid more than drivers at other companies that are paid per mile, and this has staying power.
Over the last four years, the company has set records in terms of its turnover ratio. According to Voelkel, the company started out with a turnover ratio of 45 percent in fiscal 2006, with an improvement to 42 percent in fiscal '07, and 30 percent in fiscal '08. For fiscal year 2009, Dupre's turnover rate was the best it's ever been, at 25 percent.
Often, drivers who are paid by the mile are motivated to make their delivery faster, while those on hourly pay are usually more focused on being safe and taking their time. At Dupre, this has translated into safer drivers on the road. Since 2006, the company has cut its risk management costs by 34 percent with the new pay system, Voelkel said. Risk management cost is measured as a percentage of revenue.
According to Voelkel, the driver plays a large role in the efficiency of a trucking company. Driver costs account for close to 40 to 50 percent of a company's revenue, he said. This means that if a company is inefficient, the brunt of those inefficiencies lie with the driver.
Voelkel said this type of pay structure takes the driver variable out of that equation because it makes their job easier. Because the driver is not worried about being compensated, he can focus more on the task at hand and getting the job done.
This also means that the carrier can pinpoint inefficiencies on the customer's side, and charge the customer for any delays in time. The company can weed out any inefficiencies with the customer, and be more picky about who they do business with.