Safe Trucking.
RJH
TCA Retention Coach
Having reviewed the recruiting practices of hundreds of carriers, the majority leave me completely underwhelmed. Almost everywhere I go, the model is essentially the same – cast a wide net, and hope you catch a couple. No successful entrepreneur would ever recommend a business strategy were you simply copy the same model, strategy and tactics of almost ALL of your competitors. Although most of the fine people I get to work with have good and honorable intentions, many fall far short of being as effective as they could (and should be). Within the carrier I ran, 50% of all our new hires were sourced through on-road recruiters – your fine and hard-working drivers. This is likely similar to the results from the carriers reading this post, however more and more are coming via social media channels and initiatives (which is an extremely big part of your recruiting and communications strategy – something we will talk about in depth in future posts).
Today, let’s focus on arming your on-road recruiting warriors with the tools they need to succeed. First you need to figure out a proper training program for the interested participants. That training will likely include elements such as a conversational sales course. You don’t need to develop that training program in-house, in fact it would be fool-hardy to do so. We are big fans of online training. For sales training, there are hundreds of courses available on Udemy for peanuts. Find your favorite, make it the standard. Combine this external training with a tip sheet which will include all the items you would want a prospective driver to be aware of, which could potentially work at your business. These items could include the lanes you work, company’s values statement, its social support, its pay structure, equipment (type, average age, replacement schedule etc), history, and most importantly a personalized un-scripted message about why your on-road warriors continue to work for your company despite thousands of competing offers.
In our business, we also had decals made for the side of their trucks calling attention to the fact that the driver of the vehicle was an on-road recruiter for us. We had business cards stating the same, and they had our value statement printed on the back. They had the recruiters name on them and a direct line to our recruiting department.
Further, there were two other key elements to the program, first our philosophy was that when an on-road recruiter brought a prospective new driver to our company we would go through the same criteria for pre-employment, as we would any other driver coming to our business – no exceptions. If we decided that the driver was a good fit for us we paid the recruiting fee to the on road recruiter immediately, mile one. If that new hire quit or was fired shortly after – that was on us, not the on-road recruiter!
The second element was recognition, when an on-road recruiter brought a new hire in the doors, we celebrated in our newsletter on social media, and at company events. Everyone likes a pat on the back when they succeed, and we did it loudly We had special plaques made for the best recruiters, we had one gal who was an O/O at our company, bring in six new drivers one year. They made an additional twelve thousand dollars through this program. I know some TPP members who have drivers making $30,000 to $50,000 per year in referral fees alone – wow!
Need some help turbocharging your retention efforts, take this free survey today – www.tcaingauge.com/retentionscore.
We all create annual business plans, and then attempt to get our proforma budgets in line. But how many of us revisit those plans on a regular basis? Are we monitoring the environment for changes that could impact us – a change in minimum wage, a new entrant into the marketplace, or a disruptive technology that catches us napping. Not planning for developments from competitors or governments can put your plan, or possibly even your business, at risk.
Reality check – there just isn’t enough time in the day to monitor every environmental risk that could impact us. That’s why we belong to industry associations, subscribe to newsletters, and follow blogs. These act as our early warning systems for new things coming on the horizon. There is no way that any of us can keep up with all the changing regulations that the various levels of government impose on us. Some are in response to emergency situations and get pushed on us with little notice. Others (such as the ELD mandate) are publicized years in advance, and have lengthy implementation periods before enforcement begins.
So, lets look at some things that we can control ourselves. Let’s start with your target market – have you really spelled out what it is? What is your preferred network? Your hot lanes? How will these affect your retention efforts? Have you spent enough time doing your research so that you know what your customers really want and value? And even if you did that once, have you revisited those assumptions to make sure that they are still valid? If you have the target market right, have you crafted your marketing and sales efforts to appeal to the needs of your current and potential customers. With 10-25% unseated percentages, and 250% over-capacity. It’s easy to fall into the trap of forgetting that the economic tables will eventually turn, and you’d be wise to heed one of Warren Buffett’s famous warnings – ‘only when the tide goes out do you discover who has been swimming naked’. Now is the time to make those technological investments, get lean, build that competitive advantage.
Next, what sort of branding have you done? Have you positioned yourself as a premium provider, or are you competing purely on price, effectively telling the market that you are a commodity? Playing the low-price game will eventually put you out of business. Similarly, have you focused on a market niche or are you trying to be everything for everyone? If you want to be a premium player, then you need to focus on parts of the market where you provide real value and can command a higher price. Think of the mistake that Cadillac made in the early 1980’s with the Cimarron. At that time Cadillac was known for large luxury vehicles like the Fleetwood Brougham or the Eldorado. The Cimarron was essentially a rebadged Chevrolet Cavalier with leather seats and a Cadillac logo on it, poor performance and a significantly more expensive price tag than its sister vehicles. By trying to compete against some of the smaller luxury import models Cadillac rushed the Cimarron to market with a vehicle that didn’t meet the needs of those buyers. They misread both the threat and what buyers wanted – they even had a four speed as the base transmission, not exactly something that your average Cadillac buyer wanted at that time.
A more recent example was Build-A-Bear’s “pay your age” fiasco. For those of you that aren’t familiar with Build-A-Bear, they take buying a stuffed animal to a higher level. The child gets to pick out what one they want, gets to custom fill it and then picks from hundreds of outfits and accessories to customize their new friend. And guess what, they were able to charge a premium because of the customer experience. Pay your age has probably put that premium image at risk. Why? Partially because they failed (massively) to deliver – by 11AM most malls had forced the stores to shut down because of the large lineups. But also, because now they have put the thought into the minds of parents and grandparents that $1 to $10 is all that they really should cost! In one poorly thought out and even more poorly executed swoop some major damage was done to their brand image.
Your reputation is something that could take a hit, especially with social media sites where some people have no concerns about sharing negative opinions. Unfortunately, you really must wow someone to get them to put up something positive about your business, but all it takes is one little slip up (and it probably seemed like something insignificant to your employee) to have someone start a rant against your company. We all need to be monitoring social media constantly and be prepared to give some honest and real answers when someone posts criticism or something that is plain old nasty. It’s going to hurt but if you respond in a thoughtful and respectful way you will be on track towards regaining people’s trust.
The last risk we will look at is having too much of your sales tied up in one place – whether it is one customer or with one salesperson. Too much concentration, regardless if it is internal or external, is not good. Relying too much on one customer puts you at too much risk of something like a management or ownership change causing a serious reduction in your volumes. Even worse is if they go into bankruptcy leaving you not only with lower volume but also with the potential of your receivables from them only being worth pennies on the dollar. A similar risk occurs if you rely too heavily on one salesperson. She manages your top five accounts and is very hands-on with them. Now what if she moves to one of your competitors? If she has such a great relationship with those customers, will you be able to overcome that to keep them? Depending on your state, courts may be reluctant to enforce non-compete clauses for much more than 6-12 months (if at all). You had better have a backup plan for either of these scenarios.
These examples only scratch the surface of the risks that your company could face and that you really should have a plan “B” for. Depending on your local market, there may be others that are more important, but these will give you a start. Don’t try to cover off every possible risk – the idea is not to make this the full-time job for a team. Devise realistic probabilities of any of these risks happening and what the potential cost would be. Determine what a realistic number of threats that you should (or can) mitigate against and start from there. However, ensure that these probabilities are reviewed on a regular basis so that new threats are being considered and any old ones reviewed to see if they are still relevant. It’s sort of like insurance, you hope you never need it, but you will feel significantly better if you already have a plan should any of those threats become real.
Trucking executives have been contemplating this statement since the first wheels turned in this industry. In the days of regulation, the opportunity cost of any empty seat could be calculated with certainty (it hurt, but you could at least make fairly realistic budgets and purchasing decisions). These days, that same empty seat could result in lost profits double or triple what they were last year at the same time. The anxiety of what’s being left on the table is palpable when I speak to trucking entrepreneurs and executives. During previous ‘hot markets’, I was one of these executives, and it wasn’t until we decided as owners that we were going to meet the challenge of high driver turnover ‘head on’ that we began to get a handle on it and eventually drive our triple digit turnover down to below 20%.
So why do they leave? It’s a complex question, but from a 50,000-foot view, it is really as simple as stating that people stay in situations they like, and they leave the ones they don’t. By parallel we all do it, we live where we live because it is a comfortable neighborhood, we are in the relationships were in because we see eye to eye with that person, they’ve got our back and we have theirs. We work at our jobs because they challenge us, we’re appreciated, and we enjoy the challenges and opportunities the workplace offers. People stay because they have purpose and are part of a team (a tribe if you will) that has the exact same purpose.
To put it all in context, your drivers leave (or will leave) because they have no attachment to your company. You have not created the compelling reason for them to stay. It’s hard these days for a driver not to feel like a small part of a bigger transaction, with an ever-decreasing connection to their tribe (in work and life). These forces make it easy for them to decide when another job, or bag of money gets their attention. You treat them like a transaction – don’t be surprised if they turn the tables.
The good news is that change is possible. Have been there, have done that. It’s tough. You may need to invest time and money. You may need to terminate people. You will be uncomfortable. It may get messy. TCA has created the framework to guide carrier members to low turnover numbers, it’s called the Retention Action Plan. This plan is the center piece of my role as the newly-minted Retention Coach, a service offering from the TCA Profitability Program. We believe that excessively high turnover is an unnecessary evil in our industry, and that with the right effort, and the right plan it can be reversed. If you’re interested in starting this journey, click here for a gut check.
As the number of TCA Profitability Program (TPP) participants continues to grow (both online and Best Practice Group members), we are continually refining what it means to be a part of TPP. To stay relevant, we must provide services and content that will demonstrate a real ROI to participants and their businesses. Part of this is adding new functions and datasets to the inGauge platform, to provide more value and expand the possible number of users within each company. Our development queue for inGauge extends well into 2019. Here is a small set of the features and tools we are working on:
TPP Quarterly Report
Jack Porter (TPP Managing Director) and I have created a template for an ongoing TPP Quarterly Report, which we plan to distribute to group members. The first edition was distributed on August 1st to all TPP members. Since the initial distribution we’ve received great feedback from members on additional datasets you would like us to add and analyze.
Brokerage Best Practice Groups
As many of you are aware, we are in the final stages of creating two new Brokerage focused/specific Best Practice Groups. Although we are still working through some of the final details, the two groups will be based on Annualized Revenue (< 50 Million, and > 50 Million). Further, the meeting format will be limited to one meeting per year, and four quarterly ‘virtual’ meetings. The data collected will be a new template Jack Porter created and is ready to go within the new mapping tool and inGauge (you can start reporting now if you would like). Further, this data will be ‘anonymized’ within inGauge (but in same format as your used to) to address some antitrust concerns which could arise with this new type of group. Currently 17 existing members have expressed interest in joining these groups, and our target is to have twenty members in each group. There will be a free trial for existing members, and the ongoing cost of participating in these groups will be significantly less for existing group members. We hope to have the details out to all of you for consideration in a couple weeks.
Retention Coach Services
Although a formal announcement will be made in the coming weeks, we are please to let the cat out of the bag on an important new service under the TPP umbrella. Former TCA Chairman Ray Haight will be leading TCA’s efforts on addressing the ever-important issue of Retention with TCA and TPP member companies. As TPP’s Retention Coach, Mr. Haight will work with companies that want to change, and implement a framework and road map to improve retention (in all roles and functions), while also reinforcing the importance of culture to the long-term success of any business.
We hope everyone is enjoying their summer, and getting in some much-needed downtime before September!
It’s Friday night and the yard is packed. The sound of 40 reefers trying to keep frozen loads cool has caused you to get yet another neighbor complaining about the noise. You have 3 trucks at truck stops on the other side of the city because of the perpetual traffic jam on the Interstate and they don’t have the hours to get back home. Your shop is replacing yet another corner on a trailer that was hit by someone trying to back into too small of a space. The dock is full to the point that you will need to load an empty trailer just to get at the freight that has to leave first thing tomorrow. And now Jimmy is coming into the office all steamed up because his truck is blocked in and there is no way he’s going to make his delivery window tonight. Oh, and the night dispatcher is running late because of more construction on the Interstate, and the surface streets are full of people trying to bypass the mess. As you get yet another cup of coffee to stay awake you start to wonder if maybe it’s time to look for a new yard.
Now don’t get me wrong, growth is a good thing (as long as it is profitable of course). Unfortunately, it sometimes means that the terminal that you have already paid off has become too small. Maybe it’s a block building that can’t be easily expanded. Even if it is curtain wall construction, perhaps the perimeter wall is already too close to the fence. Maybe you are just land locked and the person with the empty lot around the corner wants too much for it.
Alternatively, you may have recently fired one of your large customers because they are forever asking you to “sharpen the pencil”, playing you off against Fly-By-Night Trucking and Logistics, and treating your services like a commodity to the point that they are causing a negative return. Or perhaps one of your bigger customers has closed the doors on the distribution center across the city and now most of their work is on the other side of the state.
Regardless of why your business has changed, there will come a time when you think about moving to a new location. Before you pick up the phone and call a real estate agent you need to create a list of must haves, nice to haves and any show stoppers. Examples could include:
Sometimes you will have to do trade-offs. If you are a reefer carrier and one of your major customers is Tip Top Poultry in Marietta, GA then you will not want to put a terminal down in Forest Park, near the Atlanta Airport. It may cost you more upfront to be in the north end but the payback of drivers not losing an hour or two each trip running through (or around) Atlanta could be huge.
You might want to start by looking for an existing facility. The best option is a terminal that someone else is selling. Truck terminals are an unusual beast – the building may not need to be large but there has to be a lot of open land available for parking and maneuvering equipment. You will likely have to do some renovations to make it fit your needs but at a minimum you should not run into any zoning issues. If you are not certain what your longer-term needs will be, sharing a yard with another carrier through renting their unneeded space could be an option. However, keep in mind that if that company experiences growth you may be asked to move again.
If you want to build a new facility, keep zoning at the top of your mind. There are a lot of municipalities that are outright hostile to our industry. Part of the problem is terminal buildings tend to be small relative to the size of the lot (generally less than 20%). That will result in a lower property tax bill compared to a warehouse that covers 75% of the lot. Check the local bylaws in case they require a minimum percentage of building footprint to the size of the lot.
Avoid irregular shaped lots if possible. A rectangular lot will maximize the amount of trailer and equipment parking. A pie shaped lot will end up with areas that are only good for parking storage trailers or older equipment that has not yet been sold.
Another consideration is what neighbors you will have. If you have drivers who will sleep in their trucks overnight in the yard you will not want to be next door to something like a stamping plant or a meat processing facility that will cause noise or odor issues for your employees. At the same time, you don’t want many houses nearby as they will probably make noise complaints to the municipality. I once had an inherited facility in a mixed residential/industrial area. I could count on at least one phone call a week complaining about the backup alarms waking them up at 2 in the morning when my night linehaul drivers backed into the docks. You may be forced to put in fences or berms to abate the noise, adding to your overheads and detracting from your ROI.
Another consideration is the existing grade and soil composition of the land. You are going to have to do some grading to put down the appropriate aggregate and then compact it. You will want to avoid having to build up areas so that water is not going to pool or require additional drainage. Also, how stable is the soil – is it heavy compacted clay or is it sand? The site preparation work could be your largest expense so you will want to find properties that naturally minimalize it.
Finally, what sort of utilities are already servicing the land you are looking at? Is it a fully serviced lot or will you be required to bring in the utilities at your own expense? What utilities are available? For example, what sort of internet connections are in the area? If you are using cloud-based technologies, will you have enough bandwidth available? If you’re planning for the future, fiber should be a priority. What sort of right of way is available if you need to service the property yourself? For example, does a specific utility have the exclusive rights to the poles in the area? You could end up needing to trench or drill conduit to bring in electricity, telephone or fibre optics lines even though there may be poles on the property already. Is water and sewage available or will you need to drill a well or use a septic tank?
As you can see there are a lot of things to take into account before you even think about hiring an architect to design the building. There’s a lot that could go wrong in this process. Make sure you are using a real estate agent who understands industrial/commercial or have a consultant who can walk you through the process. There’s a lot of work before you even get a shovel in the ground. There will always be something that pops up during the process but avoiding as many of them before the purchase can keep the project on its timeline and keep it within budget.
Among the many newsletters I receive each day there was one that caught my eye this morning. Freightwaves posted an article on Amazon, and how their ambitions on the supply chain should have logistics companies worried. E-commerce has been steadily gaining market share from traditional brick and mortar retailers, now accounting for 9.5% of the entire US retail market. Another article I read last night talked about how grocery stores are facing tighter margins, and reduced earnings because of things like Amazon buying Whole Foods and selling more groceries online as well as the rise of online services that make it easy for any small restaurant to allow for internet or app based ordering and pooled deliveries. Millennials are just not buying cars the way other generations did, but they are more comfortable with the idea of ordering what they want from their phone. Some traditional retailers are turning to offering delivery to meet this trend. Some retailers will innovate, but others will follow in the fate of retailers like Sears, Toys R Us and Circuit City into massive store closures or bankruptcy.
Let’s face it, most of us are busy enough trying to meet our short to medium term business objectives. Who has time to find the next big technology or trend in our industry? Besides, being the leader can be a risky thing. It’s never fun to put your career on the line for a relatively untested idea. What if you guess wrong? Why not let those small start-ups live on the bleeding edge while you sit back and wait to see what ideas gain traction?
We need to make sure that there is a culture of Intrapreneurship in our organizations. We all have red tape and redundant processes that are “the way we have always done things”. Our managers and staff need to be empowered to question those processes, and be encouraged to come up with alternatives that we support and allow to be experimented with. I don’t mean letting them just try anything – customers can not be negatively impacted. At the same time, front line managers must be given some leeway to green light ideas that can be quickly executed. Nothing stifles creativity more than having a drawn-out process where all changes need to work their way up to senior management and then back down again. Give your functional managers the ability to approve experiments within a reasonable boundary so that these trials can happen quickly. Some projects will have impacts across the organization or be capital intensive enough that senior management needs to be involved but look at ways that the process can be shortened. Smaller companies with a flatter structure will be acting on these sorts of ideas more quickly and start taking your customers away as a result.
Intrapreneurship needs to be something that we build into the recruiting process. Offering the ability to create new businesses can give you a significant advantage when it comes to hiring the best and the brightest. This is a strategy that companies like 3M and Google have used for years. Offering the freedom to have ideas supported (and later rewarded) can provide a way to attract better new hires than just throwing more money at them.
One thing to keep in mind is most of these ideas and improvements will not be big, especially not at first. How many start ups get to huge valuations within the first year? Almost none of them! And many that do become successful probably would not get approved in the typical corporate review process. Think of many of the great baseball teams – how many of them rely solely on the home run to win pennants? If that was the way to do it, then this year’s New York Yankees should be miles ahead in the AL East with their new incarnation of the Murderer’s Row. Unfortunately for them, they are sitting 4.5 games back of the Red Sox. You are going to get better results relying on small ball to get runs and then when a home run does come around it is just a bonus. And don’t to try to force things. In Thursday’s game between the Yankees and the Royals, veteran KC player Alex Gordon ignored the stop signal at third, tried to create a run and got gunned down at home for the final out of the game. The same thing can happen to your business when it only tries for the next “big” thing. The reality is that none of us know what that will be (and if you really do know what it is, why aren’t you already doing it?) Encourage those smaller improvements – streamline your billing process, find a way to do routing better. Those smaller things will add to the bottom line and give you the resources to fund the big ones when they appear. Besides, having several smaller bets means that failure on any one of them will not threaten your business but going all in on a potentially big one could. At the end of the day, innovation is like portfolio theory. By diversifying your holdings, you reduce the overall risk profile. Most disrupters stated as a small idea that ended up growing beyond what it’s creator hoped for. So, encourage that innovation within your company and pay attention to what’s going on around you. That way you remain nimble enough that if someone else does start to eye your lunch you can create and implement solutions that allow you to remain differentiated from the rest of the market. It’s not going to be easy to give up some of that control, but it will be significantly less painful to give it up on a small initiative than it would be to have to bring in something big because that’s the way the market has gone while you stood pat.
Within the last two weeks I said goodbye to a great friend, and mentor. Gabe was in the prime of his life; a world traveler, a respected entrepreneur and a compassionate human being. Am still processing his passing, and it’s surreal scrolling through the many text messages we sent to each other. Gabe had very strong opinions, and many ingrained habits and principles. Some I wholeheartedly agreed with, and others I simply respected. He had an impact on my life, without a doubt. I was lucky enough to spend a day with him prior to his passing, and I told him how much he meant to me.
This sad moment also provided a time for contemplation about all the people who’ve been my mentors over the years (whether they knew it or not). When I visualize a timeline of my life, there are certain ‘eras’, and during those times there was always at least one person who I looked up to, and in turn provided both direct and indirect feedback, this feedback changed everything. In fact, I kind of feel like Forrest Gump sometimes, for being so lucky to connect and learn from such a dynamic group of individuals. The great thing about mentors is that they are normally connected to a role or activity your involved with during certain segments of your life. In order words, they not only can provide parts of the ‘operating system’ for navigating your way through life (the strategic), they will most likely impart practical and tactical knowledge that can catapult you in your career or another pursuit. The added advantage of mentors is it normally does require any direct cost. Mentors are the form of education with the highest return on investment.
In the whirlwind of business, it’s easy to forget the importance of quality mentoring with respect to employee development. The mentors are, naturally, being pulled in a million directions. The ‘mentees’ who can most benefit from mentorship are being thrown into the deep end, sometimes without a life jacket. I don’t want to generalize, as I know there are many companies doing a fantastic job with formal mentoring programs. However, they are the exception, not the rule. More companies need to stop giving lip service to the word ‘mentorship’. Stop paying a third party to do something you can better internally, with an emotional connection like no other.
If you’re successful in life or business, some part (small or large) of your success can be linked directly to a little bit of luck, and a connection to some person (or persons) that changed the direction of the arrow on your compass. Conversely, the probability is high that there is someone in your work or life bubble that admires you, and could benefit significantly from just a little bit more of your time. Give them that time, the return on investment doesn’t just accrue to them – it comes back to you.
For a great summer read, and to put the importance of mentors in proper context, I highly recommend the book HillBilly Elegy, by JD Vance. In summary, this book not only provides insight into the strength and enduring nature of ingrained cultural norms and habits (the good and the bad), it also reinforces the significance of mentors in changing the course of peoples lives, and future generations. The author’s ‘Mamaw’ was that person. Mamaw didn’t just change the course of author’s life, she changed the lives of his children, grandchildren etc. That’s my kind of compound interest.
In closing out this post, I want to take the time to say thank-you to all my mentors, past, present and future. These men and women are the true professors of my life. The degrees and designations are meaningless in comparison to the education which they have (and will have) given me.