Driver Pay: The Elephant in the Room

Driver Pay: I have been asked to take on this subject on many occasions, and although I have touched on it on and off over the years on numerous occasions, I’ve never really gone at it head on. There is probably a couple of good reasons for this, including but not limited to the fact that this subject is a bit of a rabbit’s hole. It can easily lead many different places once you start heading down this road, and you are likely to disenfranchise yourself with any number of folks, no matter what position you take on these subjects. Having said all that, let’s get at it, as I have said in the past, and it is still true today, at times, there is nothing more illusive than an obvious fact and this is one of those times!

The obvious fact here is that we live in a free-market society whose economy runs on a supply and demand structure. The market will dictate the remuneration you’re paid, determined on the specialty of your trade, or skill in conjunction with the scarcity of workers in your sector. So if one is to put forth the position that drivers are vastly underpaid the argument that there is a driver’s shortage holds no water and must be false, you simply can’t have it both ways. If you don’t believe me, talk to any economist about this situation.

To do the subject justice, it might need more than one article, it will definitely need your input, so please give me your feedback, and I want to hear from you on this – both company drivers, owner operators and executives. I will give you my opinion on the only two paradigms that matter in this subject, first the driver’s then the company’s.

Driver Perspective

When I look at this subject from a driver’s prospective I don’t blame any of you for being completely confused, over the last 3-4 decades you have been heard and been repeatedly told that there is a driver shortage, and it is at a critical stage. Problem is, if this is in fact, then why hasn’t the average driver wage reflected that reality, depending on where you search or who you ask, you keep seeing average annual pay rates between 50K and 65K, what gives? Meanwhile, you just paid your plumber $120 per hour unclog your drains??.

Obviously something is amiss, and has been for quite some time, extreme shortage and 57K annually don’t add up. To be accurate there are companies out there that pay their driver’s markedly more than this, and likely some that pay much less this is the average – the range I found was from 38K to 100K. The typical driver take home is greater for the most part than that of the general average over all sectors no doubt, but again I can see a high frustration level when folks in this profession are continually told of the dire situation that the industry is facing with its overall lack of drivers.

It’s hard to bridge the gap between what we continually hear from industry trade magazines, and the national press, and what we see in the numbers and average pay scales, the two don’t add up. So whats one to do if you’re a driver? A number of things come to mind especially in light of the fact that any number of driver surveys over the past couple decades reveal that money is not always the least satisfying element of the job, nor the top reason for a driver to quit their current carrier.

There are two messages here; One is for the drivers to first, and always be checking the market to ensure that your being paid at or preferably above market rates for your services. If your research reveals that you’re not, I would have the discussion with your employer, and let them explain their perception of the situation. The second message is of course for the employers – you have to make your driver’s pay packages understandable (even customizable), and manage very closely the relationship between their expectations and your expectations. I might suggest an average base pay rate certainly no less than industry average for your sector is a good platform to start with, then a gain-share bonus plan predicated on all the familiar touch points, fuel burn, accident free miles, longevity, production – whatever those KPIs are for your company. These bonuses should provide the driver with the opportunity to get to the top of the range of driver wages in your area. Finally, and the most critical part of the strategy, is they need for these gain-share bonus plans to be obtainable, under promise and over deliver, what a concept right! You get this part right, and the word gets out you may have something, you’d think anyway, reality might be a bit more harsh, because surprise-surprise there is another twist waiting around the corner and it’s called a Human Resources Strategy and Driver Satisfaction.

Do assuming the driver has done their homework, they are now aware of where you stand with your company’s  payment schedule relative to the rest of the market in your area. They can stop looking for greener grass,  and focus on delivering the goods now right?  Not quite. I have discussed Maslow’s hierarchy of needs in previous articles and that we as human beings are driven to needs is a sequential order as is in our nature as human beings. For us to truly enjoy the sense of Physiological (or money) needs we have achieved we now need to move on to the Safety level and then of course up to the belongingness, esteem and finally self-actualization levels. These universal laws drive everyone from the Driver Seat to the C-Suite (no one is immune). If a company decided to lead the industry with their wage package, they will still be challenged to retain their drivers unless they offer an entire package that includes a sense of community and all that goes with it.

Is there a driver shortage? To me the numbers reflected in driver wages would suggest there isn’t, not that I can see anyway? It’s more aptly described as a Driver Churn problem. The churning of drivers in the industry is more a reflection of companies not spending near the amount of focus on their retention efforts than they do on building very efficient recruiting departments, and the vast eco-system of businesses designed to simply get people in seats – as opposed to keeping them in seats – with a true sense of purpose. When I ask most executives their turnover rates very rarely do I get a definitive clear answer, there is usually some hesitation and what looks to me as a very loose estimate of where they are at. This needs to change and until carriers realize that this subject needs to come out of the closet and be a daily focus moving forward we will as an industry continue to confuse driver shortages with driver wages levels.




Commitment: The Foundation of Retention

OBJECTIVE: The importance of commitment to success in improving driver retention is vital – and it starts at the top. Here we look at what must be done to ensure that leadership is committed and that the entire company knows this.

Commitment throughout the organization will be important to the success of improving Driver Retention. But commitment is especially important among the senior management team as they are setting the example for all others in the company. To consider and then decide to embark on a project to improve Driver Retention means that senior management have looked at the problems of excessive costs associated with poor retention, recognized that significant planning and effort, affecting the entire company, must be undertaken and that this effort is warranted by the significant savings and service benefits that will be the result.

Put this way it is very obvious that the work we are about to undertake is strategic in nature. It is Strategic because we will be investing time, confidence, and responsibility in company employees well beyond the driver team. In the process we will be transforming the company from one that has a victim mentality about high driver turnover into one that is a positive, supportive and service-oriented place to work – a winner. We will become a company where people, drivers included, want to work. A transition like this is obviously strategic in nature.

Commitment is one of the most critical ingredients to the success of any effort intended to bring long-term improvements to the way business is done. This commitment must come from the directors of the Company and it must be very visible – and active. It must be genuine and it must be unwavering. After all, people throughout the company will have important roles to play and their commitment must be inspired and supported by the commitment they see in their leaders. In short, Company leaders must be seen to walk the walk and make the same commitment that is being asked of the rest of the company departments.

In addition to fostering commitment among the staff, the senior-level commitment must be lasting, since this is a lengthy project, and it must be unanimous among the leaders. This last aspect is sometimes difficult to ensure, but it is important that the leadership team speak and act in unison on the need for the company to make the significant changes necessary to reduce Driver Turnover. At the senior management level this means that a personal commitment must be requested and delivered by each member of the management team. Like a lot of strategic planning initiatives, it would be a good idea to make positive and supportive engagement a part of the personal performance criteria for managers during this project.

Let’s acknowledge that achieving and maintaining commitment among the leadership team is not something that can be accomplished just by asking for it. There are very natural and predictable obstacles along the way and perhaps the most common is the difficulty we all have with adapting to change. This is natural – we all strive for stability and then along comes a new idea or a new process or a new direction and we naturally question and resist the change. But the management team has targeted real benefits for our company and our employees. We have agreed to undertake reasonable steps to achieve great results.

We have agreed to change.

Turn that agreement to change into a commitment to change. We have a commitment to reduce Driver Turnover. We are committed to making our drivers a Strategic Advantage for our company. Achieving and maintaining commitment will require us to periodically re-visit our plan and objectives to remind us that the change we are undertaking is worth it. Do this regularly to reinforce the commitment among the team. Do this so we do not fall back into old habits. In fact, be on the lookout for any wavering of commitment and the creeping in of those old habits.

So, what other benefits can we expect by recognizing the importance of commitment and then taking specific actions to achieve it? We will create a culture throughout the organization that sees and comes to expect a management team that means and does what it says. Secondly, it will deliver proof to the management team that they can achieve significant results by working supportively together – and they can use this approach to be successful in other important projects.

We are getting ready to draw a line in the sand. There was probably some bell weather or watershed moment that brought you to realize something must be done about your high Driver Turnover rate. Keep that motivational “trigger” in mind as we go forward – the one that drove home the need for us to do something serious to improve Driver Retention. This is important because the team must be in unison on this project for it to have sustainable impact, so make it a practice to occasionally remind ourselves of what motivated us in the beginning. For our company it was the fact that our safety and accident rate was getting out of control. Before we knew it our insurance costs were going up, our service was declining and we were constantly fighting fires. It had to stop – and improving the stability of our driver workforce was the obvious place to focus. Your motivation might be different. Perhaps you simply cannot find enough drivers to feed the turnover beast. Or maybe you are seeing your profits decline due to excessive costs associated with hiring and general inefficiencies. The ironic thing is that whatever caused you to start on this process you will reap the same rewards – reduced accidents and their costs, lower recruitment needs and those related savings and, finally, a general improvement in efficiency and quality that will drive better profits.