Sharing the wealth

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When Louis Saia III started his trucking company two years ago, he wanted to instill loyalty in his drivers. First, Saia followed the recommendation of his father – a former head of trucking giant Saia Motor Freight Line – and named his company Employees Express to emphasize the importance of employees in the company’s business. Second, Saia bought new, owner-operator-spec’ed equipment. Drivers appreciated the perk; one even sent Saia roses as a token of appreciation.

Third – and most importantly, according to Saia – he launched a profit-sharing plan he believes will help Employees Express attract new drivers, retain the ones it has and make a few of them millionaires by the time they retire.

We care, we share
On the back of every yellow Employees Express trailer is a phrase Saia coined as corporate gospel: “We care, we share.” One fruit of that philosophy is a profit-sharing plan he modified from his days as CEO of Saia Motor Freight.

“Professional truck drivers are the difference between winning and losing in this business,” Saia says. “So we came up with the idea of a profit-sharing plan where they feel like they own this company and share in the profits.”

Each year, Employees Express sets aside a portion of its profits – in 2000 it was 33 percent -for the profit-sharing plan. That money is split among employees based on a point system that reflects each employee’s income and number of years served. For every year an employee has been at the company he receives 5 points. For every $1,000 earned, the employee receives 1 point. Then Employees Express divides up the set-aside funds among drivers based on their relative point totals. The company deposits the money into a retirement account.

The plan encourages employee retention in two ways. First, seniority obviously is a huge factor in how much an employee receives. Second, the retirement account’s vesting requirements mean that employees don’t gain full ownership of their funds until they have been at the company for 5 years. If they leave the company after just 2 years, for instance, they will only receive 40 percent of their portion of the profit sharing.

The investment accounts are managed by a group of independent trustees. Employees can tap into their funds on their fifth anniversary or upon termination. But the plan is designed to begin payments once a driver retires, at age 65 or after completing 20 years with the company. Allowances have been made for employees who plan to work beyond 65 and wish to defer payments. Beneficiaries will also be paid in the event of an employee’s death.

Saia estimates that if the company produces an anticipated profit level – roughly $20,000 per truck – an employee could receive as much as $6,760 in profit sharing a year. With that annual amount compounded by, for example, a 15 percent return for 25 years, an employee could retire with $1.4 million in the bank. That rate of return may be optimistic, but even if it doesn’t perform that well, an employee could still retire a millionaire based on the additional growth in his 401(k), which is separate from the profit-sharing plan.

“We believe that if we allow them to share in the profits of the company, they will care about the company like an owner.”

The ‘3 H’ philosophy
Saia finds that his profit-sharing plan generates benefits beyond recruiting and retention. When drivers realize that the value of their share rises as the company’s profit increases, they are more likely to perform better, care more about their equipment and interact more professionally with clients.

“We believe that if we allow them to share in the profits of the company, they will care about the company like an owner,” Saia says. At Employees Express, that is known as the “3 H” – head, heart and hands – philosophy, which aims to ensure that the company remains high on a driver’s priority list. When Saia recruits a potential employee, he explains the opportunity joining Employees Express affords.

“We pay top wages and provide good benefits,” Saia says. “We have brand new equipment. On top of that, drivers have a rare opportunity to share in the profits of the company. That’s something that’s over and above everything else.”

But Saia’s pitch goes further. “We explain that their family’s standard of living and their family’s future really depend on how successful our company is. And the company can only provide them a better standard of living based on our success and based on our profitability,” he says. “We focus on customer service, and the by-product of that is success and profit.”

Once an employee understands that philosophy intellectually, Saia says, the concept moves from their head to their heart. “Wherever a man or woman’s heart is, their treasure is also. Once it’s in the heart, it automatically goes to the hands which drive the truck and sign the bill of lading and shake the customer’s hands.”

Saia says it’s difficult to get truckers to embrace the philosophy when they first arrive. Because recruiting drivers was difficult during the boom economy of the late 1990s, many drivers have an attitude. “There’s somewhat of an arrogance with some drivers. They come on board with an attitude – ‘If I don’t get things my way, I’m leaving.'”

That self-centered attitude makes it difficult for carriers to get the best out of their drivers. Even worse, when drivers think they can find a job at the drop of a hat, Saia says, they don’t have a lot of loyalty. “We try to change all that through our profit-sharing plan, our people philosophy and our nice equipment,” he says.

Employees Express reinforces its corporate philosophy through materials employees receive when they’re hired. Managers must talk to drivers about their attitudes and concerns constantly in an effort to keep morale high.

“Pay alone won’t cut it,” Saia says. “You have to treat drivers like they’re somebody.” At Employees Express that means getting drivers home when they are told they will be home and making time to communicate with them. Saia speaks to every driver personally and even records audiotapes for drivers to listen to when they’re on the road.

Employees Express
Location: Houma, La.
President: Louis Saia, III
Equipment: 70 Kenworth T2000s
Engines & Transmissions: Cummins N14 engine, Eaton 13-speed split transmissions
Trailers: Utility and Great Dane
Challenge: Recruiting and retaining drivers
Solution: Profit-sharing plan, late-model equipment, corporate philosophy aimed at encouraging individual responsibility.

Mixing business and religion
The communication is both business and spiritual. Saia is a devout Catholic, and evidence of his religious faith appears throughout the company’s office and the drivers’ trucks. Each rig sports an elaborate mural of the archangel Michael standing on the neck of the devil, surrounded by fire. In his hands are the scales of justice and a sword, poised to slay the serpent. The dramatic religious symbol is one of two saintly images fleet drivers see when they come to work at Employees Express. The other, a vestal image of Mary, appears throughout Employees Express offices.

“A lot of people tell me religion and business don’t mix,” Saia says. “Even though I had that kind of advice, I still was moved to adopt [the symbols].” That’s because Saia has a deep connection to both.

Facing bankruptcy and an emotional collapse during a long legal battle, Saia says he experienced a vision of Mary while jogging on a rural plantation in Louisiana bayou country. She told him to “have faith in my son.” Saia heeded the advice and found peace.

Saia was suing Northrup Grumman for patent infringement over the Pallet Reefer, a climate- control unit the size of a standard pallet. Saia invented and designed it to give dry LTL haulers a foothold in the LTL reefer market. In 1995, Northrup Grumman, then known as Grumman Allied, originally agreed to produce Saia’s invention with him. Soon after, however, the company moved to oust him from the deal and develop the Pallet Reefer on its own.

Against long odds, Saia’s case – detailed last September in BusinessWeek magazine – ultimately prevailed, but not before Saia was reassured by the archangel Michael on the steps of a Wilmington, Del., courthouse. “I believe that St. Michael truly will help us through divine intervention,” he says.

Saia relates these experiences to every driver who comes to work for him, and the message is helping his recruiting efforts. Since adding St. Michael artwork to his trucks and to his recruiting advertising, his job applications have risen dramatically. “We have four to five times the number of applications,” he says.

Saia says the quality of applicants has also improved. “When a guy calls you because he saw an angel, he’s got good values,” he says. “He’s looking for that kind of company with good, Christian values. I think we’re getting better quality drivers.”

Three-pronged effort
Premium equipment isn’t hurting recruiting either. Using part of the $25 million windfall from his lawsuit against Northrup Grumman, Saia bought new T2000s spec’d out like owner-operator trucks, including aluminum wheels, extra gauges and interior options and 13-speed split Eaton transmissions.

Coupled with the corporate philosophy and the profit-sharing plan, the trucks have helped Employees Express retain most of its drivers. The combination has even helped assure that if a driver leaves, there will be another to take his place. Employees Express has a waiting list for drivers.