For 10 years, John Delery has studied the trucking industry and the issue of driver turnover. At Commercial Carrier Journal‘s Fall Symposium in Scottsdale, Ariz., Delery said that based on his research, driver satisfaction is a key indicator of carrier performance.
Delery, a professor at the Sam M. Walton College of Business at the University of Arkansas, said job satisfaction – the degree to which an employee feels positive or negative about his job – is an attitude, and that attitudes lead to behaviors. “I don’t believe there is a shortage of people,” Delery said. “If you run your company to utilize the talent of drivers, and use that to improve satisfaction, you will have a competitive advantage.”
After researching hundreds of trucking companies and drivers, Delery said that pay and benefits almost always is the top predictor of voluntary turnover among drivers; other predictors include home time, and communication with the dispatcher. Turnover also is associated with driver productivity; Delery said his analysis of hundreds of carriers shows that once turnover increases past 20 to 30 percent, carriers experience an enormous drop in driver productivity.
Performance-based pay – that is, the rate you pay drivers by their performance – can improve productivity. Performance-based pay rates that have a big variation between top and bottom pay are the most effective, Delery said. By contrast, the higher the “political nature” of the pay system, the worse productivity becomes, he said.
The two other panel members, however, did not agree that there was not a driver shortage. Dean Sexton, president of D&D Sexton Inc., and Tom Kretsinger, president of American Central Transport (ACT), both said that a shortage of drivers, not just driver satisfaction, was a barrier to growing their companies. “I firmly believe there is a shortage of qualified drivers,” Sexton said.
Local drivers at D&D Sexton, a 170-truck refrigerated carrier based in Carthage, Mo., have nearly zero turnover, Sexton said. “In the long-haul segment, there is turnover all the time.” To address this problem, Sexton said he is looking at ways to bring drivers home more, and improve recruiting practices to get drivers to stay for 90 days. Sexton said that once drivers stay for 90 days, they are likely to stay for much longer.
Kretsinger said that management of ACT decided to change its driver pay structure this year to better fit its business model of safety, high service and growth. In 2005, the company had a one-size-fits-all pay scale for company drivers: a base rate in cents per mile, an extra penny if you stayed for one year, and up from there.
What ACT really wanted were drivers with five to 10 years of experience with one company. “Every company has a core of those people,” Kretsinger said. “How do I steal them from you? What is it going to take to get a driver who has been in place for 10 years and make him move?”
Kretsinger said that ACT went with a broad range of pay, and matched driver pay according to the driver’s qualifications and existing pay. “We made it easy for them to switch jobs,” Kretsinger said. “They can come to our company and not lose any pay or vacation. We also feel, to some extent, that you pay now or you pay later. We want low accidents, high productivity and good service.”