The Elephant in the Room (Driver Wages & Retention)

By: Ray Haight
Creator, Driver Retention Masterclass

Ray Haight Masterclass WorkbookAre driver wages a direct reflection of the driver retention problem your company is facing?  More often than not, the answer to that question is the “Elephant in the Room” whenever I speak on this topic at industry events.

Consider this… we live in a free market society. Our economy runs on a supply and demand structure. The market dictates the salary you’re paid. This is determined by the specialty of your trade and the scarcity of workers in your sector.

Using this as the basis, it is hard to argue against the notion that drivers are vastly underpaid, considering there is a driver shortage in the trucking industry.  You simply can’t have it both ways.

So if you’re wondering if your driver shortage is directly related to what you’re paying your drivers, take a moment to look at pay from the perspective of one of your drivers.

Pay and Retention from the Driver’s Perspective

If you wonder why drivers believe they are vastly underpaid, look at what they have heard over the last several decades.  Everywhere you turn in the industry, drivers read or hear there is a driver shortage.  To be honest, that shortage is at a critical stage now, as it has been many times off and on in the past. The problem is, the average driver wage doesn’t reflect that reality.

Depending on whose research you look at, the average annual pay rates for a truck driver fall between $50,000 to $65,000. The range varies based on the trucking sector and location in the  country.  From the driver’s perspective, something is amiss.  An extreme labor shortage and a $50,000 annual salary don’t add up. This creates a high frustration level. Drivers are continually told of the egregious situation that the industry is facing, but it is not reflected in their pay.

How to Bridge the Gap

It’s hard to bridge the gap from a financial standpoint for many companies.  With minimal operating rations already, increasing pay means eating into an already slim profit margin.  But there is good news. A number of driver surveys over the past several decades reveal that money is not always the the top reason for a driver to quit their current carrier.  But it is a reaon.

As a company, you need to ensure you are paying fair market rates to your drivers (perferably above market to stay competitive).  You also need to make sure you pay is clearly explained and easy to understand.  Typically this is achieved by offering an industry average base pay, coupled with a gain share bonus plan.  This bonus plan can incorporate things like:

  • Fuel Burn
  • Accident Free Miles
  • Longevity
  • Production
  • And other “touch points” your company values.

These bonuses should provide your drivers with an opportunity to earn top wages.  But it is important the bonus plans are obtainable.  If you under promise and over deliver, you’ll create a situation that stops your drivers from looking for green grass elsewhere.  More importantly, if you get this part right, the word will get out among drivers that your company offers competitive wages.

Don’t Let Human Resources Hurt Your Efforts

There is still one thing that can hurt your pay efforts… your human resources strategy. Human beings are driven by basic human needs.  Those needs must be met in a sequential order.  Pay helps you meet the physiological needs of your drivers. But you also have to meet their safety needs, their needs of belonging, their esteem needs, and their self-actualization needs.

Offering an industry leading wage package is only the first step towards solving your driver retention issue.  You also have to offer a company that builds a sense of community, and all that goes with it.

Is there a driver shortage?

Driver wages do not suggest there is, yet the churning of drivers in the industry shows there is one.

Why?  I believe driver turnover is a reflection of companies not spending near the amount of focus on their retention efforts as they should be spending.  Instead, they put all of their efforts into building very efficient recruiting departments, and they never stop the leak. Stop pouring money into a bucket full of holes.

Until carriers realize that driver retention is more than just pay and recruitment bonuses, we will as an industry continue to confuse driver shortages with driver wages levels.

 

ABOUT THE AUTHOR
Ray Haight Vertical Alliance InstructorRay Haight is the creator of the Driver Retention Masterclass.  He has spent his entire life in the trucking industry.  He inherited the small trucking company his dad built. He logged over one million accident free miles as an owner-operator.  Over the course of 16 years, he grew the company to a fleet of 50 trucks, primarily focused on refrigerated freight.  He then found himself with a unique opportunity to merge with another company.  After the merger, he became the President and COO of a fleet of 300.  And like many trucking companies across the nation, the fleet faced a growing epidemic … driver turnove

As the President and COO of that company, he recognized that contrary to popular beliefs in the industry, driver turnover is not systemic to the occupation of driving a truck.  He believed it was the result of poor company wide human relation policies and until those were fixed, all of the Band-Aid type solutions the company was implementing weren’t going to alleviate the driver turnover problem … which for his company was sitting at 120%.

Sitting in a boardroom, surrounded by a team of leaders, he asked one question, “What’s it going to take to reduce our driver turnover by 50% in the next 12 months?”  That question kicked off a two year project where the leaders of the organization did deep dive self-examinations of their departments. This lead to creating and implementing real strategies that made drivers not only want to come and work for them, but also made those drivers want to stay long term.   Within 2 years, they’d reduced their driver turnover to 20%.

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