If you work in the transportation industry, there are two things that you have likely heard many times:
- There is a shortage of truck drivers
- There is an issue with retaining drivers
Both these items are true for most companies out there because, well because they are acting like most companies. They are doing the same routines, over and over and somehow expect these issues to go away.
Wellington is now in their fourth year of having a fleet of drivers and the driver retention rate remains in the high 90’s. How is this possible?
There are many reasons that contribute to these industry leading numbers, but one of the biggest ones is undoubtedly because all company drivers are paid a salary. In short, this means that the drivers at Wellington are guaranteed the same pay, regardless of how many miles or hours they put in (unless they reach OT).
When I tell drivers that Wellington has this pay structure, many are unsure how it works. Most of them like the idea of their pay being guaranteed, but they have a fear that they are going to be taken advantage of. They feel like they will be doing 13 hour days until they run out of hours for the week. At first, it was tough to convince the drivers otherwise. Especially considering that we were a brand new company that had yet to develop a reputation based on honesty and trust. Luckily, there were some brave souls that were willing to give us a chance. And aside from one of them who left for medical reasons, all of these drivers are still driving with us almost four years later.
The reaction from people working in operations at other companies is similar; they find it tough to fathom how a company can pay a salary when there are so many variables in the industry. That is part of what makes the salary system so honest; it takes the onus off of the driver since they are not in control of many of the variables that they encounter. Traffic, road closures, construction, bad weather, production delays, lack of back hauls… these are some of the common reasons that result in drivers not getting the most value of their time, that they are largely not in control of.
The other concern from people in the industry is that the driver loses the motivation to do work if their pay is guaranteed. This is true for some drivers, much like it is true for some office staff members. If a driver is pulling over at every exit for a coffee and a cigarette, this pay structure will not be profitable for the company. The numbers will clearly identify this, which makes it easy to establish which drivers are not long term fits for the company.
There are definitely times when having drivers on salary works in the company’s favour and there are times when it works in the drivers favour. The beauty of it is, if you have done your homework and crunched all the numbers, over time it will balance itself out. Having a guaranteed salaries means you have another fixed cost that you can count on when making rates for customers. Sure, it helps if you have dedicated lanes but it can work just as well on an open-board system. All you need to do is clearly outline the expectations for the job and provide the driver the tools to make it happen. If they show up for work and do their best every day, they’ve done their part and should be compensated fairly whether or not they spent hours sitting in traffic or comfortably cruising along the highway.
Mileage and hourly based pay are going to be outdated in the very near future. If you have a trucking company, get ahead of the times and create some sort of guaranteed pay. Your recruiting and retention numbers will have a noticeable change.
