Recently Katz, Sapper & Miller’s Transportation Services Group
and KSM Transport Advisors
co-hosted a Trucking Owners Business Roundtable in Nashville, TN. Approximately 35 trucking company owners and executives attended the roundtable, which focused on the driver shortage and driver recruiting and retention. Gordon Klemp (The National Transportation Institute), Steve Prelipp (Prelipp Consulting), John Biblis (Truck Safety Advisors) and Mark Baugh (Baker Donelson) presented on these important and timely topics.
Klemp provided insight into today’s company driver and owner-operator compensation trends. Overall, Klemp believes that the industry will see a significant increase in driver pay in the coming months in an effort to recruit and retain drivers. The current driver shortage has led many trucking companies to be creative with their compensation packages in order to compete with private fleets, which generally offer higher compensation and more home time. Klemp also provided insight into how the driver shortage came to be, including increased unemployment benefits, the underground economy, stricter qualifications/regulations, technology, retirements and competition from private fleets. Having a competitive compensation package has always been imperative, but has become even more important in the current environment.
Prelipp provided some best practices for the ultra-competitive driver recruiting function. The driver shortage has made an already challenging task (recruiting drivers), even more challenging and competitive. What may have worked in recruiting 10 years ago has changed dramatically. Today’s driver generally has different expectations, such as more work/life balance, from their potential employer than the driver of 10-15 years ago. Prelipp believes that in order to succeed, an organization must have a well-defined recruiting model, which includes setting goals, having the right people and systems and must be results oriented. The recruiting function must also have the right leader who can relate to Generations X and Y, must be tech-savvy and manages for results. Often times, the recruiting department can lead to a company’s success or its ultimate failure. Investing the necessary (and right) people and resources in this function can provide for a competitive advantage.
Biblis spoke about hiring the right driver in order to improve safety, productivity and retention. He reminded the audience that the driver is the only one in the organization that generates revenue, but often times these individuals are paid less than they deserve, spend multiple nights away from home and are generally treated poorly. Biblis suggested evaluating recruiters on quality and not just quantity. He also suggested that retention issues may not just be the result of poor pay or equipment, but may be more of a process and/or relationship driven issue. Biblis provided a few tips to improve retention, including: 1) Say what you do and do what you say; 2) Make sure recruiters know what they are selling; 3) Identify what you track and manage the data; 4) Evaluate every process; 5) Perception surveys (drivers and non-drivers); 6) Implement a shepherding program.
Baugh spoke about some of the employment legal issues surrounding the trucking industry, specifically the Fair Labor Standards Act (FLSA) and independent contractor status. The amount of FLSA claims, which include misclassification of employees and minimum wage issues, has increased from approximately 5,300 claims in 2008 to approximately 8,000 in 2013. FLSA claims can lead to high damages, liquidated damages and individual liability. In order to manage the FLSA risk, Baugh suggests adopting a policy, review job descriptions, self-audit and if problems are discovered, pay and ask for an acknowledgement.
Independent contractor status is another hot topic industry wide. Misclassification of independent contractor vs. employee can lead to issues with the Department of Labor, Equal Employment Opportunity Commission and the Internal Revenue Service, just to name a few. In order for trucking companies to protect themselves, Baugh recommends having a written contract between the company and the independent contractor, having the independent contractor supply their own equipment, fuel and tools, having separate training and policies and being clear. While the FLSA and independent contractor classification issues are complex, proper planning and documentation can help reduce the risk around these issues.
The Trucking Owners Business Roundtable, exclusively designed for trucking executives, is an annual program hosted in Indianapolis, IN and Nashville, TN. The roundtable is an opportunity for owners of some of the country's top trucking companies to learn about and discuss current issues that present challenges and opportunities for their businesses. For more information regarding the program, please contact Tim Almack 317.580.2068 or email@example.com.
Connect with Jason
Jason Miller is a director in Katz, Sapper & Miller’s Audit and Assurance Services Department and a member of the Transportation Services Group. Jason focuses on the day-to-day delivery of core audit services, including financial statement audits, reviews and consulting.