Driver Retention Is Not a Pay Problem
Consumers have spent a good part of the last few years weathering the pandemic remotely, dependent on goods and supplies delivered to their homes. This has brought well-deserved attention to the trucking industry that is the backbone of America’s economy. Truck drivers are one of our nation’s most valuable assets, yet, despite the increased spotlight, significant concerns remain on how to attract new employees to this profession and keep existing drivers on the road.
The driver shortage is among the most frequently discussed issues in the industry and has been a thought-provoking dialogue at conferences and carriers’ boardroom tables for years. One of the latest driver strategies focuses on retaining truck drivers at a higher rate; specifically, retaining truck drivers as a means to offset the inability to recruit new drivers due to an industry-wide labor shortage.
Through the lens of neo-classical economics, the modern dominating economic theory where all decisions are made rationally, a labor issue such as the driver shortage should resolve itself. Neo-classical theory suggests that if there is a labor shortage, excess demand will cause wages to increase to a level that will attract workers to the field, including those currently employed. The problem is that mechanism is not working. Most carriers have enriched the pay plans for their drivers in the last 12 months without any measurable results in retention. Former trucking executive and current program manager of the Truckload Carriers Association Profitability Program, Shepard Dunn, recently noted that the industry faces the same problems related to driver shortage as the industry faced as far back as 1994. Dunn conceded, “The driver shortage is here to stay.” In short, the same strategy that has been practiced for decades is not working – the magnitude of the issue is evident. Retaining drivers in a fiercely competitive environment will require some very creative problem solving.
The majority of strategies and conversations on this issue center around pay packages, pay plans, incentives, and bonuses. While it would be remiss to say that pay is an unimportant variable, these discussions are frequently qualified by commentary indicating how ineffective pay changes are, especially in the long run. The remarks subtly state the importance and effectiveness of abstract skills within an organization, such as developing trust, showing empathy, displaying respect, and personalizing interactions. These subtle remarks provide valuable takeaways: driver retention is impacted much more effectively by the soft skills within an organization rather than repeatedly enriching pay packages. To this point, there is intriguing evidence that some companies pay their drivers upwards of six figures but experience soaring turnover, while other companies pay their drivers only half of that, on average, but experience almost no turnover. Obviously, there is much more in play than just pay for these drivers. All of this evidence suggests competitive pay is a pre-requisite for retaining drivers; however, pay is not a differentiator in the long run. Dunn addressed what it takes to stand out, “The carriers who have figured it out have built a great culture.”
So, the original question remains unanswered – how do companies adapt to retain drivers at a higher rate? For decades, leaders have attempted to answer that question by asking another: How much financial incentive can I afford to give drivers to keep them driving? A more sustainable solution is buried in the abstract world of interpersonal skills. So, maybe the wrong question is being asked. Perhaps we should be asking: How can leaders inspire productive relational skills vertically and consistently throughout their companies to encourage retention and possibly even growth? Delivering on that question will produce more results than simply continuing to throw money at the problem.
Ethan Slaughter is controller of Christenson Transportation, Inc.
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