The 12 Traits of Highly Profitable Trucking Companies: Delegation and Empowerment Before Action
KSM Transport Advisors (KSMTA) has worked with over 200 trucking companies since our inception. Our primary service focuses on guiding trucking company leaders in understanding their freight network and determining strategies to improve the density, velocity, and ultimately the profitability in the geography in which they operate. In delivering this service, the KSMTA team has observed and documented 12 key traits of highly profitable trucking companies.
This article is part of a series highlighting the key traits and focuses on trait number two of 12.
Achieving above-average profitability in any industry is difficult, but no more so than in trucking. The KSMTA team has repeatedly observed several precursors to success which put carriers on the path to higher profitability than their peers – regardless of the freight market’s ebbs and flows. One of the key traits for these companies is the ability to delegate and empower their leaders and associates to plan and act while aligned on a clear vision.
Arguably, the most difficult transition in the lifespan of a growing trucking company is the moment when the single owner-founder accepts the fact that he or she can no longer be the combined lead dispatcher, salesperson, pricing manager, and maintenance director. In our practice, we are constantly asked, “When is the right time to add a controller, CFO, operations manager, or other leader?” The answer is two-fold:
- As soon as you can afford it
- When you find a person with adequate skills and an exceptional attitude
The transition from “doing” to “leading” requires relinquishing a degree of control that is not (yet) second nature. Leaders who “get in the weeds” are generally admired for possessing a positive leadership trait. However, staying in those same weeds stunts the growth of business owners and highlights the vast difference between an effective leader and a “doer” that puts an inability to accept help above growth and profitability.
These scenarios may hit close to home for those who are in the middle of this very transition. In a business’ early days, tenacity and work ethic were more than enough to generate incremental gains in profitability. However, higher profitability is directly correlated to increasing demands and an exponential gain in the decisions related to these demands. Eventually, the business will reach a terminal velocity with respect to productivity and profitability. Effective delegation and empowerment will eliminate that performance limit.
Success Is a Team Sport
The following methods and mindsets of highly profitable carriers have been observed with respect to delegation and empowerment.
- Delegation and Empowerment Requires an Inspirational Vision: Leaders who can effectively communicate their company’s “why” will inspire the next generation of leaders to take action. This vision charts both the short- and long-term path for the company, as well as how each person fits into that journey. It’s more than simply posting the company’s mission and vision in the lobby. It means embodying this vision with a vibrant, confident, and tactical plan for the next two to five years. It should also include details about how each associate will contribute to the planned success. If it seems difficult to communicate this vision verbally, use other methods. One of our clients has translated their company’s mission, vision, and strategic plan into a professional video that explicitly describes how they are going to achieve their short- and long-term objectives while ensuring a culture of trust and empowerment as their foundation.
- Know When to Engage and When to Back-Off: There’s a delicate balance for leaders between being involved and micro-managing. One of the major challenges for any manager is recognizing a clear course of action while remaining silent (and patient). Providing delegates with the time to arrive at similar – or better – conclusions produces confidence and competence. These traits will allow employees to serve the company’s interests more effectively over the long term. Setting expectations for the level of engagement, oversight, and accountability on key decisions will build a culture of trust. Utilizing a regular cadence of check-ins to present the latest updates, successes, and blockers while providing a forum for constructive debate will create a useful feedback loop for progress.
- Micro-Failures Can Breed Macro-Success: One of the greatest teachers is the self-awareness of a bad decision. Allowing employees to utilize the scientific method in their decision-making process will lead to a company-wide growth mindset. The spectrum of ‘bad’ is an important consideration. If the outcome of that decision could lead to job loss or a margin erosion, those decisions require more leadership engagement and accountability. It’s important to note that each business scenario is unique – a decision that worked for a similar issue last time may need to be refocused. Allow employees to:
- Make a hypothesis
- Take action to prove or disprove that hypothesis
- Learn and iterate
Stagnating companies often share a cycle of common denominators:
Once clear objectives for a specific decision or project have been established, stop inserting ‘leadership decisions’ into the mix – this reinforces unproductive behavior and de-motivates a valuable team.
- Be the Catalyst, Not the Muscle: The transition from owner-doer to owner-leader can be equated with being the “catalyst, not the muscle.” In this case, a catalyst refers to an “agent that provokes or speeds significant change or action.” Owner-leaders must embrace the mindset of teamwork to be successful and reinforce a sense of urgency in every key action or decision. Teamwork will also serve as a reminder of the shared dreams and vision for the company. Conversely, consistently acting as the only muscle capable of producing favorable outcomes will eventually result in burnout and reduced margins while also negatively impacting culture and retention. Unfortunately, deliberation and bureaucracy can grow at a higher rate than margins and profits if delegation and empowerment are not part of the equation.
Regardless of a company’s size or the amount of success experienced, it is critically important to regularly evaluate how leadership handles empowerment and delegation. Using the above concepts as a framework may provide any necessary course correction.
Our next installment will focus on trait three of the 12 Key Traits of Highly Profitable Trucking Companies.
To learn more or discuss any of the ideas shared, please contact a KSMTA advisor or complete this form.
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