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Would paying drivers an annual salary or by-the-hour instead of by-the-mile help reduce driver turnover?
Driver turnover is a serious problem and there's no way to sugarcoat it . . . or is there?
Quote of the Day
"The achievements of an organization are the results of the combined effort of each individual."
-- Vince Lombardi
Why Truckers Slam the Brakes on Their Careers
Management researchers at the University of Arkansas say that a combination of poor working conditions and pay issues may explain why so many truckers put the brakes on their careers. Management professors John Delery and Nina Gupta collected personnel information from managers of 326 large U.S. trucking companies and found that in addition to time away from home and family, many truckers are not satisfied with pay -- or, specifically, the way they are paid. The category "not enough driving hours/runs scheduled" was listed as a problem by drivers at more than three-fourths of the companies, which, the researchers say, indicates that drivers are not scheduled for enough miles to make an acceptable rate of pay.
"It's not that drivers are not paid enough per mile," Gupta says. "It's the total number of miles that's a problem. Many drivers are frustrated because they don't have control over the number of miles they drive. Because they're paid by the mile, they want to keep rolling. They don't like it when they're hundreds of miles from home and waiting for a new assignment."
This problem is particularly acute for long-haul drivers working for truckload carriers that ship full product loads based on contracts with specific clients.
Gupta says the rate-per-mile system used primarily by truckload carriers is an example of the piece-rate pay system, which is one of the oldest kinds of pay systems. Most likely, the historical reason for the existence of the piece-rate system, which is incentive-based, in the trucking industry is that managers cannot directly supervise drivers, Delery says. "Incentive pay aligns the interest of the employee to that of the company," he adds.
The system isn't necessarily obsolete, Gupta says, but with the trucking industry it is problematic because employees do not have control over their performance. Although Delery and Gupta do not advocate specific solutions to this issue, there are alternative pay systems that could improve turnover rates. Delery says companies have the option of moving from the rate-per-mile system to simply paying an hourly or yearly salary. There are measures and tools -- highly selective hiring practices; sound, objective performance appraisals; and on-board computers that enhance communication between drivers and dispatchers -- that can accurately evaluate potential or current employees. These tools, rather than a system based purely on incentive, can ensure that employees are motivated, loyal and conscientious. Gupta says that if companies do not want to abandon the rate-per-mile system, they can carefully design and execute the system to provide consistency for the employee and reduce or eliminate abuse.
The researchers found that average hauls for less-than-truckload and special-commodity carriers were more than 100 miles shorter than the average haul for truckload carriers. Driver quit rates were generally higher among truckload and special-commodity carriers, which is interesting when considering that many less-than-truckload drivers are paid a salary rather than by the mile.
However, drivers and companies in all three categories faced most of the same reasons for turnover. In addition to pay and benefits ("better pay/benefits elsewhere,") and working conditions ("long hours," "scheduling problems," "too much time away from home"), factors that contributed significantly to turnover were problems with supervisors, whether or not the company offered a pension plan, and whether or not the company had annual performance appraisals, especially if the appraisals were purely subjective evaluations by supervisors and dispatchers. Interestingly, factors related to specific equipment (inferior cabs, low engine power) and physical working conditions (boredom and company policies about tractor assignment and driving speed) were less likely to influence drivers' decisions to quit.
Technology is another issue that will continue to influence turnover, Gupta says. Depending on how they are used, computers in tractors could affect turnover in either direction. If they are used only as a tool to monitor and control drivers, quit rates could increase. But many companies provide computers to increase communication between drivers and dispatchers and, perhaps more importantly, between drivers and their family members. When used in this manner, on-board computers may serve as a tool for recruiting and retaining good drivers.
Copies of the researchers' study are available upon request.
