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How To Increase Driver Pay Without Paying More Cents Per Mile

Posted by Mark G. Gardner on November 24, 2016 in the category Recruiting, Retention
How To Increase Driver Pay Without Paying More Cents Per Mile

This blog post was updated on May 26, 2021.

Are you having driver retention issues? We’ll take a wild guess and say that you are. It’s not just you, though. Nearly every trucking company in America has trouble retaining high-quality drivers. Why? There are many reasons, but here is one that comes up in many exit interviews: they don’t think that they’re paid enough.

The bad news is, if you ignore the problem, you’ll lose drivers. The good news is, increasing their pay rate isn’t your only solution.

The Source of Your Retention Troubles

You may think drivers are paid plenty at your company, but that doesn’t help your retention numbers if drivers perceive that they are underpaid. It’s important to remember that perception is reality. If a driver believes an issue to be true about you or your company, you have two options: 

  1. Work to correct their perception
  2. Lose the driver

The choice is yours, but the nature of the relationship isn’t. The nature of the relationship is solely through the eyes of the driver.

So, let’s do a perception/reality thought-exercise regarding pay.

Driver Perception 

  • I’m not happy with my pay.

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Reality 

  • Pay usually isn’t the first reason a driver gives us for quitting, but it’s always on the list. However, don’t jump to conclusions and think your only solution is to pay them more money. You’d hurt your margins and still have the same level of turnover. Here are just a few underlying reasons drivers aren’t happy with their pay:

Cause #1 

  • The compensation plan might be complicated. This means that your drivers will have trouble understanding how they’re paid, and mistakes on paychecks are likely to arise. After a while, drivers begin to perceive they’re getting cheated somehow.

 Solution #1 

  • Simplify! All too often, business owners have complicated driver pay, trying to achieve better performance in one or more key areas, such as safety, cargo claims, violations, overweight fines, on-time delivery and a dozen other metrics. But complicated pay systems always lead to mistrust. Furthermore, adding little bonuses for this and that have little to no impact on the driver’s daily behavior. Just keep it simple. Your customers pay you to safely get a load from one place to another and get it there on time. Pay your drivers on the same basis and drop all the shenanigans.

Cause #2 

  • Pay based on miles driver or loads hauled can vary week to week, sometimes by as much as 30 percent. One week is feast and the next is famine, but when a driver lives hand to mouth (as most do), one bad week means he or she can’t pay the rent or buy food for the family. Two or three bad weeks in a row and the game is over. It’s not the pay itself; it’s the uncertainty of how much will be coming in and when, especially with the occasional “short week.”

Solution #2 

  • Unless you’re just a greedy no-good stingy boss who pays below market rates, you should never lose a driver over pay. Start with a minimum weekly guarantee. Sure, it sounds scary. Sure, it puts an added burden on your operations team, but offering a safety net goes a long way to building trust and mutual commitment between you and your drivers. You’ll make that money back in increased retention.

Cause #3 

  • Inefficient dispatch procedures that lead to delays. Delays can lead to missed loads, and missed loads reduces the weekly take home. So it’s not the rate per mile, or even load; it’s the efficiency of dispatch.  Dispatching mistakes are also perceived as a lack of respect. Remember, perception is reality.

Solution #3 

  • Mistakes happen. We’re human. But, mistakes made by shippers, load planners and dispatchers cascade down onto the drivers who are subject to variable pay. Mistakes directly cause drivers to make less money. Get personally involved in your dispatch office. Sit there for a couple hours every day. Listen and observe. Coach and train your dispatchers how to be more efficient. Invest in professional leadership training and in modern dispatch software (and learn how to use it).  Demand excellence. When a mistake causes a driver to make less money, pay the driver the difference. And, most importantly, learn from the mistake so you don’t repeat it.

Fix Your Driver Pay Issues to Increase Retention

Remember, perception is reality. What do your drivers perceive?  It’s not the rate of pay per mile; it’s the complexity and inconsistency that cause most of the problems. You can fix those root causes, without spending a dime.  The choice is yours. The perception is theirs.  Change their perception and retain your drivers. 

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