USA Truck (NASDAQ:USAK) implemented a pay increase for its drivers earlier this month.
That normally isn't a big deal. Companies have been doing that since late last summer. What was notable about USA Truck, one of the country's largest truckload carriers and publicly traded to boot, is that it was the company's first increase in pay since 2018, while other companies have implemented multiple recent increases.
And yet USA Truck says it has managed to cut its turnover rate by 50%.
That's according to Nick Wakefield, the vice president of driver recruiting and retention at USA Truck. FreightWaves interviewed Wakefield following a joint announcement between USA Truck and WorkHound, whose app seeks to provide trucking companies with close-to-real-time feedback from drivers. In that announcement, USA Truck credited its partnership with WorkHound as a key reason for the decline in turnover.
"Using WorkHound really helped inform us of what the current-right-now experience is, so we can engage in that experience, change it, and lead to a different result," Wakefield said in the joint announcement.
The success story USA Truck is telling about its retention efforts suggests two things. One, increasing pay is not necessarily the end-all in retention. Two, feedback only has value if it's acted upon.
"Back in June of last year, we had recognized as a leadership team that in order for us to achieve the key results of the business we wanted, we had to do something different," Wakefield told FreightWaves. "Mid-COVID, we said let's put a pause on what we are doing. We are doing the same things and not producing different results, the definition of insanity."
To get the results it sought, Wakefield said, the culture needed to change. "In order for (management) to take different actions, we need them to have different beliefs," he said.
If the proof of the success is measured in numbers, things are looking pretty good at USA Truck. In the prior 12 months, its stock is up about 165%. (By comparison, the 52-week performance of some other truckload carriers as of Thursday looks like this: Werner (NASDAQ: WERN), up 7.5%; Heartland (NASDAQ:HTLD), down 16.8%; Marten (NASDAQ:MRTN), down 3.2%.
The company's first-quarter operating ratio was 95.8% in its trucking operations. A year ago, it was 101.5%, though it should be noted that most companies had improved ORs in the first quarter compared to the prior year. But the OR was also better than the 97.2% of the first quarter of 2019.
Where Workhound came into what Wakefield said was the goal of "delivering a new experience for drivers" is that its feedback formed the basis of a culture change. USA Truck regularly looked to what Wakefield called "weekly feedback prompts" from the comments made by USA Truck drivers submitted through the Workhound app. And beyond that, he said, "Workhound held us accountable, asking us, ‘Are you taking action on the feedback?'"
Still, all the culture change in the world wouldn't have mattered if pay had not kept up with the rising levels at trucking companies and other competitors for talent. But it was the feedback it was getting from drivers that led USA Truck to not simply chase higher rates as a route to retention, a path it had not seen work in the past.
"We start every meeting with our cultural beliefs, our safety values and then our culture statements," he said. "We drive it through the entire organization."
Employees have been "empowered to feel like they could actually give feedback and have the managers actually listen and take action," he added.
Even Wakefield knows that such talk can be heard anywhere. But beyond the financial results, he pointed to another result of the changes at the company: USA Truck is in the middle of its longest streak of net hires in 19 years.
Given that success hasn't come just on the back of a series of higher pay levels, as at some companies, it comes back to a conclusion that Wakefield said they had reached at USA Truck.
"Rate per mile doesn't define what a weekly paycheck looks like," he said. "It's the number of miles you get."
The feedback also confirmed what has long been known but is a tough nut to crack: Drivers — at least some of them — like to be home at night.
Wakefield said in response to that desire, USA Truck created what he called a "brand new shuttle program." It involved having drivers far more regularly utilize terminals as "pickup points" where a driver seeking to get home could swap out a load with another driver seeking the same thing, or on to an OTR driver who is spending more hours on the road.
Much of the feedback fell under what might be considered a broad category: "Injustices and things they really wish they had in their job," Wakefield said.
He expressed confidence that responding to that toxic combination has "shut the door, because they are not leaving for other jobs. We have the types of jobs they want and they are getting bigger paychecks."
"We keep our drivers moving, and they are getting more miles," Wakefield said. "We get drivers home who want to be home."
Wakefield said about 22% of the company's drivers are getting home each night, up from a percentage that was essentially zero.
There are other steps the company has taken on what would be considered compensation. Paid holidays that had been granted to office workers now are given to drivers as well. "We had drivers who complained that we don't like how PTO is paid out," Wakefield said. "We dug into it and came up with a better solution and ran it by the drivers."
He said USA Truck had been "shooting" to get its turnover closer to the turnover rate published by the American Trucking Associations, which for the last three months of 2020 put it at 92% for fleets with more than $30 million in annual revenue, unchanged from the prior quarter.
The new pay scale at USA Truck raised the per-mile rate by 10 cents for new drivers, and the pay scales for longer-tenured drivers key off that number. "We eliminated the bonuses, we eliminated the pay bands, and we just came up with a good rate per mile," Wakefield said. The analysis led them to conclude "that is probably the best thing for us and for the drivers."
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