As we all know, trucking is VERY different from most U.S. businesses – largely because most don’t send their employees out on the road (some for days to weeks at a time) at the helm of trucks several times bigger than all the other vehicles on the highway; vehicles that often don’t give a rip about proper driving etiquette.
That’s a long way of saying it’s hard to draw direct comparisons between trends occurring in the broader U.S. business community and trucking, simply due to the extremely different nature of labor demands.
I mean, working on an assembly line or in an office cubicle – essentially, staying in one location day after day – is light years away from driving trucks hither and yon in all sorts of traffic and weather conditions.
Thus survey data indicating U.S. companies may be shifting focus away from employee retention efforts to cost-cutting strategies may not apply to trucking, especially in light of the industry’s growing truck driver and technician shortages, driven by a range of issues – especially demographics.
Still, it’s worrisome to a degree that this broader strategic shift is occurring.
Even after prioritizing retention of talent for 2015 compensation planning, 51% of U.S. employers now consider cost management to be their main focus in the coming year, according to a new compensation survey conducted by Buck Consultants at Xerox.
The firm found that retention budgets stalled out in 2013 at 3% and that isn’t projected to change in 2016. Thus, given the small but stable budgets available to retain a talented workforce, employers continue to carefully consider which “employee engagement tools” to invest in going forward, noted Tami Simon, practice leader at Buck Consultants.
“The needle for average annual merit increases has been stuck at 3% for the last four years and continues at the same level for 2016,” she said. “Employers continue to be fiscally cautious due to the recent U.S. recession and current global financial instability. We’re seeing business decision makers carefully consider which employees to invest in, with top performers getting much more than they did in the past and weak performers getting much less.”
However, that doesn’t mean pay-focused retention efforts are going by the wayside in the broader business world.
Though down 8% from last year, 45% of employers surveyed stated that retaining top talent remains one of their company’s top compensation priorities, noted Jim Sillery, principal and executive compensation leader at Buck Consultants.
“Developing and implementing an effective compensation strategy can play a major role in achieving the right balance between controlling labor costs and inspiring the workforce,” he said. “Performance bonuses are becoming the real raises in the workplace, allowing employers to reward top talent while controlling their fixed costs and maintaining flexibility for any challenging times in the future.”
So how are companies planning to spend their limited retention funds?
More than half of those polled by Bucks (59%) said that they plan to create new career development opportunities to retain top performers, while more than a third (35%) plan on making pay adjustments to meet market standards, and another third (32%) are arranging larger base pay increases.
Employers’ strategies show a need to differentiate rewards for top performers, resulting in an increased payout of 4.4% to high performers, with 9% of employees now being rated in the lowest two rungs on the performance level scale, compared to only 6.5% of employees in 2014 and 11% in 2015.
“To develop a valuable strategy, companies should look beyond base salary to reward and retain their top performers,” said Sillery. “In many ways, variable pay has become the new merit pay. It is more efficient since it is not fixed pay and, in most cases, does not drive increases in benefits. It is also more closely tied to performance.”
Again, a lot of those issues don’t necessarily apply directly to trucking. But they are worth contemplating nonetheless I think.