Alchemist finds people-first approach the solution to high turnover
Glen Parsons believes if you treat your people well, success in the trucking industry will follow. As co-owner of Coastal Pacific Xpress (CPX), a company in which he sold his share in 2008, Parsons and his partners shared generously the profits earned in good years.
In 2005, it awarded more than $400,000 in bonuses to employees after an especially successful year. Parsons told TruckNews.com at the time that he considered his employees the company’s most important asset, with customers coming second, and profits a distant third. Now he’s applying the same philosophy to another trucking company he owns, Alchemist Specialty Carriers in Langley, B.C.
CPX bought tanker fleet Alchemist about 15 years ago in an attempt to diversify, but the division wasn’t a good fit. It languished as an afterthought for the most part, until CPX ownership decided to divest it entirely and asked Parsons if he was interested in taking over. Parsons, who was enjoying retirement, couldn’t resist the challenge and in 2015 purchased the company for little more than the value of the equipment.
“At that time, I’d been retired since 2008,” Parsons told TruckNews.com. “I was looking to do something, so I picked it up. It was losing money like crazy, didn’t have any strength, and driver turnover was crazy. It had not been looked after.”
For Parsons, it was the perfect match. Despite the poor performance, Parsons liked the fact it was focused on the tanker segment, which has a high barrier of entry due to equipment costs and the specialized expertise required. He immediately shed the HazMat work Alchemist was doing and sold the company’s roll-off equipment to focus exclusively on tanker work.
Next, Parsons turned his attention to the people, and specifically the drivers. Turnover at the fleet was 75%. He knew that had to be fixed.
“You can build any company if you have the right talent in place and the right atmosphere,” he said. “People can make the success of virtually any company. We increased wages right off the bat to make us more attractive.”
Pay increases were put in place gradually at first, but have jumped 45% over the past three years. Equally importantly for drivers, Parsons felt they should be paid for all their time. A hybrid hourly/mileage-based pay system was created that sees drivers earning $42-$45 an hour. And they’re paid for every hour they work.
“We believe that peoples’ time has a value,” Parsons said, noting a friend who runs a construction business would gladly hire any of Alchemist’s employees and pay them for all their working time, so why doesn’t trucking? “We believe every hour that person spends working for us should be compensated.”
Most runs are expected to take one hour for 45 miles of travel. Often, drivers finish a 450-mile run in less than 10 hours, but they are paid the full amount. If it takes 12 hours to make that same delivery, they are compensated for the additional time. Time spent at shippers and receivers, even chaining up, is all paid. Overtime is paid after 60 hours in a week. Samsara telematics is used to track drivers’ working hours and location.
The pay increases and other changes have driven driver turnover from 75%, to 2%. Today it runs 35 company trucks and has about 70 tanker trailers. Asked how the company can compete on price while paying above average wages to drivers, Parsons said the pay increases pay for themselves.
“Once we did that we saw overspeeds drop. Hard braking drop,” Parsons said of the pay increases. “People started paying more attention to cross-contaminating loads – all those things started to settle down.”
In addition to earning a greater hourly rate, drivers are now offered safety and performance bonuses as well.
This translated to lower insurance costs (Alchemist enjoys a discounted premium and rebates from Insurance Corp. of B.C.). Accidents have been nearly eliminated (just one at-fault accident in the past three years), trucks aren’t being damaged, and cargo claims have been driven out.
“That comes from the people,” Parsons said of the results. “When people care, they want to look after the company and make it successful.”
Parsons’ people-first approach carries over to the office. He did this interview while wintering in Mexico. Parsons has put a strong management team in place and empowers them to make decisions, or in some cases even overrule his own instincts. When the owner is always present and involved in decision making, Parsons says employees are often overly eager to please and won’t challenge the owner’s ideas. He enjoys a healthy debate on company strategy and will at times defer to the team he has assembled.
Alchemist runs a young equipment fleet; all trucks are newer than two years old, and the average trailer age is four years. But getting new equipment has proven difficult for the growing fleet due to supply chain disruptions affecting truck and trailer makers. The company has had to turn down some new business opportunities as a result.
“We have had some huge opportunities in the last couple of years, but we couldn’t get the equipment to do it,” Parsons said of expansion. “When we do buy equipment the lead times are so great, and when they say they’ll deliver in four, five, six months, it’s later than they said. It is hard to make commitments to customers. We get hit every day from big customers who want to use us and we have to turn them down.”
Alchemist offers additional bonuses for long service (ranging from $500 for five years up to $1,000 for 10 years). It also gives an annual award of $2,500 to a top performer. And it invests $5,000 to $8,000 per driver on training – something Parsons says drivers appreciate.
“It has been a big component of keeping our drivers,” Parsons said of the training investment. “They know we’re safe to work for.”
“This industry has to get back to where the driver gets paid for all their work.”Glen Parsons, Alchemist Specialty Carriers
It also helps with operations, since drivers are trained on every commodity the company hauls, making it easier to cover off drivers when sick or on vacation. Despite all this, Parsons still feels the sting of the driver shortage. Turnover may have been nearly eliminated, but 40% of his drivers are 55 years or older and growth is difficult with a lack of available talent. Alchemist has a new entrant program and will cover the cost of training (reimbursed over time) for the right candidates interested in getting their Class 1 licence.
Drivers there earn $80,000-$100,000 for local work and up to $120,000 for longer hauls (the longest trips are only three or four days). Parsons would like to see more companies compensating drivers at this level so word will get out that trucking offers an attractive career choice. Drivers who are unhappy with their earnings or not paid for all their time are more likely to rush and get into accidents, Parsons believes.
“This industry has to get back to where the driver gets paid for all their work,” stressed Parsons, who drove professionally for about seven years himself.
Have your say
This is a moderated forum. Comments will no longer be published unless they are accompanied by a first and last name and a verifiable email address. (Today's Trucking will not publish or share the email address.) Profane language and content deemed to be libelous, racist, or threatening in nature will not be published under any circumstances.
And what have we learned from this today, boys and girls?