KING CITY, Ont. -- It's a constant source of frustration for Rick Geller, director of safety and signature services with Markel Insurance. Carrier executives often tell him they're reluctant to invest in driver training programs for fear the...
KING CITY, Ont. — It’s a constant source of frustration for Rick Geller, director of safety and signature services with Markel Insurance. Carrier executives often tell him they’re reluctant to invest in driver training programs for fear the driver will move on to another company only to have them benefit from the initial training investment. Geller’s response is always the same: “Ask yourself what happens if you don’t put that training into them and they stay? That’s when they’re going to hurt you.”
Geller was presenting at the recent Private Motor Truck Council of Canada’s annual convention on the value of driver training. Too often, he said, training programs are perceived as an expense when they should really be measured by how much value they bring to the company in the form of reduced accidents, lower insurance premiums and improved bottom line.
“Let’s look at training as a capital investment rather than an expense,” he implored delegates before providing some pretty convincing evidence on the value of driver training.
Calculating the potential return on investment for a driver training program begins with fully understanding how much accidents are truly costing your business, Geller said.
“I can’t urge you strongly enough to make sure you are capturing all the costs associated with crashes,” he said. “It’s very important to collect that data and make sure that the cost doesn’t get hidden in a maintenance budget.”
Even the costs of repairing small dings and scratches should be included in the calculations, Geller pointed out.
In addition to the obvious direct costs – such as towing, equipment and cargo damage, medical bills and payment to injured workers – there’s also an assortment of indirect costs, which often get overlooked. Indirect costs can include loss of productivity, the cost of training replacement workers, reputational costs and rising insurance premiums.
Geller suggested one way to get a bean-counter’s attention is to highlight the true costs of accidents and other mishaps that could be prevented through proper training. With the trucking industry’s notoriously low profit margins, an accident that incurs $10,000 in hard costs along with $11,000 in indirect costs would ultimately cost a carrier $21,000. While that may seem manageable, Geller point out with profit margins of 3%, a trucking company would have to bring in about $700,000 in revenue to pay for that one accident.
Put another way, Geller draws comparisons to the well-publicized Tax-Free Day, after which a typical Canadian has paid his or her share of taxes to the government and can begin earning money for themselves, usually occurring in late spring.
“I asked the executive of a large carrier in Atlantic Canada, ‘If you think of the revenue you have to generate to pay for the crashes that are going to happen in the next 12 months based on your historical performance, when do you think your Tax-Free Day is?’ I suggested to him that he circle May 26 on his calendar, because up to and including May 25 they didn’t have a prayer of making a penny, it was all going to covering crashes.”
If that doesn’t get a CEO’s attention, nothing will. But Geller warned it’s not a good idea to start rolling out a training initiative without first knowing what problem areas to address. He recalled working with a carrier that was eager to launch a training program to address rollovers.
“When we ran the numbers, about 60% of their losses were actually sideswipe and a few rear-end collisions,” Geller said. “When we really dug deep into the numbers, almost 50% of their sideswipe and rear-end collisions happened within two miles of their Mississauga terminal because they had a first-in, first-out dispatch system. The first one in got the best load and they had road races going into their terminal.”
In that instance, simply changing dispatch methods was enough to significantly lower crash costs.
Before starting a training program, Geller suggested researching historical crash data to determine what is driving crash-related losses. He also warned that not all drivers learn the same way, so a mix of in-class, simulator, online and on-road training should be offered.
When a training program is developed or purchased off-the-shelf, the cost of the program should be compared to the actual or projected savings. Almost always, there will be a tangible return on investment, Geller said.
“Training is an investment, it’s not a cost,” he stressed. “Most companies today claim that their people are their greatest assets but when you look at the effort they put into developing this human capital, you can see it continues to be seen as an expense by most companies and not as a capital investment. It’s up to you to turn this around.”
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