The Other Option
by Jim Park
The job market is as hot as it's ever been for good drivers. Anyone who wants to work is working, and drivers pretty well have their pick of the jobs. You hardly have to search for an opening any more. We can be more or less assured that any company that has trucks has a need for drivers. So with all that demand for drivers, and drivers having the pick of the litter, why might a driver choose to work for a personnel agency?
The other question that might come to mind is how would a driver service hope to attract decent talent when the plum jobs are all hanging pretty low on the branch these days? And you might ask why, if a driver service is paying a driver the going rate, wouldn't the carrier just pay the difference to the driver and get it over with? Why should there be some intermediary skimming gravy off the wages?
Before we get to those questions, it might be useful to explain how the personnel agencies fit into the grand scheme.
These agencies serve different purposes in different situations. To some, they present the option of outsourcing the challenges of operating an internal human resources department. To others, they bring a host of services to the table, some of them beyond the HR function, such as training and education, safety and compliance, payroll, recruiting, etc.
In a situation where an agency might employ 200 or 300 drivers spread out over, let's say, 10 small carriers, you have a situation where the agency can probably do a better job, at a lower cost, than any of the carriers could do individually. In a small 10-truck operation, the HR person is probably also the operations manager, maybe even the janitor. Smaller outfits have to make the best use of their resources, and by downloading the recruiting, hiring, training, and payroll functions, they can save money and likely get a more professional job done in the process.
But driver agencies aren't just for small carriers. Some of Canada's larger carriers use agency drivers for many of the same reasons. It's a one-stop-shopping experience for them, with all the HR functions managed externally.
There's also the potential for streamlining certain regulatory requirements, such as drug and alcohol testing, compliance reviews, and training. When you combine several smaller groups of drivers into a large pool, these functions can be handled more economically.
And on the other end of the scale, driver services often serve clients whose core competency isn't trucking, like a manufacturer that runs its own trucks. In many of these instances, the company may choose to lease its equipment and hire drivers through an agency simply because trucking presents a whole new set of regulatory and compliance challenges, which may be better dealt with by a company that knows all the rules.
"That," says Kathy Lefroy, director of operations at in-transit Personnel Inc. of Mississauga, Ont. "Is a major consideration for many of our clients. They outsource the hiring simply because we can do a better job of finding the right person for the job and looking after all the employment requirements properly."
Or maybe the driver services just handle the overload situations when a company needs more drivers on a particular day than it happens to have in the stable. From an economic perspective, it makes sense to keep the number of drivers needed under most circumstances, while going outside to get the extra help only when it's called for.
The agencies fulfill a need in the market, serving many different requirements, and they can do it quite effectively.
Agencies work especially well for some drivers, for a number of different reasons. Some are simply looking for more flexibility in work assignments - a bit of variety beyond the daily routine. Others might turn to an agency to help with a search for the right job, especially if they have specific needs and concerns. It's a one-stop-shop for drivers in search of meaningful work.
A driver looking for a specific kind of work can knock on a lot of doors in search of the right opportunity, or they can go to an agency that has numerous clients with a wide variety of opportunities.
Driver agencies have a lot to offer both drivers and carriers. Depending on what you're looking for, if you haven't yet stumbled onto just the right job, an agency might be worth a call.
The Agency's Challenge
The driver services have two sides of the equation to be concerned about: they need a client base to employ their drivers, and they need drivers to service their clients. Lefroy calls it a real balancing act. "That's the attractive option for the driver," she says.
"We get lots of calls for different types of experience, anything from LTL to pin-to-pin work, tankers, or even route drivers. That gives us a lot to offer a driver, but it really gets us scrambling to find specialty skills when those calls come in."
Most reputable agencies can serve a lot of different needs, but they're kept hopping to keep up with demand. Many agencies make good use of part-time drivers, such as firefighters, airline pilots, and police officers. Folks like these often have longer off-duty periods due to their shift schedules, making them ideal candidates for agency jobs. A lot of other drivers find full-time placement at a carrier through an agency that supplies 100% of the fleet's driver needs. So it would be difficult to pin down exactly what type of market the agencies serve, or what kind of driver they'll hire. The simple answer is everything and everyone.
But there's an unfortunate perception that the way most agencies operate is to take money from the carriers, skim their percentage, and give what's left over to the driver. According to Kieran J. O'Briain of Kee Transport, one of the major players in the personnel leasing business, the costs of managing, recruiting, covering payroll, and making a small profit, are not much different from the costs the carrier would incur directly if the whole process was managed internally.
For example, it may cost a carrier $15.50 an hour to pay an employee driver $13.00 per hour. The extra $2.50 covers the employer's contribution to EI, CPP, WCB, etc., and all the other costs of employment. A personnel agency, in this case, might bill the carrier $16.50 an hour, while covering all the above costs, plus its own overhead and a small profit, while still maintaining the driver's $13.00-per-hour wage. The agency makes its profit on the efficiency of its operation, and the cost savings accrued to the carrier.
"We can take a lot of costly functions off the carrier's plate, such as recruiting and administration," O'Briain, says. "And we still pay the going rate to the driver. We deal in economies of scale, and we make our money by doing the job efficiently. We don't do it at the driver's expense. If we did, how long would we be able to keep attracting drivers?"
As Lefroy pointed out, driver services need drivers, and to attract good help they have to be competitive, maybe even more so than the carriers because they're competing for the same pool of drivers. Otherwise, all the good drivers would be looking elsewhere, and that doesn't seem to be the case.
The Dark Side
A word to the wise is in order here. Not all driver agencies are on the up and up.
There are a number of bad ones out there claiming to offer self-employment opportunities to unsuspecting drivers. These operations prey on peoples' ignorance about employment regulations and/or tax law. They're usually called single-source driver services, and highwaySTAR covered that story in the Careers section back in July 2001, Do It Yourself Disaster. If you approach an agency and it suggests that you can set up your own business as a driver service, enjoying the advantage of all kinds tax-deductible business expenses and paying no tax, our advice is to turn and walk away.
These are sham driver services, bogus operators; they're the ones that cast a cloud of suspicion over the legitimate companies.
You could argue all day about what makes one agency better than the next, but in the case of the fly-by-nighters, Lefroy and O'Briain both agree it comes down to how they manage payroll deductions, tax disbursements other financial responsibilities.
Ensure the agency you're considering is making all the appropriate payroll deductions, and is in turn making all the necessary payments - income tax, CPP, EI, WCB, etc. - on your behalf.
There are a host of other concerns as well with the bogus operations, such as getting into a drug and alcohol testing program, long-term disability insurance for permanent injuries suffered on the job, and the scary spectre of personal liability resulting from a lawsuit after a motor vehicle accident, especially in the U.S. Simply put, the reputable driver services do everything required of them, while the sham operations try to pass all that down to you under the guise of an opportunity to become self-employed.
And then there's a rather sinister aspect to all this. We understand there are driver services around today, even large ones, who'll deliberately mislead a driver, especially the young and inexperienced ones, into thinking this whole deal is straight up and legal. The company owners have no assets and no connection to the business, and therefore are very hard to hold accountable for the losses incurred by their contractors (drivers). And because the contractors aren't employees, there's no way short of going to court to remedy the problem.
If variety and flexibility are what you're looking for, agencies that serve the temporary overload market can offer a number of different types of work, without having to change jobs. If a full-time placement is more to your liking, an agency geared to supplying drivers to a fleet can help you find the right opportunity, without having to go knocking on too many doors.
Opportunity awaits, as they say, and the driver services are yet another option to consider in the search for the right job.