Trucks at Work Blog

“The most important object in Boy Scout training is to educate, not instruct.” –Sir Robert Baden-Powell, founder of the Boy Scouts

Professor Jerry Osteryoung from the college of business at Florida State University penned an interesting column the other day about why businesses must stop focus on “training” their employees and instead find ways to help them “learn.” It’s a philosophy that has a lot to do with the business side of trucking these days, too, especially for smaller carriers and owner-operators, for only by “learning” how to adapt to all the changes going on in this industry can they not only survive but prosper.

“Most businesses these days talk about training, and many have entire departments dedicated to training their workers. However, I think the emphasis on training is misplaced,” explained Osteryoung. “Rather, the focus should be on learning, and many larger companies are now changing their training departments to learning departments. While this might just seem like a subtle change in wording, I can tell you that it is much bigger.”

The professor noted that, with most training programs, the emphasis is on the trainer disseminating information to participants. “It is the trainer’s responsibility to get the material across; training simply becomes an event that occurs when staff members attend a training session,” Osteryoung pointed out. “Learning, on the other hand, is an internal event. It transfers the responsibility to the participant. It is now up to them to understand and master the material. Between training and learning, the focus shifts from teacher to student.”

The professor, by the way, travels all over the place conducting seminars on a variety of business topics, and he always tells his participants that he’s not there to train them; rather, he’s there to facilitate the learning process.

[I for one can attest to this, being fortunate enough to hear Professor Osteryoung conduct such seminars a time or two.]

“Thus, the outcome of the seminar rests on them learning the necessary material. It is their responsibility to master the material, and not mine to train them,” he stressed. “This is a big shift in orientation, but it is one that is vital in business.”

This new philosophy, Osteryoung believes, requires that each participant comes into the learning environment with a clear understanding that the responsibility for mastering the material is his or hers and not the instructor’s. In addition, the manager plays a key role in ensuring that the learning is transferred into the employee’s work environment. The manager is then responsible for providing the encouragement, tools and support that will enable the employee to successfully apply the new skills and knowledge to his or her day-to-day activities, the professor explained

“Some people might say that the distinction between learning and training is minor, but in my mind it is quite large. It changes the entire way we approach new material,” Osteryoung noted. “With learning, you begin at a higher motivation point, allowing the students to become active participants in the learning process as opposed to having an instructor force-feed them the material.”

If you think none of this applies to trucking, think again, for this focus on “learning” is something my editorial compatriot, Tim Brady, stresses over and over again in his work. As the business editor of American Trucker magazine and veteran owner-operator with over two decades of experience out on the road, Brady believes “learning” is the key for helping smaller operators to develop the products and services that’ll win them freight on the market.

“If you describe an independent trucker as a true entrepreneur who has done his research, sees a niche the big carriers either can’t or are unwilling to fill, and has spent the time developing a business plan: his company and others like it will grow into the medium and large carriers of the future,” he said in a recent post on his Blog4Truckers site.

“I work with trucking entrepreneurs on a daily basis. The successful ones (and there are many) are providing logistic services with which the big companies can’t even begin to compete,” he noted. “The entrepreneurial truckers with their skill, knowledge and determination have the big carriers beat hands down when it comes to quality of service.”

Brady’s point is that if a trucking company doesn’t know what it costs to provide a service, have a plan on how the company is going to grow, understand the market they service and know how to set a hauling rate range that is competitive in the market they choose – if they haven’t learned how to do all this correctly, as it were – then they will fail.

“But listening and researching how to improve your operation will increase efficiency,” he stressed. “Succeeding in trucking isn’t only what your credit rating is or what your company’s Dunn & Bradstreet Report looks like. It has to do with what you know, how much revenue your company produces against your costs, what your accounts receivable look like, and also the quality and diversity of your customers must be considered. “

Being successful, Brady said, is not robbing Peter to pay Paul, but managing your assets: cash, equipment, property, accounts receivable, customers, employees and contractors, with a plan – a plan developed from all a trucker has learned about the business environment, the freight market, the needs of customers, etc.

“We all know this establishes the foundation of your business, but a foundation is nothing more than a base from which to build,” he added. “You must continue placing stone after stone on this foundation, thus building the walls of success for your trucking business.”

Something to think about, as my friend Brady always says.

“This service is another way we’re constantly pushing the envelope for our customers to help them succeed in an increasingly competitive marketplace.” –Lisa Lynn, director, UPS new product development

In recent weeks, I’ve been hearing a lot about how the “niche” is becoming a more and more critical piece of trucking’s future, for both large and small carriers alike. By that I mean that many truckers are looking at ways – or being encouraged to look at ways – to develop more customized freight services to reach specific freight market segments.

That, in the opinion of several noted industry experts, is what’s going to allow fleets not only to survive but thrive in a freight world vastly remade by the ongoing global economic downturn.

“The dynamic forces affecting this [trucking] market must be accepted – they are things we cannot change. So carriers must find a way to live with them or take advantage of them,” noted Duff Swain, president of consulting firm Trincon Group and a veteran observer of this industry. “This means the big carriers are going to get bigger and fewer, while the smaller carriers need to get smarter and more niche-driven.”

Swain (at right) has long contended that change is essential for truckers. “Some companies learned the lesson early and invested time and money in people and processes which allowed them to identify their markets, utilize technology as a management tool, develop talented management teams, demand greater accountability, and use appropriate strategies to control their markets,” he explained during a presentation at TMW System’s 2009 TransForum user conferences.

“They have learned to operate a capital-intensive business using talented managers and good information management,” Swain noted. “This process has helped them learn how to market themselves where they are most effective – and their actions have allowed them to control the market and competitors have been forced to respond to their moves. We can learn from their example.”

Mark Winkler, vice president of strategic planning & business for Bridgestone Bandag, echoed the same message, noting that both tires produced by his industry and trucking freight services are in danger of becoming commodities – that, at the end of the day, price has become the determining factor of which a tire or transportation service is purchased.

The reason is simple in trucking’s case, said Winkler (at left), as everyone meets the same basic set of standards: tracking and tracing freight, meeting on-time delivery metrics, etc. The key going forward, he stressed, is how to bring unique offerings to the commodity that is trucking. This approach calls for a “zone of segment focus” instead of the more typical “zone of customer focus” used by the industry today – and thus a greater focus on developing niche-driven services.

“A ‘zone of customer focus’ is a generic strategy, if you will– you develop products and services to meet the common needs of your entire customer base,” Winkler explained. “With a ‘zone of segment focus,’ however, you are meeting needs of specific segments with products and services that may be incompatible and irrelevant across the segments. Developing specific solutions this way can help carriers, especially smaller ones, build more profit.”

United Parcel Service is demonstrating how such a niche-driven strategy can be put into play in the freight world, as it is piloting a new service called “UPS Direct to Door” that delivers product samples to residential locations. UPS is initially testing this unusual marketing service in five cities – Chicago, Dallas-Ft. Worth, Miami, Phoenix and Washington, D.C.

It’s a smart niche offering because its taps into UPS’s established freight network to provide something new and different without adding much extra cost to Big Brown – up to 12 product samples are packaged in a custom-designed UPS Direct to Door Pak and delivered to residents that are ALREADY receiving a small shipment that day.

Casey Chroust, executive vice president of retail operations for the Retail Industry Leaders Association, summed up the benefit of UPS’s service pretty succinctly: “Retail marketers are looking for ways to make their messages stand out. UPS Direct to Door serves as a very unique and targeted marketing approach because messages are personally delivered to the door, which makes the delivery special.”

“As marketing channels evolve and consumer choices increase, we need new touch points to connect with customers,” added Pat Connolly, executive vice president and chief marketing officer for Williams Sonoma. “With a UPS Direct to Door delivery, we’re reaching an active consumer – an important factor for increased response rates.”

And that added business – small to be sure for a while – is going to help UPS stand out from its competitors, demonstrating it can do new and different things with its current delivery network. That should help their bottom line and keep their capital-intensive assets busy, without adding a lot of additional costs. It’s this kind of smart, niche-driven thinking truckers on a larger scale need to tap into.

“Remember this: you’ve got to take care of your people, but don’t forget to also take care of your sheepdogs.” –Lt. Gen. Russel L. Honore (Ret.), from a recent speech on Leadership and Preparedness in the 21st Century.

It may seem a bit odd, this reference to “sheepdogs” by retired Lt. Gen. Russel Honore, who won a plethora of plaudits for commanding Task Force Katrina back in 2005, but bear with me here.

I had the great privilege to hear the General speak at TMW System’s 2009 TransForum user conference this week and let me tell you, his rousing speech really drove home what the concepts of leadership and responsibility are all about – and he used that “sheepdog” analogy near the end of his talk to illustrate the value of personnel who perform tough and often times thankless tasks.

“The sheep often forget why there are sheepdogs; all they see is an animal barking at them, driving them this way and that,” Honore said. “They see how the master takes care of the sheepdog. How it sleeps in the house apart from them. They produce the wool that makes the money, the sheep often think – we do all the work. Why is the sheepdog treated differently?”

The reason, the General stressed, is that the sheepdog is there for when the wolves come – wolves that, in the context of his analogy, kill indiscriminately … and often kill “just for the hell of it.”

“Even though the sheep may often despise the sheepdog, it is the sheepdog that takes care of them; that drives off the wolves,” Honore said. “And remember this: compared to wolves, the sheepdog is often underweight and smaller. Yet it goes out to defend the flock. Sometimes, the sheepdog comes back missing an ear or with other injuries; sometimes, the sheepdog does not come back at all. But it goes out to defend the flock nonetheless, despite the danger.”

Taking danger head on, despite the risks, is something General Honore knows a lot about. A native of Louisiana of what he calls French-American Indian-Spanish heritage, Honore spent 37 years in the U.S. Army in a wide variety of posts: commanding the 2nd Infantry Division in Korea; vice director of operations J-3 for the Joint Chiefs of Staff in Washington D.C.; assistant commandant at the Army’s Infantry School in Ft. Benning, GA; and assistant division commander of the 1st Cavalry Division out of Ft. Hood, TX.

Honore is famous for his service in the wake of Hurricane Katrina, taking over recovery efforts for New Orleans and the rest of his native state with a firm yet fair hand and earning the title “John Wayne Dude” from the city’s mayor, Ray Nagin. “He came off the doggone chopper, and he started cussing and people started moving. And he’s getting some stuff done,” Nagin said at the time.

Yet the General did not dwell much on what he did during those long, weary days in the stifling heat of late August 2005. Rather, he stressed that there were valuable lessons to be learned from that terrible catastrophe – ones that all Americans should heed. It’s at the heart of what he calls “creating a culture of preparedness” so both citizens and businesses can survive and recover from the impact of any sort of disaster.

[Here’s a taste of what the General is like, both from his days on the ground after Katrina and as a speaker, sharing his thoughts on leadership and preparedness with Coca-Cola executives and managers.]

“Leadership means being prepared – and you truckers know something about that. You delivered the supplies to help us recover from Katrina,” Honore said at TMW’s conference. “But I ask you: how many of you have three days supply of non-perishable food and water in your house right now? How many of you have an emergency evacuation plan for your families? Many people think something like Hurricane Katrina can’t happen to them. Let me tell you – it can happen. Look at Atlanta this week, suffering from flash floods. It can happen and routinely happens, all over this country.”

The General boils that all down into a phrase he made famous in a press conference during Hurricane Rita recovery efforts: “Don’t get stuck on stupid.” He pointed out, for example, that a major high school and hospital in New Orleans had big backup generators on hand should the city lose power in the event of a natural disaster. But guess what: those generators were, in each case, located in the basement of the buildings – and thus were destroyed by flood waters.

“Let me tell you this: when we lose electricity, we go back to the way we used to live 80 years ago – instantly,” Honore stressed. “I know this stuff is pretty dull, but it’s important for Americans and American business to get and remain prepared.”

This notion of being prepared in order to face down heavy odds should be nothing new to Americans, the General pointed out. His favorite example of this “can do” spirit is none other than George Washington, the nation’s first president and commanding general.

“Go back to a cold Christmas night December in 1776,” Honore said. “Our army back then sat freezing in the snow, 90% of it sick or AWOL [away without leave]. Most didn’t have shoes and much of their ammunition didn’t work. What did they have to look forward to? There were no Veterans hospitals; social security didn’t exist. And they were facing the British army; the most powerful army in the world at that time.”

So what did General Washington do, faced with this sad state of affairs, asked Honore? Washington attacked – his troops crossing the ice-choked Delaware at night in boats confiscated from nearby fishermen, marching through the darkness in frigid temperatures, and then hitting Trenton, NJ, at dawn, killing or capturing over 900 Hessian mercenaries fighting in the British army.

“Remember that: they attacked and the kept the Revolution alive, right at the edge when it flickered and almost went out for good,” Honore stressed. “We must not forget their sacrifices and what they did so we can enjoy our freedoms today. Sure, there’s a downturn right now and we might have to make sacrifices to get through it – but we’ll be better for it in the end. Our obligation is to leave our country free and strong, in memory to those who volunteered to fight for freedom back then – many who weren’t free, being indentured servants and slaves.”

Honore said fighting for freedom, be it on the battlefield or in business, is a critical part of America’s heritage, for while to be born free is an accident and to live free is a privilege, to die free is a responsibility.

“Ladies and gentlemen, this is your world – and your world will be more volatile in the next 20 to 30 years than it was in the previous 20 to 30 years,” the General said – and that is being proved more so every minute; just look at today’s announcement that Iran has a second plant developed to uranium enrichment, this one located near one of its military bases. As the specter of nuclear weapons in the oil patch again raises its ugly head, it brings home how critical true leadership skills are going to be in dealing with this ongoing crisis.

“That’s why leadership revolves around three things: seeing first, understanding first, and then acting first. There’s a value in being first, in recognizing and then acting on danger,” Honore said. “Leadership is about innovation and ingenuity; it’s about being prepared not just to help yourself but to help others. How you survive a disaster, whatever it may be, directly relates to what you do before it strikes. Because if you wait for things to break before fixing them, they will break at the worst time.”

Valuable lessons indeed, from a veteran sheepdog that helped keep the wolves at bay for a long, long time.

“For too long, American businesses—particularly small- and medium-sized businesses—have been fighting against systemic imbalances that make it tough for them to compete and create new jobs.” –Gary Locke, Secretary of Commerce

If there’s any segment in the small business community today that knows exactly what Gary Locke, head of the Commerce Department, is talking about in his comment above, it’s small to medium-sized trucking companies.

To say it’s been a brutal couple of years in trucking is an understatement. Transcore’s 2009 Broker Benchmark Survey laid out in stark figures how bad a bloodbath it’s been for truckers. According to the survey, which covered 2008, year-over-year tonnage declined 12.5% from December 2007 to December 2008 and some 3,065 trucking company failed in 2008 alone, removing 137,650 trucks from service.

But a key indicator in this survey is the slip in gross margins: a drop of 5%. That 5% doesn’t sound like a lot, but it could mean the difference between making a profit and losing money. And it goes against expectations, in a way, as if there are fewer trucks to haul the freight, the marketplace would logically dictate more competition for loads and therefore higher rates.

Yet so it goes: there are still too many trucks chasing too little freight, with a variety of cost pressures putting the squeeze on truckers – especially those on the smaller side of the scale. For it’s the small guys that can rarely cope with high costs, especially when they come on multiple fronts increasing the price of everything from equipment (due to compliance with emission regulations) to healthcare.

Secretary Locke touched on cost pressures like these facing small businesses in a more general way during a speech before the 2009 National Minority Enterprise Development Conference in Washington D.C. back on Aug. 27. He talked about how all small and medium-sized businesses – trucking and non-trucking alike – are feeling the pinch from many quarters, both in the short haul and in terms of future development. While Secretary Locke focused his remarks on the plight of minority businesses, much of what he said speaks directly to the concerns of almost all small and medium-sized American companies today.

“My father was just like many of you,” he said. “After serving in the Army in World War II, my father came back home [and] opened a small, family-owned grocery store. I grew up in that place, stocking shelves, making free deliveries and making sure our customers had everything they needed. My father put everything he had into that grocery store. It was his little piece of the American dream.”

But today, the secretary noted, that dream is slipping away for far too many small businesses. “It’s become uncomfortably normal to turn on the news and hear about massive layoffs at this automaker or that financial firm,” he said. “But hit hardest of all has been America’s small- and medium-sized businesses. Through the third quarter of 2008, half of all private sector job losses had occurred in companies with fewer than 20 employees. For too many American businesses, the bills have kept coming while the payments for products delivered or services rendered have not.”

Going forward, Secretary Locke said, America must end its dependence on economic bubbles for growth. “To put our economy on a sustainable path, we’ve got to make fundamental changes like we haven’t seen in America for decades,” he pointed out. “[Because] for too long, American businesses—particularly small- and medium-sized businesses—have been fighting against systemic imbalances that make it tough for them to compete and create new jobs.”

What are these issues? Secretary Locke named these three: An education system that isn’t preparing our kids or retraining workers for the jobs of the 21st century; Decades of mismanaged energy policy that puts our environment in peril and leaves American businesses – especially manufacturers – vulnerable to unpredictable price swings in the oil markets; and a healthcare system that leaves almost 50 million Americans without care, millions more with too little care, and is riddled with inefficiencies that pile what he termed “backbreaking” costs on governments, citizens and businesses alike.

“There is plenty of room for honest debate on this issue. But let’s be clear about one thing: Those who advocate continued inaction are not only guaranteeing that tens of millions of Americans will continue to be uninsured or underinsured; they are also consigning American businesses to a less competitive future because of unsustainable health care costs,” he said. “Insurance premiums have gone up nearly 10% annually in the last decade. And they’ll likely do the same in the next ten. The average family’s annual premium will jump from $13,000 to $25,000. We can’t let that happen.”

The impact on small businesses is even bigger, Secretary Locke said. Small businesses pay up to 18% percent more per worker than large firms for the same health insurance policy – and as a result, many small businesses are getting out of the health coverage business altogether. “Less than 50% of firms with three to nine workers offered any type of health insurance to their employees in 2008—compared to 99% for firms with over 200 workers,” he noted.

Now, full point of disclosure – as Secretary Locke is a member of President Obama’s cabinet, he’s carrying water for the president’s version of health care reform. You may agree with the president’s vision for healthcare reform or disagree vehemently, but what Secretary Locke stressed is that the cost of health care – much like diesel fuel prices – is projected to head but one way in the future; up. And those rising costs will significantly hobble the efforts of small- and medium-sized businesses to innovate and grow.

“The thing that people need to understand about healthcare reform is that this is a competitiveness issue for our businesses,” he said. “The longer we wait to do something, the worse off we’ll be.”

At the same time, though, there’s something else to consider: American business needs trucks to get things done. So while it’s been tough and is going to stay tough for a while in trucking, truckers need to remember that they provide a necessary and vital service – one American business cannot do without.

“With the economic outlook for the next year or two not looking real bright, running a trucking company is going to be challenging. It is going to require a dedication to detail not seen for many years,” noted my editorial compatriot Timothy Brady in a recent post on his Blog4Truckers site.

“The good news is, America runs on trucks, and small motor carriers – those with fewer than 35 power units – haul a vast majority of the freight,” he explained. “Over 80% of American manufacturers are small businesses with fewer than 25 employees, meaning these small business owners are going to be facing the same dilemmas and problems as the small trucking company owner. The small business owners are going to need a hauler who understands what they’re dealing with … and who better than the owner of another small business? That’s YOU.”

Something to remember as small truckers battle to survive until freight revives.

“The question on long term strategy is not if it is successful, but if you are still alive.” –Ron de Jonge

A “cannibal” is defined as a creature that eats the flesh of its own kind; in business, “cannibal” is used in a figurative sense (one hopes!) to describe a concept whereby you devour your own sales to preserve or increase market share. Needless to say, it’s an extremely risky strategy at best – one fraught with all kinds of pitfalls – and it’s also one that gets used quite frequently in trucking, usually with unfortunate results over the long-term.

I’m talking, of course, about price cutting – a strategy in trucking whereby freight rates get sliced in order to win business. Often times, though, such freight rate cuts aren’t done internally – they are in many cases forced on the industry by shippers that no longer recognize the value of the transportation service they buy.

In any event, whether self-inflicted or not, such cuts in the price of trucking services leads to cutbacks in other areas – maintenance, driver pay, new equipment, etc. – that end up hurting the carrier, sometimes severely, in the long term. In effect, they are cannibalizing themselves to survive, but it’s a strategy that by its very nature doesn’t offer hope of long term survival.

“The big mistake we make in the trucking industry is we allow sales to set price,” noted my editorial compatriot Timothy Brady in a recent post on his blog.

“The attitude of ‘price is everything’ in the trucking business has caused what was once a vibrant and prosperous service to become an afterthought,” he said. “Frankly, I don’t believe any service or product’s value is determined by price alone. If I sell services at prices that are less than it costs me to provide them, I’m not going to be in business very long. When the customer has a problem with the service and I’m not around to help solve the problem, suddenly that service loses value to that customer.”

What gives a service value, in Brady’s view, is a combination of reasonable price (one that is profitable to the provider), acceptable quality to the customer, and a provider that solves problems when the service doesn’t attain its objective.

“Customers don’t buy price; they buy value. If a product or service’s sale price is less than its cost, it has no value,” he noted. “Discounts can be a great sales tool if used properly. [But] when a hauling rate doesn’t add value for the shipper, it’s a ball-and-chain dragging a trucking company to extinction.”

Professor Jerry Osteryoung with the college of business at Florida State University noted that at times, a price-centric focus may be necessary – event vital – for short term survival. But such “cannibalization” as he calls it is not a road map for long-term success.

“Cannibalization is a business concept where you devour your own sales to preserve or increase market share,” he explained. “For example, BlackBerry is a firm that really understands this concept. They continue to roll out new BlackBerries knowing that by offering new products, some of their existing phones are going to suffer losses in sales. However, by offering new products in new markets, they cover the cost of this cannibalization with the new sales and they stop competition from entering the market.”

However, Osteryoung stressed that it is vital that businesses understand that they must run the numbers to determine whether cannibalization or market expansion makes sense.

“For example, if you are going to offer a new product and you know that you are going to lose 50% of your revenue on an existing product line, the new product must be able to generate a return high enough to cover the cannibalization cost,” he noted. “When considering cannibalization, ask yourself whether it is actually necessary. Sometimes … you’re not really bringing in more customers by offering the lower price. Instead, you may be just shifting customers … [resulting in] a significant drop in price and margins.”

From Brady’s perspective, it’s akin to a professional football coach entering a game without knowing how the game is played, without knowing the strength and weaknesses of his team, without having a game plan customized specifically for the opponents he’s going up against – he’s only focused on one aspect of the game (in the trucker’s case, price) to the detriment of everything else.

“The end result: the opposing team will steam-roll the unprepared one, and the outcome isn’t going to be pretty,” Brady said. “But if you understand how business is conducted – the more you know about logistics, the concept of supply and demand, and the more precise information you have on what it costs to haul a load – that offers the greatest opportunity for success. That knowledge is real power.”

“Like any recession, this one will play out in stages and will vary by industry. Regardless of which stage your company fits, or the speed of change, you must move beyond tactical, reactionary moves and make structural changes needed to support growth. To make this shift, companies need to be proactive and prepare now for the new growth environment, whatever it may look like.” –David Brainer, principal, Deloitte Consulting LLP

It seems fitting on this day when an icon of U.S. political history, Sen. Edward “Ted” Kennedy, passes on, that we take stock in where we’re all headed in this country, especially economically.

Whether you loved or loathed Ted Kennedy, one must at the very least admire his doggedness – a truly American trait if there ever was one. For 40 years he fought for universal health coverage for every U.S. citizen – and he never wavered in his attempt to gain it. Right up until his death early this morning at age 77 from brain cancer, he fought for it – and as yet the final chapter in this ongoing political battle over health care is still yet to be written.

That same unshakeable sense of purpose is going to be needed by all of us as this nation continues its long, slow climb back to economic good health, for there are many unpleasant challenges ahead – with the cost of health care just one of them.

Of late, though, it seems that confidence among consumers is brightening – and more robust spirit is one of the key ingredients we’ll need in the days ahead. The Conference Board said its Consumer Confidence Index, which had retreated in July, rebounded in August, with the Index now standing at 54.1, up from 47.4 in July. The group’s “Present Situation Index” increased slightly to 24.9 from 23.3 last month, while its “Expectations Index” improved to 73.5 from 63.4 in July.

Now, these consumer confidence survey’s are based on a representative sample of 5,000 U.S. households – and considering there are over 300 million U.S. citizens out there, this “sample” seems awful small to me when making such huge broad claims about “consumer confidence.” And course such human emotions like “confidence” are always fickle, apt to change at the slightest bit of bad news (such as, say, the appearance of Godzilla on a city street). Then again, though, we’ve had a lot of bad news of late, so for “confidence” to rise in the face of things is somewhat heartening.

“Because the speed and intensity of the recovery will largely be determined by consumer psychology and a willingness to spend, I envision true economic stability won’t take root until the first quarter of 2010,” noted Greg Maloney, CEO and president of Jones Lang LaSalle Retail. “And consumer confidence will play the biggest part in our return-to-normalcy.”

“Consumer confidence, which had posted back-to-back monthly declines, appears to be back on the mend,” noted Lynn Franco, director of The Conference Board’s consumer research center. ”Consumers were more upbeat in their short-term outlook for both the economy and the job market in August, but only slightly more upbeat in their income expectations. As long as earnings continue to weigh heavily on consumers’ minds, spending is likely to remain constrained.”

But one of the things weighing heavily on American minds right now is the continuing climb in health care costs – even as we desperately seek some way to do the exact opposite. According to Aon Consulting, health care costs are expected to increase on average 10.5 percent in the next 12 months. After surveying over 60 leading health care insurers, representing more than 100 million insured individuals, Aon found that health care costs are projected to increase by 10.4 percent for HMOs, 10.4 percent for POS plans, 10.7 percent for PPOs and 10.5 percent for CDH plans.

Aon also found that prescription drug costs are expected to increase 9.3 percent, with the specialty pharmacy trend rate is 13.2 percent. In addition, health care rate increases for retirees over the age of 65 are projected to be 6.6 percent for Medicare Supplement plans and 7.3 percent for Medicare Advantage plans.

Then there are the deficits being racked up at a frightening rate by the federal government. We’re on track to post $1.56 trillion worth of red ink this year ALONE, easily topping last year’s record of $455 billion, with a projected $9 TRILLION hole being dug by current spending outlays over the next decade. That’s on top of the $11 TRILLION in debt already on the U.S. books.

While the U.S. economy is actually projected to start growing again by the White House’s budget office, albeit just 1.6% in the second half of this year, unemployment is going to stay relatively high; it averaged 9.4% in July and should peak at 10.2% next year before falling to 9.1% in 2011.

Needless to say, none of this paints a very rosy picture for the future. Yet it’s how we deal with these challenges that will be critical.

Deloitte Consulting LLP recently released new research that found while most major companies surveyed believe that the U.S. economy will start improving in early 2010, many of those same companies will lag behind the general economy when the rebound occurs. The reason: Too much focus on short-term, tactical actions and little attention to structural changes and strategic investments that are needed to support growth in the new business environment.

Approximately 55 percent of the companies surveyed by Deloitte feel the U.S. economy will start showing signs of recovery in the first or second quarter of 2010; though 25 percent think relief won’t come until the third quarter or beyond. But, when the upturn does commence, Deloitte believes many companies will struggle to deal with the new economy, which will likely be a completely different playing field from what companies have seen in previous recoveries.

“After implementing initial cost cutting measures when the economy first began to tumble, such as reducing salaries, layoffs and plant shutdowns, many companies are now are confused about their next steps,” said Kelly Marchese, a principal at Deloitte. “We believe these businesses should stop focusing on short-term concerns and look at their business in this new reality. Businesses need to focus on areas such as talent, growth and structural change so that their business doesn’t just survive – it thrives.”

Deloitte said its survey – Here Today, Where Tomorrow? Taking Action in Uncertain Times – is the result of hundreds of hours of in-depth meetings and discussions with nearly 100 companies across a wide swath of American businesses, including the healthcare, manufacturing, retail, life sciences, financial services and energy industries.

Deloitte believes there are three key economic phases to this downturn that businesses need to recognize so businesses can better focus their revitalization efforts:

• Phase 1: Over the Edge: companies were focused on shuttering their business, generating cash, and looking at tactical cost reduction. Survival was priority number one.

• Phase 2: Lumpy and Bumpy: the current phase of the economic downturn where companies need to place the focus on structural changes, strategic investments and a resetting the profit model.

• Phase 3: Growing into a New Reality: this is what companies need to prepare for; where the new economics, market realities and competitors emerge.

“Every organization grows at its own pace, determined by factors as large as the global economy and as personal as its current balance sheet. But, every business must grow – the only question is how,” noted David Brainer, a principal with Deloitte. “[Yet] that’s just the beginning. It’s not just about strategy; it’s also about practical execution.”

It’ll require a lot of gumption and faith in ourselves to successfully cross all these hurdles ahead, no doubt. But if we can stick to our guns like Ted Kennedy did over his life – despite personal successes and grievous failings, political mistakes and triumphs alike – then there’s no economic challenge we cannot overcome.

“The man who succeeds above his fellows is the one who, early in life, clearly discerns his object and towards that object habitually directs his powers. Even genius itself is but fine observation strengthened by fixity of purpose. Every man who observes vigilantly and resolves steadfastly grows unconsciously into genius.” –Edward George Bulwer-Lytton

“Directed attention” is one of many definitions of the word “focus” as compiled by the Merriam-Webster dictionary – and it’s something that I’ve been pondering lately in relation to the trucking business.

“Focus” came to mind in a recent story I wrote about Con-way Freight’s effort to group until-now disparate less-than-truckload (LTL) offerings into a single “Global LTL” division. From my perspective, at least, the move seemed to unnecessary – I mean, heck, Con-way Freight’s “LCL” or “less than container load” service for ocean container shipments coming from Asia to the U.S. in partnership with APL Logistics as well as its expedited LTL in partnership with TNT for air freight service to the U.S. from Europe seemed to pretty well as is. Why complicate things by grouping them together in one division?

“We’ve already been providing a lot of LTL to global shippers, but it’s an effort that’s been screaming for some organization for some time,” Bill Wynne, Con-way Freight’s vice president of marketing, told me. John Labrie, Con-way Freight’s president, added that the purpose behind forming the “Global LTL” division is to bring all of the carrier’s worldwide LTL solutions under one umbrella. That would make it more convenient than ever for shippers to quickly and intuitively locate the LTL service that best meets their needs, he explained.

In effect, grouping these different serviced together – LCL and expedited LTL – is going to help Con-way Freight sharpen its focus and maybe use those established services to find other business they may have overlooked when the two offerings functioned separately.

My journalistic compatriot Tim Brady mentioned in a recent post on his blog that this type of “focus” is how even small motor carriers can still make a profit in the trucking business – focus sharpened with planning, forethought, and the use correct business principles. “If you’re a small motor carrier, you should be looking for a specific niche in which to specialize,” he wrote.

“If you want to compete in the truckload side of the business, you have to provide something no one else is willing to do, and then do it better than anyone else could,” Brady (at left) explained. “There’s always a need for any size company which provides excellent customer service. So yes, you can be successful in trucking, as long as you make a plan, know your costs, and be sure your rates reflect those costs. Find and fill your niche and become the best in the lane you service.”

Another business expert I regularly follow, Professor Jerry Osteryoung (below on the right) from the college of business at Florida State University, also believes “focus” is a critical attribute to have in business today. In a recent column, he related an interesting story illustrating why a lack of focus could morph into a big problem for any company today, large or small, trucking or non-trucking:

“We’ve been helping an entrepreneur who has been in business for over 15 years, but whose revenues have lately been on a free fall. I asked him to develop a marketing plan, but he had so many problems doing so. It just baffled me that this intelligent, bright man was having so much difficulty writing a marketing plan.

Given [his] difficulty with the marketing plan, I went back to ground zero and asked him what his mission and vision statements were. Both turned out to be so general that they were of no value. During these conversations, he showed me the company brochure, which listed ten different, unrelated services that his company provided. I then understood why the marketing plan and other core statements were impossible for him to complete: There was no hope of having a focused message or a focused business while providing so many different services.

I asked him how he managed to get involved in all of these different areas, and he said that his clients had asked him to do additional work outside of his core strengths. In response, he went ahead and did these things and developed an expertise. He just thought the more services he offered his clients, the more business he would generate. Unfortunately, he just neglected to consider how trying to do too many things for too many different types of clients would dilute his efforts.

We spent one meeting just discussing which of the areas he was passionate about and which there was a market for. He decided to focus on business coaching. From this, it was easy for him to develop succinct vision and mission statements as well as a very good marketing plan. Once he was able to focus, the rest was simple. Without this focus, everything was just too scattered.

Now, there is nothing wrong with having multiple product lines, but having too many will cause you to lose focus – and the more you lose focus, the less control you have on your business. You need to understand that every new market thrust leaves less time to manage and run existing product or service lines. So instead of asking what the returns from the expansion are, the question should ask what the returns from the expansion are less the losses brought about by reduced effort on existing products or services.”

“Without a compelling cause, our employees are just putting in time. Their minds might be engaged, but their hearts are not.” –Lee J. Colan, author of “7 Moments that Define Excellent Leaders”

You know, sometimes in the trucking business there seems to be far more care extended to equipment than to people.

Don’t get me wrong; obviously, I’ve filled this space with stories about the exact opposite many a time. Yet just look at the rigorous preventive maintenance practices for tractor-trailers; they get brought into the shop at regular intervals, usually every 25,000 miles which roughly equates to every three to four months. Good truck drivers conduct a thorough pre-trip inspection on their equipment before they hit the road for the day.

But do we extend the same level of “maintenance” to the folks behind the wheel, turning the wrench, at the dispatch desk, or in the back office? It’s an interesting question, one asked recently by Professor Jerry Osteryoung with the college of business at Florida State University in the context of dealing with what he termed “problem employees.” He makes some interesting points, so I thought I’d share them and see what you think. Professor Osteryoung, the floor is yours:

“Problem employees are an unavoidable part of the working world. We all have had to work for, work with or supervise a difficult employee. Although in many cases you inherit the problem worker, he or she is still your responsibility. It is so glib to say, ‘Let’s just get rid of the problem worker,’ yet this is an unreasonable solution for many reasons.

I do not think that there is a clear definition of a problem employee. What is clear, however, is that these employees tend to affect the morale of the entire organization and make your life very difficult. Too often, the implicit assumption is that a replacement worker must be better; however, this is frequently not the case.

Look at it this way, then: How would a manager make a decision on a piece of equipment that was causing a maintenance headache? Well before it was replaced, I guarantee you that a thorough analysis of the problem would be conducted, and possible alternatives for fixing the problem(s) would be evaluated. It is just good business to make sure that the problem cannot be corrected before a new asset is purchased. Yet this same type of analysis is not done on employees who are having difficulties.

So many times I see employers letting staff go simply because they did not give the manager what they wanted. However, when I go back to the staff member and ask if they understood what was expected of them, the majority of the time, they say “No.” In these instances, management never attempted to work with them to see if it was possible to overcome the problem.

I think so many times the cost of replacing a worker is either unrealized or is perceived as small and inconsequential. There is no question in my mind that if you fully account for all of the time involved in hiring a replacement (i.e.: time spent advertising to find a new employee, interviewing candidates and training a new hire) and numerous other indirect expenses, the cost of replacing a worker amounts to at least 100% of the annual salary.

If the cost to replace a worker is so high, why do so many firms keep on doing this over and over? I think the answer is that many managers lack the skill set to deal with problematic employees or behaviors. For example, if you have a worker that has been coming in late to work, and you are disappointed because you believe you have made the company policy clear to everyone, maybe the issue is that you are not connecting with the employee, being clear about the expectations or there is something going on in their personal life that is influencing their behavior.

Changing behavior is especially difficult if it has been tolerated for a period of time. However, working to overcome an employee’s problem rather than seeking to hire a new worker will often pay off in the long run.

[At left: Professor Jerry Osteryoung]

In looking to overcome behavioral issues, consider the root cause of the problem. For example, is there something in the company culture that is contributing to the problem behavior? In the case of the late employee, maybe you are being inconsistent about enforcing company policies. Are some people allowed to come in late due to personal circumstances that are not explained to the other employees? Are you holding people accountable, or do you let things slide?

Once you have determined the reason behind the behavior, there are many things that you can do to turn the situation around. Firstly, provide specific guidelines and processes to help clarify expectations. Secondly, ensure open communication with managers and employees to help resolve minor issues before they become serious problems.

A third possibility is the use of incentives, rewards and recognition as ways of reinforcing the change you are looking for. I have seen some managers simply start acknowledging positive changes in behaviors, and that has been the key to effecting the change.”

“This survey indicates every company’s greatest asset, its human capital, might be its most tenuous, as employers could see an unprecedented exodus of talent when the job market rebounds.” – Bernadette Kenny, chief career officer at Adecco Group North America

Now, the recent worker survey by the human resource specialist company Adecco Group North America is very broad, cutting across many U.S. industries, but I think trucking managers can glean a lot from it just the same.

Adecco’s finding that 54% of U.S. workers aspire to leave their current jobs when the ongoing global recession finally ends offers, I think, both a challenge and an opportunity for trucking. On the one hand, it’s a clear warning that fleets need to refocus on their employees in this rough patch – from drivers and maintenance techs on up to dispatchers and office personnel – to keep as many good people on board as possible.

On the other, Adecco’s “American Workplace Insights” survey indicates that folks likely to look for new jobs, once the economy turns around, might offer an opportunity to put trucking on their list. [For the record, Adecco defined “employed adults” in its survey as U.S. adults ages 18 and over that are employed full time and/or part time.]

Drilling down into the numbers, Adecco’s survey also revealed some other interesting tidbits, especially about younger workers:

Goodbye, Generation Y: The youngest age group of working professionals indicates they plan to be knocking on the doors of their competitors with (71%) of employed adults between the ages of 18 and 29 saying they are at least somewhat likely to look for new jobs once the upturn begins.

Generation Y on money: Only (9%) (less than 1 in 10) of Generation Y employed adults are willing to accept a pay cut to keep their jobs compared to about 1 in 5 from other generations [Baby Boomers (22%), Generation X (22%) or Silent (15%)].

“These findings should be an eye-opener for employers who are so focused on cost containment that they are losing focus on retention,” noted Bernadette Kenny, chief career officer of Adecco Group North America. “In good times companies focus on how to keep their best and brightest talent and this becomes more important in bad times. Younger Generation Y employees bring a lot of new ideas and skills to the table, they are a generation who likes to be challenged, and if they lose this at their current job are not afraid to seek it elsewhere.”

Adecco – being a human resource specialist firm, of course – has some tips companies can take to help retain top talent. Some might not apply to trucking, but for any smart, forward-thinking manager, they provide “good grist for the mill,” as the saying goes:

Focus on mentorship: Research has found mentors and mentees feel more connected and loyal to their organization than employees not involved in mentor programs. The investment of time in mentorship will deliver strong results in employee engagement. A formal program is not needed; simply taking steps to make sure leadership is connecting one-on-one with workers with high potential will prove beneficial.

Highlight small, but important, wins: Take time to recognize your company’s good news. Highlight successes in collaboration, business wins and innovation. Increasing communication in times of uncertainty is important overall and increasing communication of small victories will go far in improving employee morale.

Support career development: Many star employees switch jobs because they feel they have “outgrown” their position. Companies should encourage top-performing junior employees and middle managers by providing opportunities to share their knowledge via training sessions, presentations, mentoring and team assignments. When employees feel their career development and unique skills are desired and respected in their workplace, they are more likely to stick around.

Consider providing flexible work opportunities: Providing your employees with flexible work arrangements such as the ability to work from home one day or work consolidated four-day workdays can increase productivity and reduce absenteeism, and can result in cost savings to the company.

Some things to consider, as an exodus of workers when the good times reappear could offer either worry or a window of opportunity for trucking managers.

“Any change, any loss, does not make us victims. Others can shake you, surprise you, disappoint you, but they can’t prevent you from acting, from taking the situation you’re presented with and moving on. No matter where you are in life, no matter what your situation, you can always do something. You always have a choice, and the choice can be power.” –Blaine Lee, The Power Principle

There’s a famous quote by philosopher Friedrich Nietzsche from his work Twilight of the Idols penned in 1888 that I am sure everyone in trucking is familiar with, even if you’ve never heard it before: “That which does not kill me makes me stronger.”

(If that’s even half true, then some serious trucking powerhouses are being forged as we speak.)

One thing business coaches of all stripes are emphatically re-emphasizing in these tough times is to make sure companies make stronger connections with customers. That’s an even greater challenge in trucking (and elsewhere in business) as there are fewer employees to do it; and maybe some of them being tagged to forge those relationships with customers are new to the game.

Jim Walton – president & CEO of Brand Acceleration, a full-service advertising, brand management and public relations firm operating from Indianapolis, IN, and Charlotte, NC – discussed this very subject the other day in one of his email newsletters.

His contention is that connecting with customers isn’t anything new; rather, it’s a tried and true necessity that becomes absolutely critical when economic hard times come round. When things are rosy, attention paid to customer relationships tend to slide and that makes firing them up in rough patches – when everyone is desperate for business – all the tougher to accomplish.

“The other day, I was pondering the fact that many non-marketing people are now having to take on marketing roles, forcing them to polish their sales and marketing skills,” Walton said. “With leaner marketing staffs, company owners and managers are now faced with moving into the very uncomfortable marketing abyss.”

He noted that, several years ago, management guru Tom Peters introduced the world to the idea of “MBWA,” a clever acronym for “Management by Wandering Around” (a principle truck maintenance guru Darry Stuart lives by, let it be known).

Essentially, Walton explained that Peters – an alumnus of management consulting firm, McKinsey & Company – stressed that many managers are remote and out of touch with their people and their customers. “Today, I contend that many business owners are finding out just how out of touch they are,” Walton said. “A slower economy may require non-marketing people to leave their offices, get their proverbial boots dirty and get focused on brining business through the door. Maybe it’s time for a new version of ‘MBWA’ – ‘Marketing by Wandering Around.’”

[Here’s a quick snippet of what a Tom Peters presentation on his decidedly unique perspective of the business world is like.]

The logical place to start getting one’s boots dirty is with people who have been paying your salaries for years, Walton pointed out – and they would be current customers. “A phone call, a visit, and maybe lunch or coffee would be a good beginning,” he stressed. “Show ‘em some love, get reacquainted and explore potential opportunities. If they have more than one decision maker or influencer, it might be worth your while to cater lunch to their office as a way of thanking them for their many years of business.”

On another front, the idea that prospective customers haven’t seen one of your company’s managers or owners in years is one that should make anyone in business cringe. “When business is good, it’s easy to become complacent, assuming that the marketing folks have the situation covered,” Walton said. “Well, it may be time to reevaluate.”

He noted as an example that a good friend of his – a business owner in his particular market for nearly 30 years – relegated himself to the role of “ambassador.” His primary job, as Walton explained, is to connect with both his staff and customers each day, showing deep appreciation and listening to their opinions, problems and needs. Since he’s not “selling,” per se, Walton pointed out that he is much more effective at establishing personal relationships that result in business opportunities.

In short, Walton believes it’s time to get out there, see customers, motivate the troops and hit the road with confidence and enthusiasm. Not easy to suggest in a down market when money is tight, but if you are doing it when no one else is, the resulting connections forged with customers may result in some valuable business being thrown your way when things start improving. It’s a thought to consider, though, at the very least.