Our people are the most valuable aspects of our businesses. It more than their hard work and even their output. However, customer first has dominated much of the leadership for many decades. “Employee First” is a model of leadership where people are put ahead of the strategy, technology, profits, and even customers. My guest today is James Dowd, Co-Founder of Iuvo Logistics. His company was ranked #310 in the 2019 Inc 5000 list. Discover the benefits of “Employee First” beyond happy employees. James shares how he created a new model within his industry and the improvement of his retention rate. “Employee First” may be foreign to you, but it could be the key to new growth.
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James Dowd: The Transcript
Target Audience: James Dowd is the CEO at James Dowd LLC, Partner at IUVO Logistics LLC. Iuvō is a Latin for “To Aid and Assist”, they take the meaning of our name seriously as it is central to our corporate values. Iuvo was founded with one objective in mind, providing our clients with a quality service at a competitive rate. A boutique carrier with a wide range of specialized services, our fleet consists of food-grade dryvan’s, flatbed trailers for the steel industry and roller bed trailers for the airfreight industry.
Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.
We’ve seen we’ve had some turnover and a lot of turnover has been our doing. That without the right mix. It makes A. a product less desirable and B. It effect our ability. I say our my partner our ability to effectively grow the company.
[00:00:20].400] – Intro
Welcome to Growth Think Tank. This is the one and only place where you will get insight from the founders and the CEOs. The fastest growing privately held companies. I am the host. My name is Gene Hammett. I hope leaders and their teams navigate the defining moments of their growth. Are you ready to grow?
[00:00:37].290] – Gene Hammett
Do you have a customer first strategy and your business. Customer First has been the winning strategy for leadership for many many decades. It came from the place where we were really focused on shareholder value shareholder value in their 80s was was the biggest thing that’s what drove companies. That’s what got you know the stock markets really firing on you. How do we increase shareholder value.
[00:01:02].310] – Gene Hammett
Well as things evolve and as businesses do evolve and change you’ve got to change with the times. So if you’re still focused on customer first then you really want to tune into today’s episode where we talk about a new modern strategy of employee first. This comes from all the fast growth companies out there. I’ve been talking to the just amazing how many of them are so focused on putting the employee experience ahead of everything else. Now if you look at the extremes of this you definitely have to have customers right and you can’t just do it alone.
[00:01:36].990] – Gene Hammett
So you have to have employees. But when you really get into the nitty gritty you look at the details of how the structure works and how leadership specifically works is employee first is winning out. We could talk about some of the the way the stock market performs on some the greatest place to work company. It’s more than 100 percent return over last few years. And if you compare that to normal be like sixty five percent so financially those companies are are performing better but there’s many other aspects to it where you think about or higher retention rates if you will that really is some of the bigger benefits behind this.
[00:02:13].890] – Gene Hammett
Our special guest today is James Dowd. He is the co-founder of Iuvo Logistics there where the INC 5000 companies and I was having a chat with him really have a different perspective and I want you to tune into this because in their industry their typical turnover is 100 percent right over a 12 month period but in their business because they put employee first they’ve got it 5 percent. So when you think about this that’s one of the biggest benefits. If you think about having great people you really want to take care of them you don’t want them to leave too early. Well you want to think about employee first from your leadership style. Well here’s the interview with James.
[00:02:54].770] – Gene Hammett
Hi James how are you?
[00:02:55].530] – James Dowd
Very well. Good to see you Gene.
[00:02:56].030] – Gene Hammett
Good. I’m excited to have you here at growth think tank. I want you to tell our audience a little bit about the company and why you started it.
[00:03:05].550] – James Dowd
Well we saw an opportunity in the marketplace. My business partner and I had this business set up as a freight brokerage business. And so those folks that don’t know that is simply we marry up jobs or clients with equipment. So you’re asset free you doing it all through technology. Back in December twenty seventeen. So we’re going on that. Two years now. We actually is 2017-2018. It’s gone pretty quickly. Is 2017. We notice that in the brokerage business the competition has become fierce.
[00:03:49].380] – James Dowd
So much to the point that my partner was on a phone call with a carrier and the carrier was offering a rate that was twice of what we were getting paid by the customer. And he got real frustrated slammed this phone down and I was with him at the time and I chuckle What are you laughing at. I said we’re on the wrong side of the business. We need to be in the assets side of the business. And that pretty much embarking on getting in to owners of tractors and trailers or semi says as folks call them that started in that July 1 year ago. Now you’re a couple of months and in that time you went from one tractor trailer to we now have 23 tractors and 37 trailers in the Midwest and south.
[00:04:43].460] – Gene Hammett
Well that’s a pretty good shifted the business. How many employees do you have James?
[00:04:49].930] – James Dowd
We have thirty eight.
[00:04:52].420] – Gene Hammett
So you know relatively still a small company and we had talked a few days ago one of the biggest things that you thought drove the growth the company has is really kind of a really different kind of approach than most businesses have around employee first. What is employee first before we go much further.
[00:05:15].120] – James Dowd
So employee first to us is and we’ve had this discussion I’ve had this discussion with other folks. What first the client or the employee. And it’s sort of a chicken and egg type scenario. We absolutely look at our input being first from the simple reason that they’re the ones that that are driving our company on a daily basis. And we’ve seen had we’ve had some turnover and a lot of turnover has been our doing that without the right employee mix it makes a your product less desirable and b the it affects our ability I say our my partner and. Our ability to effectively grow the company. Not sure if that answers your questions.
[00:06:03].040] – Gene Hammett
Well I think a lot of people you know see that that chicken and egg thing and they really attach themselves to the extremes like if I didn’t have customers we would have a business and I totally get the fact that if you looked at it with from those extreme perspectives what you’ve done is if you’ve really kind of force yourself to say you know overall like really what’s really the heart and soul of this business and it’s the employees that fair to say.
[00:06:33].240] – James Dowd
Absolutely without a shadow of a doubt.
[00:06:37].310] – Gene Hammett
Why do you think so many leaders believe it’s customer first instead of employee first.
[00:06:44].280] – James Dowd
I think they spend so much time chasing the business and when they finally win it Earnest gain it. They look at the magic is actually in getting it but they what they fail to realize on many occasions is the reason that they’ve kept the business is because of their employees. I’ve been in other companies where that I’ve owned that I’ve lost business that I had real strong relationships with decision makers because of something an employee did or didn’t do.
[00:07:21].390] – Gene Hammett
And we probably all had those situations. I know I have in hiring hundreds of people over the years when you put employees first. What links do you go. Like what are some of the strategies you would share with us around employee first.
[00:07:35].980] – James Dowd
Well it starts the day they come on. We’ve done something a little bit different our industry that the trucking industry it’s the pricing model or the wage model if you will for drivers is based on a cents per dollar. And that puts the driver in a position where he can do well if he’s driving many many miles and staying away from home. However bad weather a customer canceling in order a truck the being going down for the count which happens often or many other factors immediately stops the driver’s ability to earn and we took a different approach. We wanted to get drivers that would stay with a few years and would and would represent the values that my business partner Dave and I had to our customers because they’re the ones that are seeing the customers everyday. We’re not seeing them every day. We may talk to them but we’re not seeing them too.
[00:08:41].000] – James Dowd
We sort of disrupted the industry a bit by offering a guaranteed salary so much to the point where there’s still a driver shortage in America. We actually have a surplus surplus of qualified candidates and a great driver pool and great team.
[00:09:04].600] – Gene Hammett
Now I would imagine that this industry has a retention problem overall. Do you know what the typical company in your that you’re looking at what their retention is?
[00:09:14].810] – James Dowd
Gene, it sounds unbelievable. It’s 100 percent. There’s a hundred percent turnover and that goes. Now I don’t know how they quantify that because obviously 100 percent turnover means you don’t have any employees but over a period of time whether that is 12 to 18 months. The turnover rate is 100 percent where experiencing the week we’ve had the same team of drivers the same core of drivers 95 percent of them for the last less eight months. And I say the last eight months we made some transitions. In the beginning we we made some mistakes. Some of the most weak growth we’ve been able to get past that. The culture that we have now is just phenomenal.
[00:10:03].050] – Commentary
I know you may not be used to calculating your turnover but here’s an easy you know kind of back of the napkin approach to it. You take how many employees you have as the starting number so James said he had 38 employees then you calculate how many people did you have to hire this year as a replacement for someone else if you were doing that and you had 10 employees then you’re gonna have close to about a a 33 percent turnover. If you had to hire 38 employees you’re gonna be 100 percent turnover. If you had to hire 50 employees Wow you’ve got close to hundred 30 percent turnover. I share this with you because I want you to understand this is a key number for the health of your organization. If you have a high turnover it’s going to cost you a lot. It’s going to be very expensive your most expensive factor and is probably your labor and you have to really think about you know why employee first really works. If you’re having a problem or attention you want to look at some of these strategies to back an interview with James.
[00:11:06].940] – Gene Hammett
So the pay model is different which really changes the the risk associated with going with you and so they probably love the fact that it’s very consistent as opposed to how many because I know I worked in the actual transportation industry. I don’t think you do this. I did to K project Remember Y2K?
[00:11:28].200] – James Dowd
[00:11:30].110] – Gene Hammett
And I was working we had to retire you know 30 of their like 100 different applications and we. So we went through the whole assessment readiness of this company and so I understood the business. And you we all know you know there’s certain limitations around driving but you can’t drive you know 20 hours a day just because you feel good you got hopped up on Red Bull. There’s some limits to that. Fair?
[00:11:54].670] – James Dowd
There is. It’s actually become more difficult in over the last four years I believe it predates us. There’s something in the industry now called ELD electronic logging devices back in the day and I said back in the day there are still companies doing this and they would have two books and the one book would be what they were doing at that at that moment. Any other book would be the actual books if they ever got pulled over they gave the. You can’t do that now with exception and they were there. There are some exceptions where there are some companies out there that if the engine that’s in the tractor is predates its 2006 or 2004 then you do not need an electronic logging device because it simply won’t work with that type of engine. So companies have now gone to the to the lengths of they’ll buy a new shell for a tractor put an old rebuild engine in and they can still run under the old method which is the books.
[00:13:05].190] – Gene Hammett
Well let’s dive in to some of the other strategies you’ve run to create this employee first because I want you to understand that you see this differently. So what else would you say is it’s been beneficial for your employee first strategy.
[00:13:21].070] – James Dowd
From a communications standpoint I can think of an instance we had we had brought on a new manager with 18 years experience with FedEx and we were able to pull them away. And at a meeting a driver meeting that I was introducing him down in western Tennessee I announced that I was looking at and we were pretty close to acquiring forward facing cameras and potentially inward facing cameras in the room just disrupt it. They didn’t want that they or their professional drivers there. And I shared a story where there were a lot of Eastern European and why isn’t he.
[00:14:01].970] – James Dowd
Why do I say he’s in Europe because those are the ones that are doing it most almost the most often scams on interstates across the country where they’ll purposely get into an accident with a tractor trailer knowing the insurance companies are just going to pay the big company. So the is the gentleman we hide from the hide from FedEx shared a story where it was the same reaction with his drivers. They didn’t want it the first day a guy is on an entrance ramp a car pulls up in front of them on the entrance ramp jams on its brakes it hits them goes another 30 feet he does it again it hits them again pulls over calls 911 he gets out holding his neck.
[00:14:45].180] – James Dowd
The state trooper comes and everybody knows you hit somebody in the rear you’re always in the wrong. He shows the trooper the video it gets sent to his phone from FedEx shows feature but he takes the driver who did it. Puts him in handcuffs takes him away and told the driver of the truck. This would not even count as an altercation with it with another vehicle which is very important to drivers. So if you can explain certain things to them the right way it really is to their benefit because if you’re a good driver and you get into an accident somebody shot out in front of you. You don’t want it to be your word against anybody. You want the evidence to be there. And so needless to say all of our trucks now have forward facing cameras and the guys have warmly embraced it.
[00:15:34].240] – Gene Hammett
And you’re doing something also unprecedented the level of access that which your employees have to you is pretty high. would you say?
[00:15:44].440] – James Dowd
So my wife’s here within earshot. She may think it’s a bit too high or a bit too accessible but yeah these these guys spent many hours on the road and they can’t watch TV while they’re driving. Hopefully they’re not and they’re on the phone so I speak to probably every one of our drivers at least at one point in time over a two week period.
[00:16:08].960] – Commentary
Let’s pause here for a second. Communication in our organizations is often overlooked. We just expect that where we are talking to each other we are sending emails. But how clear are you about the communication that you have. Are you truly communicating in a way that people are inspired and truly understand what you expect of them. I work all the time with my leaders about how to improve their conversations on expectations. And if you are struggling with that at all. I love to talk to you. There’s certainly something I can share with you that would help. Now back to the interview with James.
[00:16:43].190] – Gene Hammett
I know I know we’ve been kind of going through this but you know when you were looking at creating a business with employee first did anyone call you crazy or tell you you’re wrong.
[00:16:54].880] – James Dowd
Oh yeah. I went out to dinner with a an owner of a competitor much larger in Tennessee and he essentially said we’re going to fail. He said drivers will take advantage of you. They the productivity will now be part of what he said had married and we we’ve had a sort of let folks know that you have to make every attempt to work with. We’re not going to pay you if the ability for you to to drive it they may get it but yeah yeah he he was one of our insurance for a great time. Said he had never heard of that and made a snide remarks to us saying there’s probably a reason I never heard of it yet. So if it wasn’t it wasn’t very encouraging. No longer our insurance broker. Well he moved on.
[00:17:51].170] – Gene Hammett
To pull the audience in here to my research. If you haven’t heard it before I’ve had over 500 interviews with founders and CEOs of fast growth companies these companies on the INC 5000 list. Many of them on the Inc500 and nine out of ten. And it’s actually higher than that if you want the very specific numbers. At one point time was ninety four point one percent say its employee first. Now five out of ten will say its employee first. Absolutely like it just has to be the way you are James. 4 out of those nine go you know it’s really close. Like our customers are so important to us but it just has to be employee first and only one out of 10 will say it’s customer first every time bigger companies I found will tend to say its employee first but those bigger companies as I know are having retention problems there they’re much more short term focused on quarterly numbers and things like that hitting hitting Wall Street numbers and things. You’ve got a long term focus. Where do you see this going with your employee first as you kind of think about the future?
[00:19:49].660] – James Dowd
We do. And the following year we’ll probably be in a hundred and fifty without acquisitions we’ll be doing this organically. So we’re going to need managers within weeks people around the folks that are presently working for us that. Are exude the same ideas or or have bought into what we’ve done with the drivers and with our other employees as well. I don’t mean to discount the others but the drivers in the majority of our employees and they are the hardest working.
[00:20:22].690] – Gene Hammett
James that I would love to ask you again Don’t tell me anything that you don’t want to share publicly because we have a pretty big audience here. But what mistakes have been made in this journey of fast growth that we could learn from.
[00:20:36].160] – James Dowd
You said this was a 45 minute. We that’s the system. We’d have to extend that a couple of hours. Oh gosh.
[00:20:43].920] – Gene Hammett
Give me just one that really sticks out in your mind is something that we could learn from.
[00:20:55].450] – James Dowd
Oh man. There there there there are so many and I want to give the I guess insurance views is a. We were told that if you grow too quickly the insurance company will drop you or a insurance company will drop you. We pooh poohed that. So that’s not because our premiums are going up each month. But lo and behold the March of this past year with 30 days notice they drop us and we it was more than just going out and getting new trucks. We had a switch from our rented leased trucks over to rented trucks.
[00:21:36].460] – James Dowd
And we lost over the period of two weeks about one hundred and fifty one hundred and seventy thousand for new company. That’s that’s a real gut punch. In addition to that what would we have done differently. And we just purchased our trucks and not age. We had only one foot in here we went both my partner and I we we went into this you know savings and not taking salaries and everything else that entrepreneurs do and it’s a startup. But I would have worked faster to purchase our own trucks a couple of things happened a year.
[00:22:18].830] – James Dowd
Your costs go down because you will see the equivalent if you rented a car or you owned a car of course a rental is going to be more expensive. Also your insurance goes down dramatically when you own it because you’re insuring it for the value of your note they have with the bank. Whereas a a rental entity whether it be Tennessee or Ryder or one of those they’re insuring it or the depreciation value which is always going to be higher. So those are two and there probably another 50 they’re in there but I fully believe that going through that is made us better leaders for the future for now and for the future. And we also appreciate it more having having those toe stubs.
[00:23:07].920] – Gene Hammett
I want to ask you something about leadership. You know you have learned to lead through this team maybe you learn it from other places but I’m really curious about the defining moments of your leadership as you’ve grown a fast growth company.
[00:23:24].110] – James Dowd
Defining moments can you be more clear?
[00:23:29].970] – Gene Hammett
Well you know you did a big pivot right you had to go from one business model to another so that was probably one defining moment. You probably had to change you know deciding to do to really double down on this employee first. That was probably a defining moment right. Well just tell us about that. We went through and kind of struggled struggled your way to be the leader that you are today.
[00:23:56].320] – James Dowd
Right. So if I came to work for you in your industry you have a wealth of knowledge there and you’re relaxed about it because your experience is is your knowledge base. So my partner and I started this company and we’re talking to drivers from interviewing drivers. We have zero experience in the industry in the business and even knowing about trucks. We could’ve went down the list of all the things we didn’t know about. So it was important that they knew our commitment was there because lord knows our knowledge base wasn’t there. And then from that point I would ask a ton of questions.
[00:24:37].070] – James Dowd
So it’s to the point that in wanting to know what their jobs are about and how to do that better. That I’ve actually passed my tests where a CDL permit. I don’t know if I’m going to be driving off this road that I need to know what these guys are going through and they say oh man they love that. That’s that’s that’s spread like wildfire. I was getting calls that you’re coming out with me now. We’ll go out on the road. My wife heard that as well she Yeah I can really be doing that.
[00:25:06].200] – Gene Hammett
Well I can get a movement to to your team to the employees. One last thing I want to ask you.
[00:25:14].030] – James Dowd
What have you seen as the overall benefits of an employee first approach the if you have a good employee the one saying in a small business this is the one thing you really hope you can instill in them is if they have another opportunity which they view as a better opportunity if it if you really develop that relationship with them you hope they’ll come to you first. And is one of the one of the part of the litmus test of interviewing a new employee is you know they’re excited about the job they’re most likely getting a raise.
[00:26:01].180] – James Dowd
They like the ability that they like the fact that they’re going to be home with their family every other night and on weekends. You know some of these guys are on the road three weeks in a row without seeing their family. I’ll ask them what type of notice or do you have to give. And if they see anything other than well two weeks. The only exception to that is two weeks. But I know from the past once guys leave it can be shorter. But they have to say two weeks because if they’re not going to do it to their existing employee they’re going to do it to us when they if they find another opportunity. And we’ve had a couple of guys that they thought the grass may be greener. We’ve discussed it and they’ve been able to retain them.
[00:26:45].250] – Gene Hammett
Well I appreciate you sharing your wisdom here James. A nontraditional industry with a non-traditional approach to growth. Employee first is something I really believe in. Thanks for sharing your experience with it here on the podcast
[00:27:01].420] – James Dowd
Thank you so much, Gene. Thanks for having me.
[00:27:03].450] – Gene Hammett
What a great interview. Love talking to founders out there that have figured out that employee first is driving tremendous value for the organization for the people involved for the customers because putting employee first really does make it so that those goes employees want to serve the customers they really want to prolong the fact that they found a great place that cares for them and takes care of them. So that is a really amazing message today from James. I really loved the part where he talks about you know some of the difference in his turnover rate like the industry average being 100 percent moving down to about 5 percent and really some of the benefits that happens behind that and really creating some great stories for those employees that they weren’t able to afford.
[00:27:52].000] – Gene Hammett
You know traditional housing and loans until they were able to put them on this guaranteed salary and so much has been opening up for them. So I share this with you because your industry is probably different your industry is probably a little bit more knowledge based than driving a truck and there’s nothing wrong with driving a truck. But I want you to think about those people or even harder to retain those people that you have are probably even more difficult to replace.
[00:28:20].650] – Gene Hammett
So when the employee first strategy you really could see the benefits of that long term and that’s what you have to do. You have to really be looking at the long term aspects not short term. Well that’s our piece here today. Employee first is something I believe an employee versus something that I think you should consider if you have any questions about what that means and the strategies behind it how do you get started. Make sure you reach out to me [email protected] as always with courage. Will see you next time.
Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.
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