People Strategy: the overlooked contributor to declining profits
It is no secret that insurance is the third highest operational cost for Transport and Logistics businesses across the UK.
At Oscar Insurance Brokers we work collaboratively with our clients to look at the business as a whole in order to provide insight and strategies that can help to control these costs and keep them to an absolute minimum. This includes looking at all underlying fundamentals within Transport and Logistics businesses and identifying opportunities to reduce insurance claims, and by extension, premiums.
Whilst some of these opportunities may seem obvious, others are often overlooked and the impact that they can have long-term on the profitability of a Transport and Logistics business is extremely positive.
An often-overlooked approach to reducing insurance premiums is a people-centric strategy.
What if we told you that the key to increasing your profitability is to pay your employees above the average market rate?
We know this seems a little obscure, but this strategy is built upon our collective experience and our theory is quite simple:
It’s a snowball effect….
Paying above market rate helps with talent acquisition.
This, in turn, results in a higher standard of driver, work ethic and work output.
Along with assisting talent acquisition, it is also a cornerstone in retaining the best talent in the market.
This provides greater reliability, higher job satisfaction and lower rates of driver absence.
This creates loyalty and improves overall customer satisfaction, business stability and sustainability.
The knock-on impact of this increased retention of talent, and quality and reliability of your workforce will also continue to pay dividends in cost savings across your business long-term. Let us explain:
If you experience high rates of workforce turnover or absence, you will naturally become heavily reliant on agency drivers to satisfy continued business demand. This typically results in:
- Drivers that are unfamiliar with the business, the culture, the structure and the work
- Increased operational expense with higher hourly rates
- Higher levels of customer dissatisfaction if drivers aren’t inducted appropriately
- Higher level of claims
- Higher cost of damages (under excess)
- Higher levels of vehicle downtime
- Higher cost of replacing vehicles short term
- Increased insurance premiums
This knock-on effect can have a significant impact on renewal costs, which can have a very drastic impact on the overall profitability of a business.
Of course, if inducted appropriately, agency support can be of great importance when scaling a business and with the job market as it is, agencies provide a flexible solution for businesses in satisfying business demand.
If you would like to discuss how you can create and implement a successful people strategy and the positive impact this can have on your insurance premiums, please get in touch with us today.