People Person – Danny Herman Trucking’s Joe Herman
A University of Alabama graduate with a degree in Broadcast Journalism, Bentley spent 15 years as a trucking Publisher before becoming the Editorial Director for Randall-Reilly's Recruiting Media division.
“At Our Company, Our People Come First” is a very popular CEO-mantra, and companies in numerous industries say they want to practice what they are preaching. In theory, at companies that prioritize people, recruiting gets easier, turnover drops off, service gets better and great ideas come to work. However, putting people first at a company, what is commonly referred to as being People-Centric, is easier said than done.
It cuts against the grain of short term profits, where owners or investors are often serving spreadsheets instead of human experiences; but if you make “People First” a core issue, you can program your culture to make it work. The key for most executives is to always measure their people skills by understanding the employee experience. For Joe Herman, the President of Mountain City, Tennessee-based Danny Herman Trucking, the process comes naturally.
Joe doesn’t have to disguise himself ala an executive on Undercover Boss, the reality TV show that demonstrates how leaders can be transformed by working in the field and getting to know employees at the human level. This is empathy by walking around, but Joe can “walk the walk” because he’s been in the same position as the majority of employees at Danny Herman Trucking.
While that may sound cliché, there is actually an expression in the South that may describe Joe Herman even better: he gets it honest.
His parents, Danny and Barbara, bought their first truck from an uncle. Danny drove for other people before he and Barbara started Danny Herman Trucking in 1964. Their original vision was providing quality service to customers. “My father was a true trailblazer. He was giving delivery times and transit times in hours instead of days, which was unheard of then,” Joe said. “All he had to sell was service, but he was dedicated at what he did.”
Initially, Danny hauled a lot of flatbed and refrigerated freight. Being based in Southern California, he also began delivering beer to the northern part of the state and hauled whiskey back. For the next decade, Danny continued as a one-truck operation. Wanting to expand, he bought a second truck in 1974 and applied for more authority. “In those days, prior to deregulation, dad fought the former Interstate Commerce Commission (ICC) a lot to get the additional authority,” Joe said. “He was a fair man but didn’t mind a good fight when he thought he was right.”
Joe literally grew up in the trucking industry. He first went on the truck with his dad as a two-year-old and likes to joke that kindergarten put his career on hold for a while – but he’s not far from the truth. When Danny moved to Mountain City, Tennessee in 1979 to begin providing service for a Levi Strauss plant nearby, Joe was only 11 years old. By then, Danny had five trucks and a handful of owner operators leased to him.
One day, the Levi Strauss traffic manager asked Danny if they would haul some loads to El Paso. Worried that he would have to deadhead back, Danny quoted the rate as if he was delivering to Los Angeles and was surprised that they took it. This became a regular occurrence, and Danny soon went to El Paso to look for back-haul freight opportunities. While there, he realized how much the Maquiladora industry had grown along the U.S./Mexico border. (Maquiladora refers to when a U.S. company’s factory is in Mexico to take advantage of inexpensive labor and less regulation. Typically, parts are shipped into Mexico and the finished product is shipped back across the border).
Teaching Joe about cultural differences and how to conduct business the right way became a priority for Danny, but he also groomed his son to learn about trucking from the ground up. At 14, Joe swept floors in the shop and soon became a “grease monkey”. He could rebuild an engine and overhaul a truck by the time his friends were driving cars. Joe then worked in Operations in the summer and after hours during his senior year of high school.
He considered a career in law enforcement and took a few Criminal Justice classes at East Tennessee State University but discovered that college was not for him. “I was miserable and came back to work at Danny Herman Trucking. I’ve been here ever since,” Joe said. By the mid-1980s, as Danny got involved with automotive freight in Laredo and Brownsville, Texas, and expanded into Nogales, AZ, Joe was actively involved in the business. He started driving a truck and ran as part of a team operation for a year. After that, he went back as Director of Maintenance followed by a stint as Director of Safety. While in that position, he moved to El Paso.
Joe had been dating a lovely lady named Lucia who was working in Danny Herman Trucking’s Nogales office, and she would soon become his wife. After getting married, Joe oversaw Danny Herman Trucking’s terminals along the US/Mexican border. In 1993, Joe moved back to Mountain City and started running day-to-day operations as the Vice President of Operations.
During this time, Danny Herman Trucking lost a big freight bid with an automotive OEM. “It was tough at the time but turned out to be one of the best things that ever happened to us,” Joe said. “It forced us to diversify, and now no customer represents more than 10% of our business.” Joe held the VP of Ops title until September of 1996, when he was appointed as President of Danny Herman Trucking. Since then, Joe has focused on growth – personally and professionally. “In my younger days, I liked to party a lot and should have grown up quicker. It’s in the rear view mirror now, and I know the Lord had a plan for all of that,” Joe said. “I could have got where I am today sooner and been more advanced in this position. I’m not where I want to be, but I’m better than I was.”
Joe said his father always believed handshake deals were good enough, but near the end of the 20th century, Danny was getting tired of the corporate world and contract language. In 1999, Danny sold the company to Joe and Joe’s younger sister, Kristy. “My parents always supported me and my sister, and the company was always a true team effort with my mom and dad,” Joe said.
Danny Herman Trucking continues as a family business. “I’m proud to say my mom still works here and enjoys it everyday. They say behind every successful man is a great woman, and that was certainly the case with my parents,” Joe added. “Mom was great for dad and I’m glad she’s still here for me.”
When Joe began running the company, the truck count was 95. Danny Herman Trucking, who will be celebrating a half-century of service in 2014, now operates 325 power units. Another 25% of the fleet is comprised of owner operators. More than one-third of the drivers run as teams. In the next five years, Joe sees a lot of opportunity to grow Danny Herman Trucking to the 500-truck mark. “At that size, we can still be personable, provide a high level of service and maintain our strong on-time delivery percentage, which is currently 98.6%,” he said.
However, growing in today’s trucking environment will not be easy, and Joe admits it’s going to be challenging with all of the regulations. “We run product in and out of California, so we have to deal with the EPA and the California Air Resources Board for emissions. The OEMs have been forced to do more R&D, which cost them money – so they have increased the price of trucks,” Joe lamented. “There are more sensors and electronics, which has driven maintenance costs up a few pennies per mile. Trucking has always been resilient, so we will survive.”
To generate more revenue as the economy improves and capacity tightens, Joe said Danny Herman Trucking will continue building their logistics division. He’s currently focused on process improvements, leadership training, internal communications, and transitioning the fleet to new technologies, like e-logs, as well.
Joe acknowledges the biggest short-term challenge facing our industry is the driver market getting tighter. “The shortage is coming and shippers have to realize fleets and drivers are not a commodity. We never have been but are treated like it,” Joe added. “They can’t keep imposing their inefficiencies on us – especially the drivers. They are the ones that truly suffer.”
In an effort to increase driver pay, Joe is working with their top customers to address these issues. He wants to raise compensation but needs the rates to support it. Until that happens, he is developing a program to give drivers an opportunity to make more money by improving their fuel mileage. “I can’t get the money through rate increases now, but if drivers can help us be more efficient, we will share it,” Joe said.
With Obamacare on the horizon, Joe said Danny Herman Trucking is also concentrating on driver wellness initiatives and encouraging their employees to have fitness checks. “We will keep providing health insurance and recently negotiated a 4% reduction in our rates, but I will need their help to keep these costs down.”
Despite these obstacles, Joe says he will never compromise about putting his people first and operating on the morals the company was founded upon. This can be especially challenging along the Mexican border, where many fleets take advantage of opportunities to buy business – but Danny Herman Trucking is not one of them.“We do a lot of cross-border freight where we interchange at the border. About 70% of our business originates in or goes to Mexico, but I am proud to say Danny Herman Trucking has never bought a stick, box, or load of freight,” Joe said. “We have stuck to our values and conduct business in a way that lets us sleep good at night.” Danny Herman Trucking is also a faith-based company, and Joe says the recent recession only helped increase his beliefs, which were instilled in him by his mother and father years ago.
Joe says the best advice his father ever gave him was, “Always tell the truth and you won’t have to remember what you said. You can look people in the eye without hesitation.” Danny also taught Joe that they are in the people business first and that trucking is merely a tool. “Many fleets think of drivers as a number or necessity to get trucks down the road, but we consider them as part of our family. We’re not perfect, but we are willing to address issues and find what works best for all parties involved and move on.” This proactive remediation results in satisfied drivers who are viewed as valuable assets, rewarded for their good work, and communicated with frequently and openly.
“Many fleets talk about an open door policy to management, but we use it. I talk to drivers in orientation, and while there is a chain of command, I want them to know they can call me,” Joe stated. With experience in various aspects of trucking over the years, Joe recognizes and addresses the environmental stresses that may impact drivers’ behavior and actions. “A lot of fleet presidents did not grow up around trucking like I did. Aside from God and my family, it’s my life. I love people and have learned we’re all going through something, so I try to help everyone find a solution. That’s rewarding in itself.”
Joe’s management philosophy is based on the drivers themselves – keeping them happy, safe, productive, and employed – which empowers Danny Herman Trucking to improve retention. His people-centric management approach has fostered a culture of safety and driver satisfaction, and resulted in a turnover rate of only 59% – well below the industry average. “We’ve had many good drivers at Danny Herman Trucking over the years, and we still do. A lot of drivers leave our company but often come back,” Joe stated. On the morning we interviewed Joe, he shared this text message he had just received from a driver:
“Joe, if it hadn’t been for a family situation, I’ll would never have left Danny Herman Trucking. I have never been treated better anywhere else.”
Despite examples like this, Joe remains humble and says he can’t take all the credit. “It’s not me. We have a great group of people, drivers, and support staff that live our culture,” Joe said. “My job is easier, because our leadership team and every employee at Danny Herman Trucking is driver-focused. It’s not my culture, it’s theirs.”
Spoken like a true people person.