TURN UP RETENTION IN A DOWN FREIGHT MARKET
Turn Up Retention in a Down Freight Market
With a down freight market, you may think you can relax on finding new drivers, but recruiting and retaining efforts must continue in order to keep your workforce strong. High turnover rates among truck drivers remain a big challenge, so companies that continue to invest in their recruiting and retention efforts will see greater rewards when the market turns again. Keep reading for essential tips on how you can improve your retention rates and become an employer of choice for drivers.
Understanding the Turnover Rate
Before diving into the strategies for improving driver retention, it's essential to understand what the turnover rate represents and how it is calculated. The turnover rate measures how many drivers are exiting an organization within a given period. It is calculated by dividing the number of driver separations by the average number of drivers and multiplying it by 100.
To calculate the turnover rate, follow these steps:
- Designate a specific time for the calculation, such as annually.
- Determine the number of drivers at the start and end of the period.
- Calculate the average number of drivers for the period.
- Determine the number of driver separations during that period.
- Divide the number of separations by the average number of drivers and multiply by 100.
By understanding the turnover rate, you can assess the impact of driver attrition on your operations and profitability. Monitoring the turnover rate can also show you how retention strategies are working or if they need to be adjusted.
The Cost of Driver Turnover
Driver turnover comes with a hefty price tag for companies in the freight transportation logistics industry. Let's take a moment to understand the financial implications of losing a driver to a competitor:
- Recruitment and Training Costs: When a driver leaves, companies incur expenses related to recruiting, hiring, and training a new driver. These costs typically exceed $15,000 per driver.
- Lost Revenue: A driver's departure means lost revenue potential. A company can lose more than $250,000 per year from the departure of a single driver. This loss in revenue can seriously impact the company's financial health.
- Equipment Costs: Companies often have lease or purchase payments for trucks that remain unused when a driver leaves. These costs can amount to $1,500 to $3,000 per month, or $18,000 to $36,000 per year.
Taking into account all these factors, the total loss to a company in one year due to driver turnover can be significant in revenue and potential revenue. With an average turnover rate of 89% in the industry, the financial impact of driver turnover becomes even more detrimental.
The Key to Success: Driver Retention
To mitigate the negative effects of driver turnover, companies must prioritize driver retention. By focusing on retaining your drivers, your company can build a stable and reliable workforce while avoiding the high costs associated with turnover. But what strategies can you employ to improve driver retention? Let's explore some essential solutions:
1. Cultivate a Positive Company Culture
The company culture plays a critical role in driver retention. Owners and managers must set the tone by treating employees with respect and creating an inclusive and supportive work environment. Evaluate your performance and interactions with employees, and make any necessary adjustments. It's essential to extend this culture to all levels of management within the company.
- Meet with supervisors and educate them on the importance of the company culture and their role in fostering it.
- Devote extra time to educate dispatchers, fleet managers, and other low-level supervisors.
- Monitor supervisors closely, as their behavior can significantly impact driver turnover.
2. Prioritize Work-Life Balance
Work-life balance is a top priority for drivers, especially the younger generation. Companies that offer flexible schedules and adequate time for personal commitments can attract and retain drivers who value a healthy work-life balance. Implement strategies that allow drivers to spend more time with their families and provide sufficient vacation time.
3. Enhance Compensation and Benefits
While work-life balance is essential, compensation and benefits remain crucial factors for driver retention. Competitive pay rates, retirement plans, comprehensive medical care, dental and vision care, and bonus programs can all contribute to driver satisfaction and loyalty.
4. Provide Quality Equipment and Technology
Invest in high-quality trucks and equipment to ensure that drivers have reliable and efficient tools to perform their jobs. Well-maintained equipment not only improves driver satisfaction but also enhances your company's image.
5. Foster Open Communication and Feedback
Maintain an open-door policy and encourage drivers to provide feedback on their experiences and concerns. Regularly seek input from drivers to understand what is working well and identify areas for improvement. Actively address any issues raised by drivers to demonstrate that their voices are being heard.
6. Recognize and Reward Drivers
Recognize and reward drivers for their hard work and loyalty. Implement incentive programs, performance contests, and recognition initiatives to show appreciation for their contributions. By acknowledging their efforts, companies can foster a sense of pride and loyalty among drivers.
7. Offer Career Development Opportunities
Provide drivers with clear career paths and opportunities for growth within the company. Offer training programs, mentorship initiatives, and tuition reimbursement to help drivers advance their careers. By demonstrating a commitment to their professional development, companies can attract and retain motivated drivers.
8. Embrace Diversity and Inclusion
Create a welcoming and inclusive work environment that embraces diversity. Encourage women, people of different ethnic backgrounds, and individuals from various demographics to pursue careers in the trucking industry. By fostering an inclusive culture, companies can tap into a broader talent pool and strengthen their workforce.
9. Leverage Technology
Embrace technology to improve efficiency and driver satisfaction. Use mobile apps and in-cab communications to provide drivers with access to information and resources. Implement route planning software and other tools to streamline operations and enhance the overall driver experience.
10. Participate in Apprenticeship Programs
Engage with apprenticeship programs, such as the Federal Motor Carrier Safety Administration's Safe Driver Apprenticeship Pilot Program, to attract younger drivers. These programs provide valuable training and support for young drivers, enabling them to gain experience and advance their careers in the industry.
The Road to Success
In a highly competitive industry like freight transportation logistics, driver retention is crucial for the long-term success of companies. By prioritizing driver satisfaction, work-life balance, and career development, you can create a positive and supportive work environment that attracts and retains talented drivers. Investing in driver retention not only reduces turnover costs but also improves operational efficiency, customer satisfaction, and overall profitability.
Remember, the key to success lies in cultivating a company culture that values drivers, providing competitive compensation and benefits, offering career development opportunities, and embracing technology to enhance the driver experience. By implementing these strategies, companies can position themselves as employers of choice in the freight transportation logistics industry and build a loyal and dedicated workforce.
As the industry continues to evolve and face new challenges, companies that prioritize driver retention will be better equipped to navigate the changing landscape and emerge as leaders in the field. So, invest in your drivers, and they will invest in your company's success. And remember, recruiting doesn’t stop after the hire. You need to continue to recruit your current drivers because if you don’t recruit them, someone else will.
If you have company drivers, learn how the TeamOne Logistics platform provides leading solutions for recruiting, retention, safety training, and compliance. Contact us for a free custom consultation.