The truck driver turnover rate is surging to near all-time highs with recent statistics placing it around 89% according to a NewsNation report. This is dire news for trucking companies of all levels. The high turnover, coupled with a persistent and worsening, decades-old driver shortage, means that some companies are feeling the pain of the driver shortage, while a few companies are thriving, unaffected by either turnover or the shortage. So what’s the secret behind the success of the handful of companies who aren’t feeling the crunch in their driver pools?
It’s a concept called driver retention. In this article we’ll take a deep dive into truck driver turnover, driver retention, and how to better mitigate the impact of the driver shortage.
What is Turnover Rate and How to Reduce It?
With every driver that walks out your doors, you lose capacity. This is a direct blow against your efforts to improve your company’s profitability. The fact that most drivers exit your company and go to work at one of your competitors compounds the problem, because your competitor’s capacity went up while yours went down, and now they are ahead of you. Therefore, it is important to have a metric that you can use to measure how many drivers are exiting your company. The metric used by most companies in the U.S. is called the turnover rate.
Here are the steps to calculate your turnover rate:
- Designate a period to use for the calculation. In this example we’ll use annual turnover.
- Determine how many drivers you had at the start of the year. For example, on January 1st, 2021, the company had 500 drivers on the payroll.
- Determine the number of drivers you have at the end of the year. For example, at the end of 2021, the company had 400 drivers on the payroll.
- Now determine your average number of drivers for the year. For example, (500 + 400) ÷ 2 = 450. So the company had an average of 450 drivers for 2021.
- Determine the number of separations for the year. Do not include drivers on temporary leave. For example, at the end of 2021, the company had 300 drivers who voluntarily or involuntarily departed.
- With these numbers in hand, we are now ready to calculate the company’s turnover rate. To do so we divide the number of separations by the average number of drivers and multiply that by 100. For example, (300 ÷ 450) x 100 = 66.6%. So the company has a 66.6% turnover rate.
Here is the formula for easy reference:
To determine your retention rate, simply subtract the turnover rate from 100. For example, the company had a 66.6% turnover rate, and when we subtract that from 100, we get a retention rate of 44.4%. As one number goes up the other goes down and vice versa.
With your turnover rate in hand, it’s time to start looking at strategies to decrease your turnover through improving your truck driver retention rate. This can only be accomplished by developing strategies aimed at driver retention.
Essential Tips to Improve Truck Driver Retention Rate
The effort to begin improving your retention rate starts at the top–with you. As the owner of your company, you are the one steering the ship. Your decisions and initiatives will flow down to the lowest ranks of your company and will have the largest impact.
To achieve success in retention, you, the owner, must set the culture for your company. How you treat your employees is critical in the success or failure of your business. Therefore, when working to improve your company’s retention rate, the first thing you should do is take a look in the mirror. Evaluate your performance and interactions with employees, look at the type of image you project to your employees, and make the necessary adjustments. Once that is done:
- Meet with your company’s supervisors and make sure they understand and implement the same adjustments. Educate them in the culture you are creating in your company and its importance to their success.
- Devote extra time in educating your dispatchers/fleet managers, operations managers, and other low level supervisors.
- At the lowest levels of management are where some of the biggest problems arise when it comes to turnover rates. Monitor your supervisors. If one is creating a negative culture by treating your drivers poorly, it is best to terminate that supervisor immediately. It’s surprising how often one low level supervisor can be responsible for a large percentage of your turnover.
Once you have your house in order the next items to address in order to improve your retention rate are:
The Value Exchange
It’s not all about money, and we need to understand it. There are other super important aspects that truck drivers take into account when deciding to move or stay:
- Various pension alternatives
- Medical care (most people will switch jobs for this, especially if it covers their family)
- Dental and vision care
- Better or more flexible working hours
- Enough vacation time
- Gym memberships at no cost (or similar)
- Free phones and gadgets Bonuses and prizes
- Performance contests
Build a healthy feedback culture
If you want to increase driver retention, you must solicit feedback from your drivers so they can tell you what you're doing well (and wrong), as well as complain when required. An open door policy is one of the easiest and cheapest ways to boost your retention rate.
Recognize their job
There’s a well known phrase in the truck driver community: “Meat in the seat.” When drivers ask other drivers about the company they drive for, a common question is: “Does your company treat you well or are you just meat in the seat?” That “meat in the seat” feeling comes from drivers who are underpaid, ignored, or treated thanklessy by their employers. It is one of the big reasons for a driver to hop to a different company. So recognize your drivers, reward their hard work and loyalty, and do everything you can to make your grass the greenest out there.
Work-Life balance should be a priority
Truck drivers desire to work flexible hours and spend more time with their families. The way you manage your drivers may vary depending on the sort of job they do and your requirements, but attempt to establish an atmosphere in which your drivers can thrive.
Make sure they work with high-quality equipment
Invest in high-quality equipment wherever possible. Truck drivers take pride in their vehicles. Putting them in old, poorly functioning equipment is an embarrassment to them and it should be an embarrassment to the company as well. Well-kept equipment is also important for your company’s image. If customers and other drivers see your trucks broken down on the side of the road all the time, or hear about your company in the news over an incident caused by poor safety standards, you’ll have a hard time staying in business, because no one will want to drive for you and no one will want to hire you.
Be honest with your drivers
Never lie to your drivers. Make it a zero-tolerance rule within your company and make sure every supervisor understands they are to be upfront and honest when dealing with your drivers. One broken promise is all it takes for a driver to pack his things up and move to another company. One of the biggest complaints drivers have about “bad” trucking companies is their dishonesty.
Driver care manager
A few forward thinking companies have created a position called the “driver care manager.” Individuals in this position need to have a positive attitude, be good listeners, and willing to take a proactive approach in advocating for your company’s drivers. The companies that are using driver care managers are seeing a big increase in their retention rates just by having someone whose only job is to care for the drivers.
How Much Does Driver Turnover Cost?
If all the above seems like too much hassle, or if you think driver retention is a waste of time and money, let’s take a moment and translate driver turnover into cold hard cash. Let’s say a truck driver has put in his notice. He’s unhappy with how he’s being treated, his pay is less than other companies, his fleet manager canceled his hometime twice this year, and the company has been operating outdated equipment. When he walks out the door to drive for your competitor, you’ve lost:
- $15,000 - $20,000. The amount you spent to recruit, hire, and orientate the driver.
- $192,000 - $480,000. The amount you would have made this year off this one driver.
- $15,000 - $20,000. The amount you’ll spend to recruit, hire, and orientate his replacement.
- $1,600 - $2,500/month or $19,200 - $30,000/year. The amount you’re paying on the lease/purchase payment for a truck that is now collecting dust in your parking lot.
The total loss to your company in one year because of one driver walking out your door to drive for a competitor: $241,200 - $550,000 in revenue and potential revenue.
If you have ten drivers walk out your door in a year, you’ve lost: $2,412,000 - $5,500,000 in revenue and potential revenue. Those numbers will continue to climb with each and every driver who quits to drive for someone else.
With an average turnover rate of 89%, and a worsening driver shortage, the need for a strong focus on driver retention has never been more important. When a driver walks out your doors and goes to work for another company, you’ve lost capacity and your competitor has gained capacity and that’s a key ingredient in a recipe for business disaster.
By making driver retention a priority, your business will thrive, the driver shortage will impact you less, and you’ll be succeeding–while your competitors who don’t understand the importance of retention–struggle to stay in business.
If you’re ready to make driver retention a priority in your company. If you’re an owner-operator looking for a partner who can help you grow and understands the negative impact of turnover. If you’re a driver looking for the greenest grass in the trucking industry–It’s time to join us at CloudTrucks.
Here at CloudTrucks we are forward thinkers on the cutting edge of trucking in the 21st century. Partnering with us means you’ll have access to 24/7 support, the best rates in the business, 100% control of your schedule, same-day pay, as well as access to all our tools to support you on the road including: Business intelligence and route planning software. If you’re tired of being meat in the seat, come drive with us and thrive with us.