Driver retention masterclass: The cost of recruitment

By reducing our turnover by half each year, we would save $360,000. In turn, this would reduce the revenue needed to support this expense to $7.2 million. Bearing in mind the company’s improved efficiency with a lower driver turnover rate, we might even be operating at better margins and need even less cost-covering revenue. It just keeps getting better.

But be sure to keep the focus on recruiting and hiring quality drivers. The objective is NOT to reduce the cost of hiring an individual driver. The aim is to minimize the OVERALL cost of hiring all your drivers. It is acceptable to spend more per hire if the selection and retention is improved.

With these kinds of numbers, it is obvious that reducing driver turnover has the potential for substantial cost savings and improved profits. In our example, going from an 80% turnover to 40% saves $360,000 per year. These cost reductions drop straight to the bottom line as increased profits or new funds for business growth investment. Improving driver turnover has a significant, positive impact on business financial health.

Earlier in this section, we suggested an average cost of $9,000 to recruit and onboard a new driver. Your cost will be different, and you need to estimate your own costs. Start by making a list of the “costs” that apply to your situation. Here are some of the typical cost elements for you to consider when estimating your own cost of hiring:

NOTE: For costs listed as “annual,” the total must be divided by the number of “new” drivers per year to obtain what the “per driver” portion is:

This list is a sample to help get you started. You may have others that apply to your recruitment processes and environment. For instance, your industry or region might require some very specific skills that go well above the typical driver training and orientation sessions needed to onboard an experienced driver.

We also know that lower turnover usually means a safer carrier. Which in turn means lower insurance expense, fewer accident claims, and less wear and tear on equipment with fewer drivers rotating through which means a higher residual value of rolling assets. Lower turnover means better turnaround of receivables through a better understanding of paperwork flow with seasoned drivers. Fewer service failures with less turnover means a stronger relationship with shippers and receivers.

Companies with lower turnover are more profitable companies. For you doubters, ask the heads of safety, administration, maintenance, and operations what the cost savings might be if they were in an environment of 50% less turnover than they work with now and then add these expenses into the cost of turnover. These numbers will likely far overshadow the $360,000 saved by Company A at 40% turnover compared to 80%.

Want to learn more about retaining your skilled workforce? I’m eager to talk with you.

Safe Trucking.

Regards,

Rjh