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Does your company have a driver retention budget?
Quote of the Day
"Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall."
-- Stephen R. Covey
My Point
What's in Your Retention Wallet?
By Marvin Shefsky
Plenty of carriers have advertising budgets designed to recruit additional drivers, but how many of those same carriers have a serious retention budget aimed at retaining the drivers they already have? I can't answer that, but based on anecdotal evidence and conversations with industry leaders, I'm shocked at how many carriers have no formal retention budget at all. Oh, sure, companies hold driver appreciation days and raffles and hand out awards and bonuses for jobs well done, but how many of them have an institutionalized, well-funded retention program whose only goal is to keep their own drivers, especially their veterans with several years of loyal service, on board?
On the other hand, I have analyzed the content of ads in our publications as well as competitors, so I know that approximately 90 percent of all recruiting budgets are spent on ad campaigns aimed at luring experienced drivers away from companies like yours. What does it all mean? It means that other carriers are coming after your most valuable assets -- your veteran drivers -- and they're coming after them hard with big carrots, and chances are pretty good that your company isn't doing nearly enough to protect itself against this potential devastating loss.
We all know the numbers. The industry-wide annual turnover rate among drivers exceeds 100 percent. The turnover rate varies greatly, not just from one carrier to another, but from one group of drivers to another group within the same company. Less-experienced drivers and drivers new to the company, for example, tend to turn over far faster than veteran drivers, so a company may have to replace that segment of its drivers three or four times a year compared to once or not at all for its more experienced people.
Given the cost of replacing a driver ($4,000-$8,000 according to industry estimates), along with the increased production and reduced liability of experienced drivers, the drivers in your veteran, low-turnover pool are worth several times as much as those in your churning pool. Ironically, if carriers have a retention budget at all, they tend to spend the majority of it on those drivers in the churning pool rather than those in the veteran pool. What's wrong with this picture?
Conventional wisdom says that once a driver has three or four years of seniority with a company, he or she tends to become comfortable with their position and stops thinking so much about "greener pastures." Carriers know this, too, and perhaps that's why they don't focus their retention efforts on their veteran drivers. In today's economic and employment environment, however, it's time to rethink everything we thought we knew about driver retention.
The fact is, your best, most productive drivers are being bombarded like never before with attractive opportunities from other carriers. How much is it worth it to you to keep those incredibly valuable assets on your team? $500 a year? $1,000 a year? $2,000 a year? More?
Sure, you need a campaign to attract new drivers to your fleet, but you need perhaps an even bigger campaign to keep the good drivers you already have. Does your company have a retention budget? Is it effective? How much should you spend on retention? Should you spend more of it on veteran drivers? If so, how would you break it down? Are you and your company doing all you can to protect your most valuable assets. Let us know what's on your mind. Give us your opinions. We'll make it really easy. Just reply to our "Question of the Day" elsewhere in this issue. We've got some retention ideas of our own we'll share in future issues of Inside Trucking, but we want to know what you think. As we say every issue, we're all in this together.
We'll close with a familiar idea that costs nothing but could be priceless in terms of retention: Insist that every person in your company treat each one of your drivers with respect. For many drivers, a little show of respect makes all the difference in the world.
-- Marvin Shefsky, Publisher/CEO
