Getting a Handle on your Trucking Company’s Retention and Increasing your Bottom Line

Growing your fleet and generating more sales without tending to your bottom line is a little like the old Jackie Mason joke when he tells the audience how rich his brother-in-law got by selling watches at cost. So how’s he making any money if he’s selling them at cost? He sells a lot of watches! This makes as much sense as companies with high turnover expanding and buying more trucks when the whole point of being in this business to begin with is to generate profit. Unless I’m missing something here and I don’t think I am.

So knowing what we now know on this issue, if you’re a company with high turnover, growing your fleet size should be the last thing on your mind. If the purpose of being in the trucking business is to make money, your focus has got to be on reducing your driver turnover which goes hand in hand with reducing your operating cost to it’s lowest possible number while maintaining your fleet size. I guarantee you will make far more money getting your turnover in line than growing your fleet while you still have high turnover.

So you need to know your numbers before you can enter the strategy phase of determining exactly how you’re going to take your driver turnover number and reduce it as low as possible. Want some motivation for this effort? Fact: Companies with lower turnover have fewer accidents. Fact: As I revealed in an earlier article, the TCA InGauge benchmarking program confirms a direct correlation between lower CSA scores, insurance premiums and best in class Return on Investments i.e. higher profitability. Visit: www.tcaingauge.com.

So here is a good starting point for many of you. No truer words were ever spoken than the phrase ‘you cannot manage what you cannot measure’. It is just as true now as it ever was. So let’s begin by getting a very clear picture of exactly where your turnover is now at, and here is how we are going to do it. Before we get started I want to mention that it is very important here to include all drivers in your calculations no matter if they left on their own, were terminated or left for health or family issues. At this point, why they aren’t at your company now doesn’t matter. We are just looking for the honest bottom line of your turnover.

Use this formula to calculate your overall turnover rate:

Drivers no longer with the company (year to date) / Elapsed days x 365 / total # of Drivers.

This is going to give you the Overall Company Turnover.

For example: The company lost 100 drivers year to date. That number is divided by days elapsed from January 1st and then you divide by the total number of drivers in the company.

This example is a 150 driver fleet that has lost 100 drivers year to date. 100 divided by 256 (the number of days since January 1st when I wrote this article) divided by 150 = 74% turnover.

Now we are going to determine our 12 month or Short Term Turnover Rate. We do this with this formula:

Drivers no longer with the company that were hired in the last 12 months / drivers hired in the last 12 months.

So now that we have these numbers we can begin to get our hands around just how substantial the issue is, right? Now we can begin to deliberate or debate the kind of improvement we think we can achieve over a reasonable timeframe. What should the goal be over the next 12 months? Of course that’s up to you folks. We know the driver pool is shrinking. We know that without drivers we are all unemployed. No one needs a trucking company without any drivers.

If you think you need a clearer picture on what you might be able to achieve I recommend that you drill down further with your measurements to discover specific reasons behind the turnover numbers. You’ll likely find some low hanging fruit right at your fingertips.

So here is how you do it. Look at your individual dispatch boards as though they are individual fleets within your company because they really are. Now just apply the same calculations as we did for the overall fleet to each individual dispatch board. At our company, we had six different dispatch boards. So every month I would receive two turnover numbers for each board and I would also receive the overall and short-term numbers for the entire fleet. For those keeping score, that’s 14 reports.

When you’re done this you’ll likely want to look even deeper. At our fleet we had approximately 100 Company Drivers and 200 Owner Operators and we decided that we wanted to measure each group separately. So now we are producing 28 separate reports. You’ll realize soon enough that once you get the formulas up to date, these reports are not difficult to generate. In fact, once you start they become easy. Not to make things appear to be overly complicated, because they really aren’t, we also had three training trucks and we decided that we would gauge the success of our training efforts by also measuring our entry level drivers in the same way. 29 monthly reports allowed us to see where our worst problems were which gave us direction on where we needed to focus first. In your situation, the number of reports or calculations may be different, but the objective is to measure the overall actual turnover numbers and compare these to the same types of measurements for dispatch sub-sets of your driver teams. Go through this exercise and see what it shows you.

Of course what you’re looking for is any anomalies that might show you where to focus your efforts. I guarantee that you will find some low hanging fruit when the numbers are finally revealed and you’ll be on your way. Making driver retention a key strategy is just good business; moving your company to one that is driver centric takes even more work but in the long run it is also the best way to ensure a sustainable best in class bottom line.

Safe Trucking

Ray J. Haight
Co-founder
tcaingauge.co