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FreightWaves Carrier Summit: Getting real on driver recruitment, retention costs (with video)

“There aren’t best practices about how to connect with drivers you had to lay off during a pandemic.”

Chad Hendricks and Max Farrell discuss driver turnover during the FreightWaves Carrier Summit.

Recruitment and retention are perennial challenges for carriers, but many companies aren’t using the right metrics to determine how much it actually costs to hire and retain drivers, much less align those costs with business operations and revenue goals.

“One of the potential problems we see with carriers is how they’re measuring success,” said Chad Hendricks, president of Brand Outcomes, a recruiting and retention firm.

Hendricks said companies will say retention is really important, and have metrics they are tracking, but those KPIs, he said often “don’t match up to the actual health of the organization.”

Hendricks and Max Farrell, CEO of Workhound, a feedback platform for frontline workers, participated in a fireside chat about driver turnover during FreightWaves’ Carrier Summit today.

Far too many carriers rely on what Farell described as “vanity metrics,” a category that includes the cost to hire an individual driver. So a carrier can shell out $2,000 per driver, but if you have 200% to 300% turnover, the actual recruitment cost is much higher, he explained. 

Hendricks recommended using a cost-per-hire-per-truck metric. Suppose the cost to hire is $1,500 per driver. But further suppose 25% of turnover occurs within 30 days. Then that one driver position is really costing $18,000 per year.

Yet another metric is something Farrell described as the cost per net added driver. Say a company has 1,000 drivers. Turnover is 100% and they spend $5 million a year on hiring. “I want to know what is that number when they add an extra 100 trucks in a calendar year,” Farrell said. Whatever the total cost is for them to add that 100 — that’s the cost per net add. 

“It’s a really powerful number because it shows how much an organization has to spend to grow their fleets in that time,” said Farrell. The more you have metrics that encompass how recruiting and retention impacts revenue and operations of the business, he added, “the more important retention becomes.”

Hendricks echoed that conclusion. If a company pegs the hiring cost at $1,500 per driver, they are not going to allocate nearly as many resources to recruitment and retention as they would if they realize the cost is actually $18,000, he said. 

Turning their attention to the pandemic, Hendricks and Farrell talked about the importance of communication and maintaining good relations with drivers, even those they had to lay off.

Carriers might consider building an alumni network offering former drivers access to company discounts, training programs and other perks. So when freight demand comes back, the company will be ready to pivot and rehire the drivers they laid off, Hendricks said.

During periods of change, Farrell said, companies have to learn to innovate on the fly. “There aren’t best practices about how to connect with drivers you had to lay off during a pandemic,” he observed.