That’s not something any of us care to hear, but occasionally turbulence gets intense.
Similarly, by most reports, driver turnover in 2018 is already showing signs of intensifying and we are just a week into the year.
In a recent meeting with a large carrier, the executive team spoke of attending an investor conference where the talk focused around, “It has never been this bad.” The team wanted to know if we were seeing similar spikes in our driver turnover database.
Here’s how we answered them:
The Stay Metrics Carrier Community Database has seen an upward trend in turnover. The good news for our carriers is that while the ATA reported Q1 v Q2 turnover increased 16%, on average our carriers experienced a much more modest increase of 3%. So, our carriers are not immune from industry trends, but so far have been meeting them with better performance.
But looking at 2018 – the story could be different. In the past weeks, we have been looking at industry trends, talking with our clients and examining our data. It seems clear that driver churn is on the rise.
Here are my views as to why the increase in churn and what you can be doing to combat the trend.
Why, and why so early?
These are four factors contributing to the potential for increased driver churn, even among those carriers that have been managing it well to date:
- The ELD mandate – Though enforcement will follow later this spring, the chatter surrounding ELD implementation, driver “retirements” in protest, and the potential reduction in driver capacity (both as drivers leave the industry and existing drivers drive less) is quite loud.
- Sign-on bonuses – Already the industry is seeing some of the largest sign-on bonuses in history.
- Contract rates – It is common knowledge that contact rates are expected to go up; with some reports of 10-12% increases.
- Pay increases – Several national carriers have already announced substantial pay increases.
Your best drivers have been waiting for this!
Just as you are aware of these environmental factors, so too are your drivers. Don’t get caught being complacent about your core driver base. It is easy to believe that our current “driver core” is safe and secure since they haven’t moved away to another carrier.
In today’s environment, complacency is your enemy. We believe that many of these drivers are more sophisticated and savvy than they are often given credit for. Many understand that until recently there was little fluctuation in a total compensation package.
These same drivers have been waiting a long time for driver pay to make a substantial shift and they are seeing the beginning stages of increases. These drivers will look long and hard at double-digit opportunities to increase wages; they will also look hard at some of these large sign on bonuses. At the same time, their ability to discern a “real increase” from a “same pay, paid differently” is much more sophisticated. (Don’t underestimate the role that Social Media plays in enabling drivers to compare packages and experiences across carriers.)
What can you do?
For starters, our experts suggest the following:
- Communicate you’re aware, attentive and working with your customers to increase rates allowing you to pass on a raise.
- Consider a % split comp model as our research has shown a higher level of pay satisfaction versus a per mile model. Drivers like the % split model, as they feel it allows them to share in the upside. If you can manage it, you might consider allowing a driver to choose between both models. This should give pause to drivers looking at the neighbor’s grass, but perhaps encourage them to stay with you, but move over to the % split model.
If you are a Stay Metrics client – use your rewards program as a differentiator:
- If your drivers have the chance to earn $600+ in points annually, the chances are his/her family is enjoying this perk as much as the driver. Some of our most successful carriers have increased their programs to $1,200+ annually. In the words of one of our earliest and best clients, “I want my best drivers to take their family on vacation, on me, every year.” That statement engenders loyalty.
- Even if you don’t increase the amount drivers can earn, make sure your rewards program is robust enough that it gives pause to a driver considering leaving the flock. Your program should also create a conversation around the dinner table at home. If a driver is considering leaving, the home team can remind him/her about the entertainment bundle or vacation that they have been saving for. (Reminder: We recommend rewards categories that help achieve your operating goals, potentially offsetting the cost of the awards.)
- Use more Applause awards. Research consistently shows that lack of recognition and rewards are reasons for leaving jobs. How many times have we all heard drivers say, “They just didn’t appreciate me.” Applause awards allow you to recognize drivers, for above and beyond performance – but also for being consistent performers. We encourage you to work with your Account Manager to increase the frequency of giving Applause Awards. Perhaps set a goal that 10% of your drivers will receive an Applause Award each month. They are economical and underutilized. They generate considerable goodwill. Become great at Applause Awards; make it part of your culture.
Finally – for clients and non-clients alike:
This year has the potential to be a wild ride. We encourage all trucking industry leaders to “Lead with Love.” It is up to us to make every effort to ensure that drivers understand that we are working to raise our customer rates and are fighting to put more in their weekly settlement.
We know 2018 will bring great opportunities and many challenges to the trucking industry – the Stay Metrics team is ready to help you meet them.