There is no one I know who goes to work and tries to fail. There are, however, a lot of people that trucking companies set up to fail, starting with their new drivers and their margin generators, the dispatchers.
Most trucking companies are privately held, the barriers to entry into the business are minimal, and that leads to many situations. A driver sensing opportunities starts with one truck and grows from there. That was not my situation, but not far off. My father left me three trucks when he unexpectedly passed away. There are two common scenarios, folks were pushed into the industry or they took a leap of faith and just went for it. I did a little of both.
To get from one, two, or three trucks to what would be considered a trucking company takes drive, it takes hard work, and it takes trust in oneself.
What you won’t see are start-up entrepreneurs who have HR prerequisites. You don’t see communication training, conflict resolution, etc., among these owners.
And at one to three trucks, why would you? It’s when things take off that it gets problematic.
Most of these challenges as you grow your business are outside your walls. The finance community wants you, the bankers, new customers, the OEMs, fuel companies, all the suppliers, it goes on and on. A new entrepreneur has to make competent decisions regarding all of these necessities.
So, what comes last? In many cases, it’s the relationships inside the business because you don’t notice them slipping away.
That was true for me. We went from not measuring turnover to doing so and when we did, it was at 120%. Congratulations, the fleet is now 200 trucks, but you’re burning through 240 people a year.
There are two ways of countering this issue. One, hire more drivers faster, and for a while, many companies were very good at this. That was until an interruption in the supply of new drivers arrived in the form of Covid. Our older drivers decided this would be an excellent time to slow down or retire.
Take a good hard look in the mirror and ask yourself how you transition this company you have built into one that people want to come to work for, rather than flee as soon as they get a chance.
If you’re looking for a method of reducing turnover by outsourcing it to another company, you will never get it under control. Not going to happen. You created this situation, own it or stop whining. If you own it, you can change it; if you don’t, you won’t.
The cost of turnover permeates throughout the whole company, and it hides in every department. In talking to one of my clients last week, the following scenario came up: This company dropped its turnover last year by 50% and they do an excellent job of measuring the effects of turnover. All with the intention of dropping their turnover by another 50% this year, and I have every belief that they will.
They have nine dispatchers, and we were looking at average revenue per truck by dispatcher. A cursory look at the numbers put two of the nine dispatchers clearly ahead of the others. But when we drilled down a little, we found that one of these dispatchers has a turnover number that is far higher than the average of the rest of the boards.
So, when these costs were factored in and after $6,000 per hire was deducted, the real margin winners were not the top two as per gross revenue per tractor.
This is important for more than a couple of reasons. The dispatchers were taught that money comes before the people. As much as we could debate this, the two are symbiotic in that without customers and revenue, you have no company, and of course, without drivers, you have no customers.
If you have a dispatcher that churns through customers, how long will they be working for you? Conversely, if you have a dispatcher that churns through drivers, what is the difference?
I tend to look at all turnover as a failure with a learning opportunity. Either we should have done a better job in the screening process, or we didn’t set the individual up for success while at our company.
At our company, a review of the turnover related to retirements and health-related issues amounted to just over 2%. This was the total amount of turnover that was out of our control. To me, that says that our absolute opportunity is 97% retention, or 3% turnover.
Driver turnover is a business challenge for many in our industry, but like many other challenges leaders can rise to the challenge. We overcome recessions, pandemics, sub-prime mortgage disasters and so on. Driver turnover falls into these categories. What is your company doing about it?
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