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Battling Turnover With Bonuses, Raises

 

By Al Muskewitz

Wright Media Editor-in-Chief

 

More carriers are upping the ante on compensation and bonuses as they hope to keep the drivers they have in-house, but most expect driver turnover will continue to rise.

 

Interestingly, smaller carriers, perhaps because of they have a more intimate connection with their drivers and their needs, seem to be doing better at holding onto their people than the bigger carriers in a strong economy.

 

DriverIQ, in its second quarter recruiting and retention report released last month, found almost 70 percent of their respondents are offering sign-on bonuses – a more than 20 percent jump from Q4 2017. More than one-third of the respondents are reporting 6-10 percent of their seats are unfilled and it’s split 50-50 on whether the number of applicants will increase or decrease/stay the same.

 

The survey reflects the views of recruiting managers who operate more than 75,000 trucks. The majority of responses, DriverIQ said, came from dry van carriers with more than $100 million in gross operating revenues.

 

It might stand to reason that it's times of a strong economy turnover seems the strongest as drivers are more comfortable about looking for new situations because jobs are plentiful. The way to stifle turnover is a recession, and no one wants that.

 

“We are no where near having wages high enough to make a dent in the turnover, and that’s because you’ve got full econom;, guys can go anywhere they want to go,” Lana Batts, co-president of DriverIQ, told Wright Media. “At the height of the recession the ratio was 6.6 unemployed people for every job opening; today it’s less than 1. When you don’t have options you stick where you are. When you have options you go somewhere else.

 

“If you look at what they call the ‘quit ratio’ it’s an at all-time high because they know they can find another job. When you start looking at what carriers are doing on compensation, what they’re doing on sign-on bonuses, it’s not surprising a number of drivers are jumping jobs.”

 

For the first time Driver IQ is reporting differences among three revenue sizes of carriers – more than $100 million, between $30 and $100 million, and less than $30 million – and there are “significant” differences between larger and smaller carriers regarding turnover.

 

The large carriers expect turnover to increase while the smaller ones don’t. More than 65 percent of the larger companies are finding drivers are retiring as expected, while an equal number of smaller carriers are finding that drivers are not retiring as expected.

 

All of them are trying to keep those they have because it’s a big expense to replace them.

 

“Nobody can afford to lose $15-$20,000 when you lose a driver,” Batts said. “I think ‘Cheers’ was right – the bar in Boston where everybody knows your name. I think working for a smaller company where people know your name is part of why guys stick around.

 

“The second thing is smaller carriers tend to get their drivers home more often and if you can get drivers home more often where there could be some predictability in their pay then if you’re offering them an increase in wages that increase in wage may be enough to keep them around.”

 

The survey found the most common size of the sign-on bonuses is between $1,000 and $2,400 with 50 percent of the carriers paying out in less than six months.

 

A number of Hiremaster clients are offering sign-on and other bonuses. Several also have recently announced significant increases in pay.

 

Bay & Bay, K&B and Averitt all announced increases in driver starting pay and KLLM in overall pay over the past six weeks. Oakley Trucking announced as much as a 10-cent-per-mile increase based on a driver’s CSA score effective July 30 and Jim Peters, president and CEO of TLD Logistics recently said drivers with at least 11 years with the company could expect a bump in pay.

 

What level of driver pay would keep them from jumping? In an earlier survey most recruiting managers thought an annual salary of $75,000 would “start to make a dent” in overcoming the disincentives to the job. In 2016, the median salary for a truckload carrier driver was $53,000. It was $86,000 for a private carrier.

 

“Drivers have been undercompensated for the last 10-20 years,” Batts said. “If we were paying drivers, let’s say, $100,000-plus we probably would not see the churn we have. You just can’t raise those rates that fast in the kind of competitive market that we have.”

 

Until then, the churn will go round and round.

Averitt Express

Averitt Express

Bay & Bay Transportation

Bay & Bay Transportation

K & B Transportation Inc.

K & B Transportation Inc.

Oakley Trucking

Oakley Trucking

TLD Logistics Services

TLD Logistics Services

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