For decades, the trucking industry has struggled to retain qualified CDL drivers. In fact, the industry has one of the highest turnover rates compared to other industries. Each year, the turnover rate falls at or around 90 percent. Replacing drivers comes with a steep price tag. On average, companies spend over $8,000 replacing a single driver. Driver compensation is one of the leading factors that influence drivers to change companies or leave the industry altogether. Here are some key ways that a compensation analysis can help reduce driver turnover.
1. Stay Aligned with Market Pay Rates
It’s no secret that truck driver wages have changed over the years. Today, the median annual wage for a driver is about $48,500. When adjusted for inflation, truck drivers in 1980 earned about $110,000. Addressing significant pay discrepancies through a compensation analysis could be the single most important step toward reducing driver turnover. According to research conducted by the team at Inflection Poynt, 63% of all drivers indicated that they were looking for better pay. By making sure your pay is competitive compared to the market and other similar companies, drivers are incentivized to stay.
2. Modernizing Benefits
Benefits are another major factor when it comes to drivers deciding to leave their existing employer. Our research found that 37% of drivers cared more about benefits than they did about pay alone. These benefits include perks, health insurance, the relationship with their manager, and the company’s culture.
The demographics of truck drivers may need to shift due to an increased shortage of drivers. While the average truck driver is 55 years old, companies may need to look to younger generations to fill the gap. That means that companies need to modernize their benefits packages for these workers.
More and more drivers are expecting perks and benefits such as flexible working hours, enhanced insurance and retirement plans, and tuition reimbursement. Other unique benefits, such as allowing pets or family members to ride along, could help drivers feel valued and reduce turnover.
3. Incentive-Based Rewards
A compensation analysis allows companies to look at incentive-based compensation and rewards in addition to regular wages. These often come in the form of monetary bonuses (annual, sign-on, etc.). However, there are other types of rewards that could encourage drivers to stay with a company longer.
When it comes to bonuses, many trucking companies offer bonuses for new drivers. However, we’ve found that sign-on bonuses have less impact on retention (with less than 50% stating it was a significant factor in leaving a company). Instead, companies could evaluate the concept of retention bonuses for reaching certain goals or milestones (like the number of miles driven or years of service). Companies can also look into non-monetary incentives such as giving tenured drivers upgraded trucks with kitchen equipment or satellite television.
4. Hire the Right People the First Time
During a compensation analysis, companies should also carefully review their existing job descriptions and responsibilities to ensure they are accurate and reflect the expectations of the role. Outdated job descriptions and compensation packages could result in hiring the wrong people in the first place. Being able to set these expectations up front, can reduce the number of workers who leave after a short period of time when they realize the job or company wasn’t as advertised.
5. Build Trust and Transparency
Employees want to work for companies that they respect and trust. A compensation analysis can help provide better transparency into compensation practices and help drivers understand that their pay and benefits are consistently being evaluated and aligned with the market. This can send the message to drivers that the company views them as valuable assets and help reduce turnover.
Let Us Help Your Reduce Driver Turnover
Conducting Quarterly compensation analyses can provide companies with the insight needed to stay ahead of factors that influence driver retention issues. The experts at Inflection Poynt are here to provide companies with all the tools they need to build highly-competitive compensation packages and retain the best talent. Contact us today to see how compensation analysis can significantly improve your organization’s turnover rate.