Chris Henry, Program Manager, TCA Profitability Program
IMAGE: JIM ALLEN/FREIGHTWAVES
A weekly review of the Key Performance Indicators (KPIs) that all trucking companies should be tracking on a daily, weekly and monthly basis. These standardized KPIs are the foundation of the TCA Profitability Program’s inGauge Benchmarking Platform – the largest (and only) online benchmarking platform for the North American Truckload market.
When we first launched the inGauge Benchmarking Platform, one of the most frequent questions I was asked was “How do you calculate Driver Turnover?” Since that time, I’ve had endless discussions about the ‘proper way’ to measure ‘Driver Turnover’. My general observation was that the method many carriers were (and are still) using to calculate turnover were too heavily influenced by subjectivity – a major no-no when it comes to benchmarking. It was quite common for carriers to adjust their ‘departed driver count’ each month based on whether the driver departed voluntarily or involuntarily. Likewise, some were going back and adjusting historical results because a driver came back in X months. This behavior was masking (and for some, was still masking) a cultural problem which ultimately leads to poor productivity and profitability. For this week’s edition of ‘By the Numbers’, I thought it would be a useful exercise to walk through the basic Driver Turnover calculation which is used within inGauge.
To start, let’s make some assumptions:
- A ‘Departed Driver’ means they ain’t driving for you. They are gone, and we don’t care whether they left voluntarily (found greener pastures) or involuntarily. The fact is that a valuable human asset is not there, and now you have an empty truck and lots of other fixed expenses. Arguing about the reason is useless – either you made a mistake when you hired the driver, or the driver made a mistake when they ‘hired’ you!
- We Annualize the number of ‘Departed Drivers’ in the formula. This makes for a clear understanding of the impact of your retention results during the month. In other words, when you’re viewing the results, the value should be prefaced with: “If we have the same result for twelve months, our turnover would be XX%”
- Driver Count Beginning of the Month – If the driver had a payroll or settlement record in the previous month and are listed as ‘Active’ in your TMS (they haven’t been terminated or they haven’t given notice), they get counted. If they are less than full time, use a Full Time Equivalent calculation to provide the count for those drivers.
- Driver Count End of the Month – Essentially the same as above, except you add any new drivers that were employed or contracted during the month (and had at least one payroll or settlement records), and subtract all those that are no longer employed or contracted with your company
The Formula:
As you see above, the formula is simple. Don’t try to overcomplicate things by rationalizing ‘why’ a result is ‘higher than reality’. In the last two weeks, I’ve spoken to two fleets on either side of a wide spectrum of driver retention. One, a carrier with 72 Drivers and Trucks, has maintained a 13% average annualized turnover percentage for almost two years! Conversely, a fleet with 240 drivers can’t seem to get below 155% over the past 18 months. The former still wants to improve – and we can’t wait to hear everything they are doing to get below 10% turnover!!
How does your Driver Turnover % stack up against similar companies? Find out, by booking a demo here.
