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What’s the True Cost of Hiring a Truck Driver?

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What's the True Cost of Hiring a Truck Driver?

There are many metrics that a carrier can use to measure its hiring success. Some metrics are more well defined and simple like time to hire, while others are more subjective and harder to wrangle, like driver happiness.  

But no matter what metrics you look at, the dollars spent to hire a candidate is traditionally thought of as the most important. That’s why carriers need to know what these costs are and how to measure them effectively. Let’s take a look at the true cost of hiring a truck driver. 

How to Calculate Your Cost Per Hire

Before you can reduce your CPH, you need to know how to calculate it. Luckily, calculating CPH is pretty simple math.   

You add up your total costs for recruiting new drivers, and then divide that by the number of drivers ultimately hired. This gives you the cost per hire for all your recruiting efforts. (Note that this factors in actual hires, not just leads.) You can use this formula to measure CPH over any time period you’d like, including month, quarter, or year. 

So, What’s the Real Cost of Hiring a Truck Driver?

When nailing down the cost of hiring a driver, the actual math is not the tough part. It’s finding all the factors that go into the cost of hiring. This means all the costs, not just the ones associated with finding driver candidates, like job advertising and using recruiting services.  

Your company’s cost per hire will be unique to the way you recruit and hire drivers. And it might take some time and refinement to ensure you’re calculating it correctly. Here’s a list of the most common costs associated with hiring a truck driver. 

Turnover Is Your Enemy

Now that you understand the calculation for cost per hire, there’s another piece of the hiring puzzle that needs to be factored in as well; your turnover rate. 

It’s widely known that the trucking industry faces very high turnover rates. According to some surveys, over 50% of newly hired drivers will leave their carriers within the first six months. In some cases, turnover can be closer to 90-100% over a year. 

Looking at those stats, it’s easy to see that turnover is a huge problem for many carriers. To avoid high turnover, don’t fall into the trap of hiring drivers to fill an empty rig as quickly as possible.  

If you’re hiring quickly and not taking the time to ensure you’re a good match for each other, it’s not likely it’s going to be a relationship that will last and will raise that hiring cost. If you keep repeating that cycle, it’s going to cost your company exponentially more and you’re still going to have empty seats to fill.  

Every time you hire a new trucker, do it with the intention to retain that driver for a long time. The best way to do this is by really taking the time to get to know your candidates during the interview process so you can see if them coming onboard with your carrier is truly a fit for both sides. Doing this is the number one way to lower driver turnover, and in turn, lower the cost of hiring. 

Measure Consistently for Best Results

Once you’ve found all your costs, the most important thing to do is to measure consistently. This is the only way that you’re going to be able to compare things year-over-year or month-over-month to see if the changes you’re making are truly helping to reduce your true cost of hiring a truck driver.  

Don’t add in costs for one timeframe, then remove those costs the next time you calculate. If you do this, then you’re comparing apples and oranges and won’t have an accurate picture of your recruiting process.  

Once you are tracking consistently, you should see some trends that help inform changes to your overall hiring strategies. Overall, you want this number to be as low as possible to deliver you a quality driver who wants to stay with your company. 

ultimate guide to truck driver recruiting

Ultimate Guide to Truck Driver Recruiting

Current ways of recruiting truck drivers just don’t work anymore. That’s because recruiting isn’t a transaction. This ultimate guide helps carriers recruit for retention.

Get the Ebook

3 Ways to Lower Your Cost Per Hire for CDL Drivers

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cost per hire

For driver recruiters, there are few metrics more important than cost per hire (CPH). For many recruiting and HR departments, it’s what defines their success to decision makers in the organization. Because of this, driver recruiters are always looking for ways to lower their CPH without having the candidate experience suffer. Here are 3 ways that recruiters can lower their cost per hire. 

What is Cost Per Hire?

Before you can reduce your CPH, you need to know how to calculate it. Luckily, calculating CPH is pretty simple math.  

cost per hire

You add up your total costs for recruiting new drivers, and then divide that by the number of drivers ultimately hired. This gives you the cost per hire for all your recruiting efforts. (Note that this factors in actual hires, not just leads.) You can use this formula to measure CPH over any time period you’d like, including month, quarter, or year.  

You should keep this number handy and have yearly goals set to manage it as needed or as budgets change. Once you have determined your cost per hire, you can then make more informed decisions on where to spend your recruiting dollars.  

What Costs are Part of Cost Per Hire?

While the formula for calculating cost per hire is pretty simple, knowing what goes into that top “cost section” isn’t as easy.  

The first thing to know is that there are both internal and external recruiting costs which need to be factored in. Here are some common costs that should be included in your CPH.  

Internal Costs 

  • Salaries for HR and Recruiters – Includes managers and freelance recruiters (if applicable) 
  • Referral or Sign on Bonuses for Drivers – Do you give drivers bonuses when they get hired on? Do you give current drivers a bonus when they refer someone who eventually gets hired? 
  • Interview costs – How many hours are recruiters/HR spending interviewing driver candidates? 

External Costs 

  • Recruiting Software – Do you utilize recruiting software or a service to help you find drivers? 
  • Job Fair/Events – Does your carrier participate in any trucking job fairs or career day events? 
  • Advertising – What are your advertising costs? This includes both digital and print. It could also include costs associated with an advertising agency, if you work with one.  

These are just some examples of possible recruiting costs your carrier could be incurring. Every carrier will have different costs that go into their CPH, so take some time to find what yours are.  

3 Ways to Lower Your Cost Per Hire

1. Leverage Past Leads

Every time you need to hire for a new opening, you don’t need a fresh list of candidates to contact. Check in on your existing pool of names and filter or scan for matches to your current job openings.  

Reaching out to these passive candidates, who may not have been a good fit in the past, is often a better bet than reaching out to candidates who you’ve never had an interaction with before.  

The dollars spent to generate and capture these leads are already spent, and no additional budget is needed to go back to those lists. 

You know that they’ve already been partially vetted if they matched up with prior openings, they might just need to be checked-in for these new opportunities. If you put a little bit of effort into keeping these older leads engaged between new job postings, you might have the perfect person sitting in your database already.

2. Reallocate Ineffective Spending

One of the best things about CPH is that once you have it, you can use it to dig deeper into the different costs you’re using to hire. You can find the CPH for specific costs like recruiting software, sign on/referral bonuses, interview costs, or any other cost you may have.  

Use the same formula above, just replace the total recruiting cost with the amount for that specific cost. Drilling down further like this helps you find extremely useful information about whether your recruiting dollars are being spent as efficiently as possible.  

For example, you could find that 25% of your carrier’s recruiting costs go towards job fairs and events, but you’ve only hired two drivers from them. 

With this information, you can start to make decisions to reallocate funds from higher CPH channels to lower CPH channels to increase efficiency. This should result in faster hires, at a lower cost.

3. Try Something New

If you’re struggling to attract and retain the best drivers, that’s probably a good indication to switch things up. Keep your eyes and ears open for new recruiting ideas, and as your budget allows, give something new a try. You might find something that brings in new drivers faster and saves on your CPH over time. 

Knowing you’ve got a finite budget for recruiting new drivers to your open jobs, it’s important that you have a handle on what you’re spending to hire each new driver. And of that spend, what tactic(s) are producing actual hires most efficiently. Effectively managing cost per hire, and other key recruitment metrics, will lead to the ultimate success of your hiring process. 

These tactics can certainly help decrease your cost per hire and improve your bottom line. However, working to reduce your overall driver retention rate is a huge time and money saver over the long run. If you’re ready to start recruiting and hiring for retention, schedule a demo of our platform today. 

Comprehensive CDL Recruitment Solutions

Ready to start recruiting the right drivers? Our solutions experts are happy to answer any questions and show you how Drive My Way uniquely approaches CDL driver recruitment.

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How to Create a Better Trucking Recruitment Plan

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The most well informed recruitment plans have drivers at their core. In a finely tuned trucking recruitment plan, the needs and preferences of your drivers sit side by side with company logistics and priorities. First, listen closely to the questions, concerns, and priorities expressed by drivers. These are valuable insights that will help close leads. Similarly, marketing, budgeting, and technology are the infrastructure that supports the relationship between recruiters and drivers.

Start With Drivers

Developing trust with drivers requires a significant investment of time. Building a relationship with drivers takes multiple touchpoints, ideally on their schedule. That may mean making time during evenings or weekends to speak with drivers. In conversations with prospective drivers, be clear early on about pay, hours, home time, and other key details. Your total number of driver leads may decrease as a result, but it’s worth it. As a result, you will retain quality leads who are more likely to become hires.

Ask drivers what attracted them to your job post and, when relevant, why they are no longer interested. Then, use this data to refine your job descriptions. If there is one aspect of the job that is consistently cited as a problem, consider creative solutions. Is there an opportunity to increase driver pay? If not, what non-financial incentives can you offer that will attract drivers?

Connect Recruiting and Marketing

Once you have identified which job aspects most appeal to drivers, align marketing and recruiting efforts. Platforms targeted toward recruiting drivers like social media pages and your company website should present a cohesive story that highlights the most compelling parts of your company.

If you’re unsure how to refine your media presence, start with feedback loops. Create visible channels through which drivers can give feedback.

Thoughtfully review driver comments and reactions. Then, assess comments for actionable steps and implement any changes that make sense. Throughout this process, track driver lead attribution to identify which channels most effectively engage drivers. Identify marketing channels with a low cost per hire (CPH), and increase spend there. 

One of the most powerful lead generators is word of mouth. Consider implementing a referral program for current drivers to help recruit new employees. To start, designate specific time and resources for the internal marketing of referral initiatives. Similarly, include marketing efforts for retention as a key element of recruitment. Retaining drivers is one of the most cost-effective and time-efficient ways to keep a fleet running smoothly. 

Account for Large and Small Expenses

When creating a budget for a trucking recruitment plan, it’s easy to overlook variations in cost per hire. Often, these are recurring costs, and those numbers add up quickly. Increasing budget precision in your trucking recruitment plan may increase your intended spend. 

When reporting up for budget approval, revenue is the bottom line.

Assess the revenue totals for an incomplete fleet. Next, compare that to the revenue that could be generated with a fleet at full capacity. A well-defined recruitment budget clearly demonstrates the increased revenue potential of a fleet operating at full capacity. Here are a few places to make sure you have accurately assessed your costs.

Turnover

Driver churn is a huge part of the recruitment process. Realistically, failing to account for the extra drivers you will need to hire to compensate for turnover will set your budget back substantially. 

If Company A has a 100 driver fleet and a 50% turnover rate, they will still need to recruit more than 50 new drivers annually. You have to account for turnover within your new hires. That’s an additional 25 drivers! Company A should plan a recruitment budget for a total of 75 new hires to maintain their fleet size.

Referrals & Rehires

Not all hires have the same cost. Referrals and rehires are typically a lower cost per hire than a cold lead because they already have a warm introduction to your company. As a result, these hires should be assigned a lower cost in a trucking recruitment plan. With that in mind, if rehires are not currently a part of your recruitment budget, add them! Allocating resources to retaining drivers will save capital in the long run if you can reduce turnover.

Hiring Across Divisions

Just as referrals and rehires have a different cost per hire than other leads, large fleets may also see a significant difference in CPH across divisions. For example, local no-touch freight jobs are likely to require less time and expense than an OTR livestock position. Analyze historical CPH data and use that information to create a more precise budget.

Use Technology as Infrastructure

Successful recruiting is personal, but the technical aspects cannot be ignored. Essentially, technology is the infrastructure that supports human relationships in recruiting. Everything from your company website to specific job applications must be mobile friendly to optimize driver engagement. 

Technology is the infrastructure that supports interpersonal relationships in recruiting.

Technology can remove inefficiencies in your recruitment process. First, conduct a systematic review to identify areas of lost, misallocated, or delayed information. Randall Reilly has compiled a list of common recruitment inefficiencies in the trucking industry. Then, evaluate your ATS and ensure that no leads are being lost or incorrectly attributed. Next, encourage recruiters to get qualifying information early. After, immediately eliminate any unqualified leads. Finally, carefully nurture your qualified leads. 

Calendars and standardized note taking practices can safeguard against lost leads. In addition, when leads are disqualified, track the reason. If a pattern emerges, you may be able to streamline your recruitment process. It pays to eliminate disqualified leads earlier in the pipeline because it saves time in the long run.

ultimate guide to truck driver recruiting

Ultimate Guide to Truck Driver Recruiting

Current ways of recruiting truck drivers just don’t work anymore. That’s because recruiting isn’t a transaction. This ultimate guide helps carriers recruit for retention.

Get the Ebook

Driver Rehires: 3 Reasons to Focus Here

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Driver Rehires: 3 Reasons to Focus Here

Recruiting for retention is an important strategy for any trucking company. Some might argue it’s the most important strategy when hiring new truck drivers. But sometimes, even with a true driver-centric culture, good drivers leave. Rather than letting that be the end of the story, it can give you an avenue to focus on for hiring in the future. When looking for new drivers, consider your former drivers. Here’s 3 reasons to have driver rehires as part of your overall hiring process.

1. Driver Rehires are Already Familiar with the Company

Driver rehires are already familiar with your company, your culture and your policies. If they left on good terms, they might have just been testing the waters for a better salary. Or looking for a newer fleet of equipment to use. When that didn’t pan on for them, they start looking again for their next new trucking job. That can be a short trip back to your company. Their onboarding can be a lot more efficient, as they only need to learn what’s new, vs. starting from the beginning. If they apply again, and you know that they weren’t terminated or otherwise had any issue while employed, it could be an easy conversation to get them rehired.

2. Saves Money on Recruiting

It’s cheaper to rehire a driver than to find and hire someone brand new. If the driver worked for you already, you are almost certain to be on their radar if they start looking for a job again. They might be following your social media or the job boards that you use to post opportunities.

With the driver shortage not getting any better, having a pool of qualified and experienced employees to call on for rehire can be a valuable resource. Make sure the people you want to come back to work for you know they are welcome back.

You don’t have to spend any incremental dollars to get them to see what you’re already doing, because they’re following you already. Compare this to what it takes to find a brand-new lead. Then nurture that lead through your channels to get them to apply for your open trucker job. Instead, just go back to your list of former (good) drivers, and reach determine which ones might make good driver rehires. This can be a good cost saver, as well as a time-saver in getting your open seats filled.

3. Part on Good Terms

If a good trucker is leaving you, plant the seed that you’d look forward to hearing from them again in the future. Let them know you’ll be willing to keep in touch in the future. And that you’re happy to share future driver postings with them. If they indicate that they’re okay with that, mark them as eligible for rehire. Then keep them on your marketing list for newsletters, social media invites, etc. You can let your current marketing budget help them be aware of any news or job postings.

Why Did They Leave in the First Place?

As a side note, when working on your retention strategies, keep track of the reason that drivers are leaving you. Look for patterns or consistent reasons for leaving. Then work to adjust and seal-up any gaps in the future. Even better, keep a good pulse on what your drivers are thinking, and then be proactive with changes.

Keeping driver satisfaction high is a great way to ensure your drivers stay with you. Recruiting for retention is a great overall strategy to keep your fleets full and your drivers happy.

ultimate guide to truck driver recruiting

Ultimate Guide to Truck Driver Recruiting

Current ways of recruiting truck drivers just don’t work anymore. That’s because recruiting isn’t a transaction. This ultimate guide helps carriers recruit for retention.

Get the Ebook