Avatar fleet
WHITE Paper
Driver Turnover: Costs, Causes And Solutions
Avatar Management Services, Inc.
Brian Whitaker, Ph.D.
Driver Turnover: Costs
In 2009, despite the tight labor market, the quit rate for the transportation industry was 33%
higher than the national average1. In a healthy economic climate, annual turnover rates of 100%
and higher are common in the
truckload industry.
The constant loss of drivers
significantly increases a carrier's
cost of doing business through a
number of expenditures associated
with turnover.
The average replacement cost per driver is approximately $12,0002, but according to some
estimates that cost could exceed $20,0003. At a $12,000 replacement cost, suppose your
turnover rate was a conservative 30% and you employed 300 drivers. At the end of the year,
your total turnover cost would be $1,080,000.
If you are surprised by this number, you
may not be considering all the costs
associated with replacing an employee.
Past research has identified several
categories of expenses related to
turnover. The categories in the turnover
costing model include: separation costs,
replacement costs, and training costs.4
Separation costs include:
- the costs incurred for exit interviews
- administrative functions related to termination
- separation/severance pay
- any increase in unemployment compensation.
1
Job Openings and Labor Turnover – November 2009. Retrieved January 19, 2010 from Bureau of Labor Statistics
website: http://www.bls.gov/news.release/pdf/jolts.pdf
2
Employment Policy Foundation tabulation and analysis of Bureau of Labor Statistics Job Openings and Labor
Turnover Survey Data.
3
Rodriguez, J., Kosir, M., Lantz.B., Griffin.G., & Glatt.J. The Costs of Truckload Driver Turnover. Retrieved January
19, 2010 from Upper Great Plains Transportation Institute website: www.ugpti.org
rd
4
Cascio, F.W. (1991). Managing Human Resource: Productivity, Quality of Work Life and Profits, (3 ed.). New
York: McGraw Hill.
Replacement costs include
the cost of:
- attracting applicants;
- entrance interviews;
- testing;
- travel/moving
expenses;
- pre-employment
administrative
expenses;
- medical exams;
- acquisition and
dissemination of
information.
Average Turnover Costs
Trucking Industry
$3,500,000.00
$3,000,000.00
$2,500,000.00
$2,000,000.00
$1,500,000.00
$1,000,000.00
$500,000.00
$0.00
Training costs include
formal and informal training costs associated with getting the new employee “up to speed.”
Keep in mind, for a period of time there will be a difference in productivity between those who
leave and their replacements.4
Today, a more comprehensive framework has been proposed to account for indirect costs
including5:
-
Excess over-time pay to incumbent employees or monetary compensation paid to outside
substitute employees in order to compensate for the lost employee
The financial value of the loss of production and/or customers to competitors due to failure
to deliver products or services on schedule
The turnover effect on morale
Higher injury and accident frequencies due to the inexperience of newcomers
When turnover is high, the indirect costs associated with replacing drivers can have severe
effects on safety and customer service. Drivers with questionable qualifications are likely to be
hired simply to keep a tractor on the highway. This can lead to increased accidents, abandoned
trucks, lowered morale among other drivers, as well as
conflicts with shippers and receivers.
[Despite the recent decrease in
turnover] "In the longer run, the driver
We all know turnover generally rises during economic
shortage will be back with a
expansions and falls during recessions in an inverse
relationship to the unemployment rate. Turnover rates
vengeance, once freight volumes pick
may be lower than in previous years, but that does not
up, likely boosting turnover."
mean you should sit back and relax. Those who act in
an economic downturn and prepare for the upswing
will be better situated to seize opportunities and
- ATA Chief Economist Bob Costell
position their business for economic gain in the future.
5
Tziner, A, & Birati, A. (1996). Assessing Employee Turnover Costs: A Revised Approach. Human Resource
Management Review, 6, 113-122.
Driver Turnover: Causes
To understand the causes of turnover, it’s first important to understand there are two different
types of turnover – positive turnover and negative turnover. That’s right – there is such a thing
as good turnover.
"Good Turnover” also referred to as positive or desirable turnover occurs when underachievers
are separated from the organization. “Bad Turnover” also known as undesirable or negative
turnover occurs when quality performers leave for other opportunities.
When a valued employee leaves, not only do you incur obvious costs, but the company also
loses that employee's knowledge, expertise, and skill set. When a desirable turnover event
occurs, the organization may save money due to reduced risk of accidents, injuries, and
customer complaints, but the organization will still encounter separation, replacement, and
training costs associated with replacement.
It’s important to devise solutions aimed at a reduction in “undesirable” hires to begin with.
Additionally, strategies must be employed increase the rate of “desirable” hires and the
subsequent retention of those hires.
To date, management researchers have compiled a long list of factors that drive turnover.
According to the management and research literature, turnover can be caused by many things inadequate supervision or leadership, too much work, not enough work, insufficient career
growth opportunities, and inadequate pay, just to name a few.6
These factors represent workplace-related conditions. However, based on decades of
research, we also know that there are many characteristics of the employees themselves that
contribute to turnover. Indeed, recent research published in a highly-reputable, peer-reviewed
journal indicates that employee characteristics are more powerful predictors of turnover than are
workplace characteristics.7
Avatar’s research and experience in the transportation industry shows that people voluntarily
leave their jobs for the following reasons:
1.
2.
3.
4.
5.
6.
7.
6
Unfulfilled expectations
Inability to adequately perform the job
Activities and rewards are not in line with personal interests
Lack of respect, attention or support
Inadequate affiliation (sense of belonging)
Demands of the job are too challenging
Inadequate compensation and/or benefits
Robbins, S. P., & Judge, T. A. (2008). Organizational behavior. (13th ed.). Upper Saddle River,
NJ: Prentice-Hall.
7
Zimmerman, R.D. (2008). Understanding the impact of personality traits on individuals‘ turnover
decisions: A meta-analytic model, Personnel Psychology, 61, 301-349.
Driver Turnover: Solutions
The conventional wisdom among trucking company
executives is that higher pay and more time home can
Increasing wages will result in
decrease turnover. Even if these issues were the culprits of
excessive turnover, there is little management can do to
more expensive turnover but
address those problems. Due to the nature of the industry and
not lower turnover.
the current economic climate, significant pay increases are
unlikely, at least for most firms. Moreover, even if increasing
pay were economically feasible, this would pressure other carriers to also increase wages. Most
likely this would result in more expensive turnover, but probably not lower turnover.8
There are a number of strategies and processes that have been proven to reduce turnover and
increase overall job performance. The reasons why employees leave are categorized below,
along with the relevant strategies to address each issue. Some are repeated because they
align with more than one specific reason employees voluntarily leave.
1. Unfulfilled expectations
Strategies:
 Realistic Job Preview, accompanied by Self-Assessment Survey
 Ride-along / job shadowing
 Pre-hire visits to the workplace to observe
 More discussion/description during the interview process
 Providing each candidate with an easy-to-understand and complete job
description and going over it in detail with him or her
 Having applicants meet with one or more current employees, especially those
with less than six months tenure
 Hosting open houses – inviting applicants and their families to discuss the job
with existing employees and their families
2. Inability to adequately perform the job
Strategies:
 Pre-employment testing
o Content valid
o Construct valid
 Imposing firm, fixed hiring criteria (minimum standards)
 Gathering bio-data for review and analysis
o Job experience
o Job history
o Thorough reference and background checks
 Conducting structured interviews
 Providing effective education and training
 Providing adequate time between hire and the requirement to be fully functional
 Providing adequate supervisory support
 Providing effective job aids
8
Richard, M.D., Lemay, S.A., Taylor, S.G. (1995). A factor-analytic Logit Approach to Truck Driver Turnover. Journal
of Business Logistics, 16,281-99.
3. Activities and rewards are not in line with personal interests
Strategies:
 Presenting a Realistic Job Preview during the selection process, accompanied by
a Self-Assessment Survey
 Providing clear career path opportunities
 Demonstrating competent leadership, especially among the first line supervisors
 Providing reward systems (non-compensation)
 Providing recognition systems
o Formal
o Informal
4. Lack of respect, attention or support
Strategies:
 Taking the time and effort to put each new employee through a comprehensive
orientation process that includes role alignment and shared values (takes place
over three or more months)
 Asking the employees what they think
o Formal, such as employee opinion surveys
o Informal, such as better and more frequent direct communication between
supervisor and employees
 Providing uniforms and other evidence of belonging
 Providing reward systems (non-compensation)
 Providing recognition systems
 Demonstrating competent leadership, especially among the first line supervisors
 Giving each employee adequate attention, especially from front line supervisor
 Providing regular and meaningful communication (information) from senior
leadership – letters, memos, meetings –access to ask questions
 Providing an on-going mentorship process for both new hires and for those
seeking advancement opportunities
 Following-up on all problems and issues and providing resolution
 Providing performance evaluation and meaningful feedback
o Formal – scheduled reviews
o Informal - better and more frequent direct communication between
supervisor and employees
 Providing an acceptable general environment such as clean facilities in a decent
location, etc.
 Providing structure and organizational discipline
 Justice
o Procedural
o Distributive
5. Inadequate affiliation (sense of belonging)
Strategies:
 Taking the time and effort to put each new employee through a comprehensive
orientation process that includes role alignment and shared values (takes place
over three or more months)





Demonstrating competent leadership, especially among the first line supervisors
Providing each employee with adequate levels of attention, especially from the
front line supervisor
Providing regular and meaningful communication (information) from senior
leadership – letters, memos, meetings –access to ask questions
Providing mentorship during the first six months of employment
Following-up on all problems and issues and providing resolution
6. Demands of the job are too challenging
Strategies:
 Presenting a Realistic Job Preview during the selection process, accompanied by
as Self- Assessment Survey
 Finding people willing to make the necessary sacrifices to participate in the
industry/job
7. Inadequate compensation and/or benefits
Strategies:
 Conducting a pay-equity study and sharing the results with rank and file
employees
 Pricing contracts at a responsible and fair value so that employees can be paid a
living wage
 Implementing pay-for-performance wage scales whenever possible
Where Should Your Strategic Focus Be?
1. Hire the Right Person
Due to the heightened focus on employee factors as the primary drivers of turnover, many
organizations - including transportation companies - have begun to make modifications to their
selection systems and pre-employment processes in order to reduce turnover rates and lower
replacement costs.
As a technique, selection first involves the rigorous, thorough evaluation of the job in order to
identify the key employee specifications that an applicant must have. Once key employee
specifications are known, the selection specialist must systematically gather information from
applicants with regard to how much of the necessary specifications each possesses.
The importance of this process is very clear. If done correctly, selection not only identifies those
individuals who have the knowledge, skills, and abilities to perform the job, but it also gives
organizations an opportunity to identify those who preferentially engage in undesired behaviors
such as theft, sabotage, or risky behavior that leads to injuries and collisions.
While plenty of evidence exists that many organizations do not properly construct their selection
systems to function nearly as well as they could9, the upside is that quite often selection
9
Gatewood, R., Field, H, & Barrick, M. (2008) Robbins, S. P., & Judge, T. A. (2008).
Human Resource Selection. (8th ed.). Upper Saddle River,
NJ: Prentice-Hall.
systems can be improved fairly easily by incorporating specific research-based techniques, and
thus, important organizational metrics, such as turnover, can be dramatically improved.
While many such techniques exist (e.g., assessment centers, integrity tests, biodata forms,
intelligence tests, physicals, drug tests, etc.), three types of assessments in particular have
been found to routinely predict, over a wide range of jobs and industries, which applicants will
routinely leave their jobs within a relatively short period of time. They are:
1. Realistic Job Previews, accompanied by Self-Assessment Surveys
2. Personality Tests
3. Behavioral-Based Structured Interviews
Realistic Job Previews, accompanied by Self-Assessment Surveys
The number one cause for voluntary turnover occurring within the first six (6) months of hire is
known as “unfulfilled expectations”10In other words, the newly-hired employee, once on the job,
finds the activities (work duties and responsibilities) and available reward systems
(compensation and personal treatment by management) to be very different than he or she
originally anticipated. This phenomenon is pervasive within the transportation industry. In fact,
there are several documented instances in which recruiters actually lie to applicants about the
job conditions just to fill open positions.
Frequently, new employees find the work to be more demanding than expected, the hours and
schedules to be incompatible with personal and home life and the pay, which is often based on
miles, set runs or hours worked, to be inconsistent. Within the passenger transport sector, the
added requirement of working directly with the public seems to be a common problem. Upon
their premature departure, many newly-hired drivers and operators cite to the demanding nature
of passengers and the need for direct contact as a major disconnect that they had not originally
contemplated when they accepted the position.
Many of these unfulfilled expectations can be resolved by implementing a carefully designed
Realistic Job Preview, typically inserted early in the employee selection process. Research has
consistently found an increase in job satisfaction and retention rates for employees who receive
a realistic job preview (an accurate depiction of both the positives and negatives of their
position).6 This is usually accomplished through a video-based presentation that follows a very
specific formula of intermixing positive and negative aspects of the job to present a true picture
of what work will be like on a day-to-day basis. This can also be accomplished through other
means such as ride-along programs, one-on-one meetings with incumbents and open houses
attended only by those who hold the driver position (no management present). However, these
latter options are generally more time consuming and more expensive.
Presenting the Realistic Job Previews can be very helpful, but it is only part of the solution.
Many candidates, who are desperate for a job (any job), are willing to delude themselves and
rationalize away the less pleasant aspects of the preview. To bring greater clarity, a selfassessment survey can be used immediately following the RJP to force the candidate to
confront the issues and declare (at least to himself/herself) that after consideration, he or she
still wants to proceed with the selection process.
Properly constructed RJPs have been shown to consistently reduce the applicant pool by 25 to
30 percent as candidates self-select out of the process and begin to seek other, more suitable
employment opportunities in line with their particular interests.
10
Gardner, M., & Govern, D. (2004) White Paper: Unfulfilled Expectations.
Personality Assessment
In addition to the use of behavior-based interviews, many organizations employ the use of
personality tests to predict important job-related behaviors. In fact, a recent survey found that
more than 40% of Fortune 100 companies use personality tests to screen entry-level
applicants.10 Another line of research found that personality assessment in high school could
predict on-the-job behavior over 50 years later.11
Intuitively, most managers agree that personality traits - those things that people habitually say,
think, and do - matter at work12 and the research conducted on personality in the workplace
backs up this notion. Selection researchers have found that personality tests, when used
appropriately, can provide crucial information when making selection decisions. For example, in
a comprehensive study analyzing the results of over 85 studies, personality factors were found
to play a very important role in determining who will remain on the job and who will turnover
across a wide range of occupations and industries.9 More specific to the transportation industry,
in a recent case study a Southeast Michigan transportation company with 150 employees and
an annual 45.2% turnover rate added a pre-employment personality test to their selection
system. After two years, turnover was reduced to 10.7% at a savings of about a half a million
dollars per year.13
Behavioral-Based Interviews
Among organizational decision-makers, interviews are widely acknowledged as the most
frequently used and important selection device.14 In fact, more than 96% of all organizations use
some sort of selection interview, and for good reason. Interviews give organizational decisionmakers the opportunity to a) recruit good candidates and educate them about the organization,
b) measure in a very efficient way the extent to which an applicant possesses required
knowledge, skills, and abilities, and c) make an early decision about an applicant’s
acceptability.15
Because of its widespread use and importance, organizational specialists have studied the
interview for more than 80 years. Until recently however, the overwhelming majority of these
studies produced negative conclusions regarding the interview’s usefulness and utility for
selection purposes. In a nutshell, interviews (as commonly practiced) are not very good at
predicting on-the-job behavior. In fact, they are seemingly worthless. Over time, selection
researchers have come to realize that this lack of utility is due to the use of inappropriate, non11
Judge, T.A, Higgins, C.A, Thoresen, C.J, and Barrick, M.R. (1999): The big five personality
traits, general mental ability, and career success across the life span. Personnel
Psychology, 52, 621-652.
12
Dunn W. S., Mount, M. K., Barrick, M. R., & Ones, D. S. (1995). Relative importance of
personality and general mental ability in managers' judgments of applicant qualifications.
Journal of Applied Psychology, 80, 500-509.
13
Kreitner, R., and Kinicki, A. (2007). Organizational Behavior (8th ed.). Burr Ridge,
ILL: McGraw-Hill/Irwin.
14
Posthuma, R. A., Morgeson, F. P., & Campion, M. A. (2002). Beyond employment interview
validity: A comprehensive narrative review of recent research and trends over time.
Personnel Psychology, 55, 1-81.
15
Barber, A.E., Hollenbeck, J.R., Tower, S.L., & Phillips, J.M. (1994). The effects of interview
Focus on recruitment effectiveness: A field experiment. Journal of Applied Psychology,
79, 886-896.
job-related questions during the interview, interviewer over-confidence in his/her ability to
predict good employees, bias, and other extraneous factors that influence an interviewer’s
evaluation of an applicant.16
Findings such as these prompted other work which developed corrections for these deficiencies.
A specific technique for increasing the utility of the interview is to ask applicants behavior-based
questions (“Can you tell me about a time when you…”) and to use a standardized format and a
standardized scoring system to rate applicants. To date, behavior-based interviews have been
linked to a number of important organizationally-relevant outcomes such as job performance,
tenure and turnover.14
More specifically, in a recent study of 14 organizations (including international finance, energy,
and health care organizations) that began using behaviorally-based structured interviews,
turnover decreased an average of 44%.17
2. Provide State of the Art Training
New hires walk in with a fresh view of the company and an intrinsic motivation to contribute to
their job positions immediately. They start their first day with both excitement and worry. They
want to excel in their new jobs, but they do not know where to start.
New hire training is necessary. Training new hires effectively will:
- Reduce new-hires' fears
- Increase the understanding of company, such as culture, company structure, etc.
- Increase new hires productivity
- Increase job performance
- Increase commitment, loyalty, and engagement
- Reduce new employee turnover
During periods of slow growth and a weak economy, most companies often cut programs in
order to maintain profitability. Training programs in particular are often targeted because of the
expense of these initiatives18. Even in good economic times, organizations must decide how
much to invest in on-the-job training, balancing the benefits of increased productivity against the
costs of training. Because trained workers can easily jump from job to job in the transportation
industry, another carrier could easily benefit from the increased skill set of your trained drivers
without paying the costs.
In fact, it has been found that managers are sometimes reluctant to train their employees for
fear the competition will lure them away. However, numerous studies have shown that untrained
16
Kinicki, A., Lockwood, C., Hom, P., & Griffeth, R. (1990). Interviewer Predictions of Applicant
Qualifications and Interviewer Validity: Aggregate and Individual Analyses. Journal of
Applied Psychology, 75, 477-487.
17
Salgado JF, Moscoso S. (2002). Comprehensive meta-analysis of the construct validity of the
employment interview. European Journal of Work and Organizational Psychology, 11,
299-324.
18
Glance, N.S., Hogg.T., & Huberman, B.A. (1997). Training and Turnover in the Evolution of Organizations.
Organization Science, 8, 84-96.
workers change jobs more often.19 Employees who don't receive guidance or have difficulty
learning the ropes are much more likely to leave your company.
3. Create a Supportive Work Environment
A lack of perceived organizational support can also lead to voluntary turnover. This lack of
support can stem from decreased perceived fairness, low levels of management support, unfair
workplace practices, and a need for better job conditions. These workplace factors have been
shown to lead to significant spikes in turnover.8
Competent supervision is a significant predictor of turnover. In this context, competence refers
to your supervisors’ repertoire of skills, especially as applied to the set of tasks related to
management and leadership. Competence includes communication and interpersonal skills,
such as respect, support, and trust, which are all essential to developing effective working
relationships by and between your employees. The quality of the relationships between your
supervisors and employees is the most profound aspect of employee commitment. Employees
who do not have confidence in their immediate supervisor are far more likely to voluntarily exit
the organization.
19
L.Lynch. The Impact of Private Sector Training on Race and Gender Wage Differentials and the Career Patterns of
Young Workers. Final Report submitted to the U.S. Department of Labor, Bureau of Labor Statistics (1991).
Summary
Overall, there has been much time and effort expended by organizational researchers over the
last 80 years to provide decision-makers in organizations with research-based solutions for
reducing turnover. This research strongly indicates that a combination of new employee
assessment tools, including Realistic Job Previews, Job-Related Personality Assessments, and
Behavior-Based Interviews not only predict which applicants in the general workforce will turn
over, but it also indicates that this research can be successfully applied to assist those in the
transportation industry to help them achieve their own organizational goals. Additionally,
providing training and development opportunities and creating a supportive work environment
have also been shown to reduce turnover rates.
Don’t wait until you are faced with 100% turnover to do something about your turnover problem.
It’s easy during tough economic times to forget about turnover and retention because the
turnover rates in most industries decrease as employees focus on job security.
However, this is an ideal time to examine your turnover and retention rates and develop goals
and strategies for dealing with your current situation as well as creating strategies for the future.
It’s especially important to act now because quite often the “seeds” or initial causes of turnover
are more likely to be happening now because of the frustration related to budget cutting, hiring
freezes, layoffs, and lack of development funds and opportunities.6
According to a recent survey, only 45% of Americans are satisfied with their current job20. This
dissatisfaction with current employment could lead to a burst of turnover in a relatively short
period when job openings at other organizations do occur.
20
Where America Stands: The State of America and Its Future. CBS News Poll. Retrieved January 10, 2010 from CBS
News website: www.CBSNews.com
Avatar Fleet specializes in the development of custom-branded systems that focus on driver behavior.
Avatar conducts organizational analyses, provides expertise and develops custom selection, orientation,
education, training and support systems. Avatar helps companies modify their employees’ behaviors so
that people take responsibility for behaving safely. Avatar’s custom-branded strategies encourage and
reinforce the desired behaviors and lead to world-class safety results.
For more information on this white paper, contact Mark G. Gardner, at www.mgardner@avatarms.com
Or, visit us at www.avatarfleet.com
Avatar Fleet
8157 Bavaria Dr E
Macedonia, OH 44056
800-728-2827