True Cost Of Hiring Truck Drivers, Randy Badiuk, John Farquhar

What is the true cost of hiring truck drivers?  When you are recruiting are you capturing all of the costs in hiring truck drivers?
Randy and John are discussing how to hire truck drivers and what are the costs? Are you capturing all the costs?

Randy Badiuk Contact Info:
Email: randy@cdtstrategies.com
Phone: (519) 380-5292
Web: www.cdtstrategies.com
 
John Farquhar Contact Info:
Email: John@summitrisksolutions.ca
Phone: 226) 802-2762
Follow John on Twitter, @1975Buick
Connect with John on Linkedin, http://linkedin.com/in/john-farquhar-9b88771a2

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Transcript

0:23

And welcome to another episode of the dog on a trucking podcast. Once again, this week, I'm lucky and fortunate to have Mr. Randy Paducah and John Farquhar back on the show and we are discussing turnover and the cost of driver hiring. Randy. Can you say a few words and introduce yourself to our listeners and viewers? Absolutely. Thanks for having me back. My name is Randy Badiuk. I operate CDT Strategies out of London, helping carriers with their daily operation needs and training needs. And it's just fun to be able to share your real life experiences and help put other companies put a little mortar between the bricks, if that makes any sense. Well, if it doesn't yet, it will in a minute, John, Mr. <inaudible>, can you introduce yourself? Sure, sure. Hi, I'm John Farquhar of summit risk solutions. I've got closed the I'm at 40 years now, 40 years in the transportation industry. And I've got about the last 15, 16 years in the insurance side, risk evaluations and whatnot. So some at risk solutions, we specialize in risk evaluating transportation operations, and helping them to better understand and manage the risks that they have on a daily basis. Awesome. And I too probably have about 40 years, but I have to say I'm the whitest. We all got gray hair, but I am John and Randy, you know, if you're listening to this, John and Randy actually have a little darkness to the colors, but damn, we're all pretty great. Yeah. We stayed out of the sun, Randy, we are talking about the cost of hiring. What estimates have you seen just out of curiosity, have you seen for the cost of hiring? I think some carriers who would be dramatically surprised at the true cost of hiring by the time you do your advertising, your interviewing the onboarding, the background checks all the way through till that driver is finally at the controls of the vehicle themselves. I wouldn't be a bit surprised if it's anywhere from 3000 to $4,500 per hire, based on just tangible numbers that you can put a value to John, you got any ideas You're you're Randy is spot on, you know, I've seen, I've seen numbers as high as 10 grand, depending on the training and the uniqueness of the operation that they work in, maybe tanker or, you know, heavy, dangerous goods, large exposures that way. But I think the biggest problem with carriers not realizing the true costs is they're not calculating all the costs involved. You know, they kind of think, Oh, it's going to cost me this much. The fuel when training is this and that, but they're not taking into account all the man hours that all the different people in the organization touch that driver while hiring, evaluating training and getting them up to as Randy says where they're up and running on their own. And, and let's talk about some of the other costs that you may not think of. I mean, but I think of a cost of putting an ad in the newspaper or indeed, or whatever, or even a lot of companies have referral programs. So I think if the cost of the referral program, but that's not a good measurement of the cost of hiring Randy, what are some of the other costs that you should be including in that cost of hiring? Okay, Well, one of the non-monetary costs is the perception that, that new applicant I'm going to use the word, get stained with positive or negative of the company and how they communicate that to other potential applicants, where they say it's a rock solid company, it's a good company to work for, or it could be a negative Tange where you can't measure that element. But one of the monetary costs that I was really looking at was the rehiring of a driver who was really with the company for a very short period of time. I'm talking a month or less. And when we did a lot of interviewing what the drivers and saying what happened, there was really three primary reasons. We found a driver left in that very short period of time. Number one, they said the job really wasn't represented to me well enough. And that was frustrating because I knew how much it costs to onboard that driver. Now you have to do it again. And I'm going to circle back to that. Number two, my, my spouse didn't know I was going to be home that much or a way that much, or I was going to be handling this type of product or number three, being in bulk liquid. They said, you know, once I got on that truck, I don't want to handle that truck. There's too much movement. There's too much. It's just not for me. So a couple of the very, very simple things we did to help eliminate that. We always made sure we had that driver who is going to be doing that same lane of work sitting beside us when we interviewed, because they could validate the information. And if we accidentally misspoke, they could say, wait done. We always allowed that applicant to talk to that driver one-on-one and encouraged them to ask the deepest, darkest ugliest questions. And number two quickly, we always invited them to bring their spouse to the interview and we pay them. We had tremendous success with that because the spouse usually was asking better questions than the applicant. What are the benefits? What, what is this? What's this what's this. And the third, if they, to the unique carriers, we are for them go for a ride for a day, see what you think of it before you give up that existing job. And we've had some applicants come back and say, no, this just isn't for me. Thank you. So from that first end part, because to see them walk away and have to spend that money again, it was just frustrating. And to that point, I've actually seen estimates that are significantly higher than 10 grand. And those estimates they took into the account, the cost of photocopying, a piece of paper, the print of the, the recruiter's office. You know what part of that, because really, if you were taking into account costs, you're going to say, Hey, that office needs to pay rent, know the heat, light, and hydro the cost of the truck sitting empty against the fence is another cost. The insurance for that truck sitting against anyways, it goes on and on, and it makes sense, John, what are the costs? And I got to ask Randy, but I want you to get in here first. But Randy, think about this. How many of the spouses, when you made the, the offer to bring your spouse in for the interview, what percentage do you think actually took you up on that? But we'll come back to that. John, what are the, some of the other costs of hiring? And by the way, every time, if whatever the cost is, every time you fire a driver, you're going to incur that cost. Yep. But whether it's 3,500 up to five, like Randy was saying, or North of 10, like I was saying, are you, you know, every time you decide to turn a driver, you just made a significant financial decision. So, Oh, huge, huge. Think of it as one of the simplest aspects that I would look at and I I've owned a trucking company. So I have a really good understanding of this is the whole purpose of my company is to move freight from a, to B to collect a revenue, to compensate the cost of me doing that task. I don't know any carrier that builds in a margin to do the hiring, you know, to do the firing. You know, I, I, I track my maintenance maybe on a per mile basis, my driver, my fuel, my insurance, my truck payments, all that. You can break right down to a dollar or cents per mile fee. But I don't know anybody that says, Oh yeah, my recruiting costs cost me X cents per mile. You know, they, they don't look at it in that fashion. It's just a cost of doing business. You know, when no, it shouldn't be, you know, I gotta hire training needs to be in there. If I can maintain the trucks, then I need to maintain the drivers. And that costs needs to be contributed in there. So what kind of go off on a tangent here? Because we all know freight rates are not where they should be. They need to be much higher than they are. If we really truly knew the true cost of what it costs to run this operation, everybody would be going, Oh yeah, I need 20% added to these rates, you know, but they don't track it. So you're back to that. What you don't measure, you don't manage properly, you know? So it comes right down to, I'm not measuring the cost of hiring a driver. Well, then I'm not managing it properly. I'm just hiring drivers, you know? And, and, and what Randy touched on with the hiring process of that driver, sitting them down, putting them with another driver, that's doing that job, getting that driver to ask a lot of questions and getting their supposed to ball. That is a phenomenal way to do things. But unfortunately, it's such a rarity in this industry. We're not seeing enough carriers do that. I don't even see enough drivers who actually interview the carrier as part of the process of the hiring. They're more sitting there going, yeah. What do you want me to do? How much experience do you? I got this, here's this, when do I start? You know, rather than, well, what's the job entail. I love the idea of what Randy had said is, and this was available with all carriers is why don't you go with the guy for a day? See what the job's like. You know, I get to actually test drives a job before I decide if this is for me or not. You know, I might tell, you know what? Yeah. I like the idea of driving a truck, but I don't like going that far, or I don't want to cross the border. Oh, well, if you like that, we have another position in this division or over this area, running local stuff or something opportunity to save the guy. But that's, those are practices that are just not common, unfortunate. Yeah. Many years ago showing my age when I was running the Sears operation, that was a long time ago. I had hair and we were doing it with owner-operators and we had a horrendous turnover because we, as much as I believed I was truthful and I spent time trying to describe the job. It wasn't until we decided to actually put an applicant in the truck for a day and go with the helper and the driver and say, look, here's really what the job is. And that many people come back and go, you guys were nuts. They usually used another word in there, but you get the idea. They thought we were nuts doing that. Find out about it sooner. Anyway, if they're hired and not given that chance, they're still gonna see that. And you've already committed to that individual, Not just that these were owner operators, they had to buy a truck in order to do that. It was terrible responsibility because I felt like I was ruining families sometimes because even a straight truck for the Sears operation was a significant investment. But Randy, I want to come back to you. How many, what percentage of the spouses joined the driver? And then I want to talk about, and by the way, for our listeners and viewers, we're going to get into how to reduce these costs. That's going to be how we wind this up. But what percentage of people actually brought their spouse with them? I was quite surprised. So I'm going to say approximately seven out of 10 that were offered, did, and using John's words before using historical information, we knew approximately how many drivers we were going to have to hire over the course of the next year. So we got into a habit of having an open house early into January. People were making resolutions that they want better. And that way it would give us a chance to have four or five drivers with this at the open house, at the hotel, we were holding an app and it was really pleasing to see how many of the spouses were there as well. But by doing that, we could do the background checks and say, you know what? We want to commit to you, but it's going to be may before we're ready to fill that spot. So stay put where you're at. And it reduced the processing time dramatically. Cause we had already done that background work. And by inviting the spouse, I like using the phrase that remove the blind date syndrome. They knew who we were and we knew who they were. So when those driver was talking to their spouse at home, there was a connection that they knew who they were talking about. And we just fit, put, felt to put more strings in that rope to use that analogy again. Well, so this is one of the ways that you reduce the cost of hiring, correct? Let me ask Chuck, John, with your experience here, you spent years in the insurance industry, seeing probably over your experience of trucking companies. Have you ever found a recruiter to lie? Excuse me? I didn't even drink water and I'm joking. No, they don't lie. Never, never lie, but they've been known to stretch the truth a little bit exaggeration comes to mind. Well, I mean, I have run into recruiters who don't paint. Like every job has got the negative side. They'll only tell you about the positive. I've never really run into. I don't recall running into a recruiter who outright lied, but I do know of some recruiters who would avoid all the downside. Yup, yup. You know, and my suggestion for any recruiter, that's listening to this would be paint the downside, say, Hey, this is what a lot of the drivers don't like about working here. And this is how they handle it. Say the problem and then give the solution as well. Yeah, that would be my one tip I've I've I've I've found that if we focus more on retention, less time I have to spend on recruiting. And with that note, John, I think it's a interesting point to bring up. We've found drivers who had more than five years of service with the company they're by far percentage-wise they would give their resignation in the second week, after a period of vacation of two weeks or longer that they take their break. They relax not one week because one week you really don't unwind and go down that two week vacation period. They are totally relaxed. They come back and it's just like getting slapped in the face again, there hit the ground at a hundred miles an hour. So we always made a point of having that personal face-to-face talk during that second week, after that two week vacation period, just to say, you know, how's it going? How was your vacation? Everything going good. And if there were any issues, at least you got an opportunity to talk to that driver. If there was frustrations building and we found that was, but again, using statistical information to pinpoint your greatest areas of times of resignations. Well, again, it goes back to, you can only control those things that you measure. And so you were actually tracking it and measuring, when did these people leave? What type of seniority that they have, because you mentioned five years of experience after a two vacation. This is when they quit. So obviously you were measuring all that. What other stuff can you measure, John Damn near anything? Probably one of the key things that I kind of want to touch on, Randy said there was communication is key. You know, that's, that's the only way we're going to find out what's in your mind. What what's, why, what are your thoughts? Why are you thinking of wanting to leave? It's a shame. We thought this was a great relationship. What are, and one of the biggest problems is carriers have to realize they need to blame themselves. You know, don't blame the driver. What's the problem. What's your problem? You know, it's like, no, what are we not doing to satisfy your needs? What is it where, what, what haven't we held up our end of the bargain for, you know, get that conversation going before it turns into an exit interview. Absolutely. And I, to double with what John's saying, we had a couple situations where maybe we should have terminated a driver or, or, or, but we wanted to hang on to the driver and we realized it was those actions of us that put a negative taint on the other drivers, that they felt their effort wasn't being recognized because you're accepting this as the line in the sand. And when that individual was ultimately released from the company, I was really surprised how many drivers came up and said, thank you. So they're watching what you're doing. And I think it's respecting the efforts of the drivers and not in a negative way, but not tolerating. The behaviors of people who are choosing to do what they want to do instead of what the company is saying they want to do because that echoes and every behavior has an echo and the drivers are saying, well, why should I care if you're not caring about this? If you are allowing drivers to operate at a low standard, I really believe most truck drivers are professionals and they're proud, or they at least want to be proud of who they work for. And if you allow somebody with that reflects poorly on the company, it reflects poorly on them as well. I'd like to Chris that we did an, it, it seems very simple, but we've all heard when drivers leave and go to another company that picture at the other end, isn't what they were thinking it was going to be. And we knew we wanted that driver. We always made a point of contacting the driver approximately two weeks after they left the company just to say, how's it going? We just want you to know, you've always got a home here. Just let us know and you'll be back. And it just gave a little bit of reassurance to that driver that left that. Wow. I, I really did matter to them. I did care. And as simple as it is keeping in touch, we had a system where we sent birthday cards to the employees with a handwritten signature, nothing, you know, generic. We carried on with that employee after they left the company because they said, wow, I I've been gone two years and I still get this card quite simple, but it, it did have an impact. Huh. And I hope you only sent the card to the drivers on the list of we'd like to have you back. Correct. Hey, that I first heard of something similar and like is a Kelly Henderson that is out of the States. He's a recruiting guy. He used to come up here and speak and, and he has a letter that he would send to a driver. And he tried to time it, after that driver who had left, he would try to find out where they went and then try to time it so that the driver had gotten two paychecks and then they would get the letter. Often we leave for greener pastures. And after the second paycheck, we're going, man, is it really greener over here if it's timed, right? And you get that, that in his letter that our safety committee reviewed your file and voted in similar to what you said. I forget the exact words, but they said, Hey, you'd be welcome back. So That's good wording because the word loaded means it's one person. It's a great right. Exactly. Yeah. I've actually heard of a couple of companies that have actually, and again, high up companies, well, well known companies that have actually taken and they will send the drivers wife flowers on either their wife, the wife's birthday or their wedding anniversary. If, if so, it's speed. But you know, again, it's, you know, I want to recognize the driver, but if I can recognize the wife, who's the cheerleader in this relationship, you know, they're going to move on. You don't want to leave there. These guys treat you really good. You know, you're looking over the wrong fence Guys, go ahead, read it. One other element we did. And I'm going to make a very simplistic, but we've found it gave the driver accreditation for the effort there was putting out. And it was inside of our driver bonus system where we originally used a 2% of their eligible wage as their baseline. And unfortunately there was only be reductions from there. And it, you thought you were doing the right thing, but it sort of had a negative tinge to it that you're removing it for the benefit of the company. So I'm going to make it simple. If you had 10 drivers in your fleet, if each driver earned a thousand dollar bonus, hopefully you don't have a negative incident. And the company is committing to pay out $10,000, that 10 drivers per thousand. So we turned it into like a shares of a stock that every driver got so many shares for their months of service. So the longer you stayed, you got more shares and different elements and it was prescribed reduction of shares. But the one thing we did for every clean inspection, you got, you got bonus shares. And it turned out that some drivers, if I'm using a 2% baseline, got three and a quarter percent because they had more exposure at the scales. They had clean inspections, some drivers for 1.7%. But the positive thing is it didn't cost the company one additional dollar, but the drivers who had the most positive performance, whether it was in fuel economy or breaking, they got a higher percentage of bonus. And we had a lot of positive feedback. It was recognizing their good, positive professional behavior. That's huge. Sorry. Like w you know, we're heading into the end here, John, you, you had a great idea that I'm taking away from this, recognize the spouse send home something significant to the, to the spouse so that the spouse is the one saying, Hey, you don't want to leave there. I like where you are when your bonus system that's huge. And as you said, it doesn't cost the company anything, but you've turned what sometimes is a negative into a positive, a huge, I got to thank you both. But hang on one sec. I just want to tell you a funny story. All right. We had an owner-operator and this was a long time ago, cause this was the Fergus truck show. All of us I'm sure. Remember Fergus. And this owner operator loved working for the company so much when I was there, but he took, he just bought a new truck. He took the weekend and asked, could he display his new truck at our booth at Fergus? And we said, sure. So I think it was, he spent the weekend with us and didn't earn a dime and spent it away from his family. So my boss at the time thought it would be really nice. And he sent roses to the wife. Okay. To say, thank you. You know, the owner operator walks in, who did you get those roses from? And she says, your boss, why is it the first time a man ever gives me roses? It's not my husband. I thought I remember he came in. He was so embarrassed. And he's you guys got me in trouble, but Randy, John, again, thank you so much for coming on the show. If our listeners and viewers didn't get something from each of you, I would be shocked. Your contact info is in the show notes below Randy, last word. I think it's just recognizing and giving acknowledgement of positive behavior, as opposed to saying, Oh, they can always do that. Give credit where credit is due and make sure they know you see their behaviors. Perfect. Thank you, John. Last word. There's lots of bad drivers out there, but I don't know any one of them that wants to be a bad driver. They don't know how to be a good one. So it's going to take companies with good strength to teach those guys how to be good drivers, and there'll be thankful for it. Beautiful. Thank you both. I hope you love the show as much as I did. Please leave us a, like a thumbs up a review, a comment, a rating. If it is, thank you so much. And I do really appreciate your time and join us again next week for another exciting interview.