How to Evaluate Trucking Cost per Hire

In the trucking world, effectively managing recruitment costs is paramount; from spending money to attract new drivers to handling turnover caused by driver burnout and other factors, many unique factors plague this industry. Companies must understand and optimize their recruitment expenses when hiring and retaining talent. 

This article will explore the "Cost per Hire" (CPH) and its relevance in trucking, delving into the critical link between CPH and Employee Onboarding Return on Investment (ROI) and providing insights into strategies to enhance both.

Understanding Cost per Hire

Cost per Hire (CPH) is a crucial metric that quantifies the total cost incurred by an organization to recruit and onboard a new employee. It encompasses various direct and indirect components that contribute to the overall expenditure. To understand and optimize CPH, you must first consider the following components:

• Recruitment Advertising Expenses: Job postings, recruitment agencies, and promotional campaigns costs.
• Hiring Team Salaries: The salaries and benefits of recruiters, interviewers, and other personnel involved in the hiring process.
• Applicant Tracking System Costs: Expenses associated with the software and tools used for applicant management and tracking.
• Background Checks and Drug Testing Expenses: Costs incurred for verifying the qualifications and integrity of potential hires.
• Training Costs for New Hires: Expenses related to initial training and orientation programs for new employees.
• Miscellaneous Costs: These may include travel expenses for candidates or relocation packages for new hires.

It is also essential to account for both direct and indirect costs associated with recruitment and onboarding.

How to Calculate Cost per Hire

Calculating CPH involves a systematic approach to summing up all recruitment-related expenses and dividing the total by the number of hires within a specific period. Here is an example of how organizations calculate cost per hire: 

Imagine a trucking company, Expert Truckers Inc., calculating the CPH for the year 2023. During that year, they hired 50 new drivers.

Components of CPH:

• Recruitment Advertising Expenses: $10,000

• Hiring Team Salaries: $40,000

• Applicant Tracking System Costs: $5,000

• Background Checks and Drug Testing Expenses: $3,000

• Training Costs for New Hires: $15,000

• Miscellaneous Costs: $7,000

Summing up All Recruitment-Related Expenses:

Total Expenses = $10,000 (Recruitment Advertising) + $40,000 (Hiring Team Salaries) + $5,000 (Applicant Tracking System) + $3,000 (Background Checks and Drug Testing) + $15,000 (Training Costs) + $7,000 (Miscellaneous Costs) = $80,000

Divide the Total Expenses by the Number of Hires:

CPH = Total Expenses / Number of Hires = $80,000 / 50 = $1,600 per hire

So, in this example, Expert Truckers Inc. spent an average of $1,600 to recruit and onboard each new driver in 2023.

Using this calculation gives companies valuable insights into the direct costs associated with their hiring process. By tracking CPH over time, they can implement strategies to reduce it while maintaining the quality of hires, which enables informed decision-making and improves recruitment efficiency. It's worth noting that indirect costs, such as high turnover or seasonal variations, should also be considered when assessing the full impact of recruitment expenses on the company's bottom line.

Factors Influencing Cost per Hire in the Trucking Industry

The trucking industry faces several unique factors that significantly influence Cost per Hire (CPH). High turnover rates are a prevalent challenge, necessitating more frequent hiring and, consequently, higher recruitment costs. Seasonal fluctuations in demand for trucking services may lead to varying recruitment expenses, posing additional challenges for cost management. Moreover, regional variations in labor markets and market conditions can result in disparities in hiring costs across different geographical areas. Access to technology and automation also play a crucial role in optimizing CPH. Companies that forego incorporating innovative solutions in their recruitment process,  miss out on the opportunity to streamline processes and reduce expenses.

An Overview of Employee Onboarding ROI

Employee Onboarding Return on Investment (ROI) is a critical measure of the value derived from successfully integrating new employees into an organization. The relationship between ROI and Cost per Hire (CPH) is profound, as a well-structured onboarding process can yield several positive impacts on ROI. 

Firstly, it can reduce turnover rates, fostering higher employee retention and diminishing the need for costly replacements. Secondly, a carefully executed onboarding program can expedite the time it takes for new hires to reach total productivity, enhancing the company's overall profitability. Finally, a positive onboarding experience contributes to heightened employee job satisfaction, leading to improved morale, higher productivity, and, ultimately, a more substantial return on investment.

So how can organizations reduce cost per hire while improving onboarding ROI? It starts with having a strategic approach.

Optimize Cost per Hire and Enhance Onboarding ROI

To enhance Cost per Hire (CPH) and maximize Employee Onboarding Return on Investment (ROI) in the trucking industry, consider implementing a holistic set of strategies. 

Start with streamlining the recruitment process: identify and eliminate bottlenecks, simplify procedures, and reduce administrative overhead. By doing so, your company can enhance overall efficiency. 

Leverage technology as a powerful ally. Utilize applicant tracking systems, AI-driven screening tools, and online platforms to source, screen, and evaluate candidates precisely and quickly. 

Invest in a comprehensive onboarding program structured to include training, mentorship, and ongoing support for new hires, ensuring they acclimate swiftly and effectively. 

Finally, prioritize continuous improvement by regularly analyzing recruitment and onboarding processes, soliciting feedback from new hires, and making data-driven adjustments to optimize talent acquisition and retention efforts. These proactive measures can collectively lead to cost savings and a more productive, satisfied workforce.

Managing recruitment costs and optimizing Employee Onboarding ROI is a strategic imperative in the competitive and ever-evolving trucking industry. Cost per Hire (CPH) is a vital metric to gauge the efficiency of your hiring processes. By understanding the components of CPH, calculating it accurately, and implementing strategies to enhance it, trucking companies can achieve better financial outcomes and secure a more stable, satisfied, and productive workforce. 

Want to learn how companies just like yours have reduced their CPH by 50%? Explore TransForce's innovative solutions and see how they stack up against other driver recruitment solutions!