While sales and dealership profitability grew significantly since the recession until 2016, the retention of dealership employees has continued to be the white elephant at the party. We have debated and deployed revised hiring strategies, installed pay plans without commissions, and expanded benefits and perks. Even so, dealers continue to receive failing grades on the ability to hire, engage and retain employees that view the automotive industry as a career.
The most-often cited reason for people leaving the industry is not compensation, vacation time or flexibility in work schedules. It is rather embedded in the level of engagement they emotionally feel about or attachment they experience with their dealership. The ownership of this issue is solely borne by the dealer principals and their executive leadership teams — or the “head coach” and his or her assistant coaches.
NADA findings in their most recent workforce studies have found that dealership employees earn nearly 24 percent more than their peers in other private sector jobs. Total dealership turnover, however, remains at close to 40 percent for all dealership employees and close to 70 percent for sales consultants. Turnover for Millennials, which consist of 60 percent of new hires, tracks above 50 percent and female sales consultant turnover tracks at close to 90 percent. With each employee loss costing the dealership close to $16,000, even with increased gross profit generated, dealerships continue to bleed on the bottom line. This level of turnover also directly impacts the consumer experience and negatively impacts the morale of the staff, thus promoting the image of a dealership as not being a “good place to work,” let alone making it a career focus to attract new blood into the industry.
According to Paul Herr, author of Primal Management, the level of disengagement among private sector employees remains at epidemic proportions. He has identified three different levels of engagement among all employees. Currently 17 percent of the workforce is completely disengaged. These people are internal enemies of the company and will engage in behaviors that are intended to harm their employers. They are the most likely to steal from the dealership, cause disruption and intentionally harm customers. Another 50 percent of the workforce are passing time or strictly transaction focused. They complete their tasks to receive a paycheck. Herr refers to this as “personal trading.” Don’t expect anything beyond the minimal job requirement, nor any contribution to innovation to exceed customer expectations. The remaining third of the workforce are what Herr refers to as “allies.” These are the people who you want to go into combat with, knowing that they will defend your dealership to the end. Working at the dealership is their personal call of duty.
“Connected Culture” and Millennials
Unless you have been living under a rock, we are in a connected culture, regardless of age. We, all expect immediate response and feedback. If we post something on social media, we all wait and anticipate feedback. Likes or shares give us pleasure and gratification. No response causes concern and disengagement. How many sales consultants have said to you, “the customer didn’t return my call so they are not interested,” only to see them reappear at your dealership or, worse, purchase a vehicle from one of your competitors. The immediate feedback was no response and perceived to be negative. When you seek information on a company’s Website, we want immediate information, product detail and availability. Many of you have already addressed this with your e-lead response strategy.
While the above has often been attributed to Millennials, the level of sensitivity to “rejection” or lack of feedback becomes exponential. This generation has been rewarded since birth, given awards and recognition for just participating. This entitlement mentality has carried over into the workforce. Working as a team and team recognitions pales in the gratification that they receive from individual recognition or, more appropriately, reinforcement of acceptance or that they belong and are allies with whom they work for.
For the first time in history we have four generations of employees serving five generations of customers. According to NADA, Millennials are 60 percent of new dealership hires representing 42 percent of the workforce and accounting for 52 percent of all dealership turnover. The challenge has been for the traditionalist, Boomer and Gen X managers to understand the Millennial value system and feedback and put in the coaching required to transform their viewpoint from just being “on the job” to becoming your allies in the workplace.
“Player’s Coach” — Facilitating Engagement
The term “player’s coach” has been kicked around often in the world of sports. Some have succeeded, while many have failed. Many traditionalists in both sports and our industry have viewed this player’s coach as being too “easy,” lacking discipline and quick to give into every request that the “players” desire. Temporary fixes, such as pizza parties and special events, may have provided a temporary lift in morale, but seldom result in longer-term engagement.
The successful player’s coach is not only tuned into the pulse of the organization, but has become a master at maintaining constant dialogue with all employees at all levels of the organization. Feedback is immediate and, while it is not always positive, it is feedback. It is ongoing and daily. It may involve correction of errors or undesired behaviors. However, when coaching on errors, it always involves including rationale and benefits for the organization and how the behavior of the employee can have both a positive or negative impact on the individual, as well as the company, team or dealership overall.
Making this feedback process part of the organization’s culture is critical. That means having the ability to measure, develop the manager’s ability to listen, digest and respond to each type of employee, regardless of position or generation. This is not a once a year, quarter or monthly activity — it is daily. Just like coaching a game occurs on every play, creating a feedback culture needs to be embedded in each action taken and every word spoken by dealer leadership. Repetition of this behavior, just like long practice sessions, is required to remove the completely disengaged and develop your role players in the dealership to allies who are advocates of your dealership to both your customers and the communities which they serve.