For decades, dealerships have used their compensation plans and spiffs as means of motivating their sales teams to perform. General managers, sales managers and sales consultants have reworked, upscaled, broken down, undone and redone their comp plans, and some dealers have just plain given up. And yet, through all that, to date, no one has managed to create the perfect pay plan to adequately motivate their sales teams and drive up performance.
However, as an industry, when it comes to motivating our salespeople, there’s a good chance we’ve been taking the wrong approach. The focus on compensation as the first strategy to motivate has created a concerning trend. In its annual Workforce Study, NADA reported that profitability in dealerships grew at .4 percent over the year. On the other side of the scale, compensation grew at 1.4 percent. Translation: In order to motivate sales teams, dealers had to outpace their profitability growth — obviously, this is not the way investments are supposed to go.
The inevitable question arises, then: Is there another way? The answer is “yes.” Motivating employees in any business comes down to: (a) finding out what is important to your people, and (b) leveraging those values to inspire high performance.
Right off the bat, let’s be clear that money is not, by itself, an adequate motivator. Money is important, but it can’t stand on its own; people also want and need security, relationships, freedom, power and recognition.
Consider these ways to effectively motivate your sales team without using cash as the only carrot:
1.Flexible Hours — Let’s be honest: In the automotive industry, we are not comfortable with people taking time off. This mindset, however, hurts both recruiting efforts and retention rates. By opening up flexibility in hours or vacation, I’ve seen dealers motivate teams to perform on a higher level. The surprising result is that, often, the people who get this option don’t use it fully. Why? Because they want to continue to win, and the added flexibility gives them the feeling of being more in control. Additionally, flexible hours contribute to quality of life, and if an employee feels that they have a higher quality of life, they are more likely to want to keep their job and excel at it. Remember: If they don’t want to be there, they are not there.
2.Career Path — We surveyed more than 700 salespeople and found that 15 percent of them were motivated primarily by the opportunity to move up in their current organization. Showing people they can grow in your dealership allows them to catch a vision of themselves in the future and, as a result, provides them with a reason to achieve their goals. Make path goals smaller — not just from sales to finance, and finance to sales desk, but, for example, creating the ability to “level up” within their current role (I recommend multiple levels of the “sales professional” role that newcomers can achieve.) This gives them a way to reach short-term goals, which contributes to morale and acknowledge that they are continually improving and moving toward larger goals.
3.Give Them a Freakin’ Sword — This recommendation comes from our 2016 Presidents Club keynote speaker, Dan Waldschmidt. When a new employee starts working at Waldschmidt’s company, they are given a sword to “join the fight.” This symbolizes the company’s commitment to defend the new employee, and, in return, the expectation that the employee will defend the company. It doesn’t have to be a sword; at my dealership we used coins and wristbands to give employees continual physical reminders of the company’s mission as well as the employee’s personal commitment to that mission.
4.Call Them Out…For Good — One of our most basic motivations is achievement. When you recognize people in your team for doing something good, you provide them with a boost that drives them to achieve. The struggle that tends to arise, though, is creating a consistent way of doing it. Develop a consistent way of identifying performance and be sure to set aside specific times to publicly recognize your employees. The carrot and the stick might get the job done in the short term; however, praise will create an addiction for more praise. We all love hearing how great we are.
5.Develop Them — Our study also revealed that our survey participants’ second-highest motivator was having the ability to improve their own skills. Give your team a way to develop themselves. By investing in their abilities, you will not only see returns in performance, but you’ll also notice that your employees will be much more motivated to work at your dealership. The right type of development processes help employees feel like the company is investing in their future. When a company invests in their employees, those employees invest themselves in the company.
6.Invite Them into the Tribe — Another basic need for humans is the need to belong. We want to feel like part of a group. This can be as basic as taking people to lunch, but could also include more in-depth activities, like buying tickets to a local sporting event and taking the whole team. This seems easy, but it is often missed because it is not recognized for its management value.
As you can see, there are more ways to motivate your team than just your comp plan. I’m not going to try to convince you that the comp plan isn’t important; our survey did show that money was the top motivator. But it also found that the more committed the employee was to staying long-term at their current dealership, the more they valued other, non-financial motivators. And the more they had those other motivators, the more committed they were to staying at their current dealership long term.
Your goal as a leader is to create a motivated team that provides you with the highest profitability possible. It’s time to look beyond the comp plan and focus on what really motivates your people. You’ll see happier people, which in turn will lead to higher performance and greater success as a dealership.