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How Better Hiring and Training Processes are Driving Change in the Industry’s Largest Dealer Group

Today, the turnover number for the average dealership is more than 70 percent. Automotive consulting firm ESI Trends is familiar with the challenges faced by the industry: It also partners with the NADA to produce the annual National Automobile Dealership Association Dealership Workforce Study.

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Alan Dodaro is the product marketing manager for Hireology.

For the average dealership, turnover can cost upwards of $500,000 annually. For the retail automotive industry as a whole, this cost scales into the billions.

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This revenue is lost slowly, and indirectly. It happens in a few different ways:

  • Wasted resources, time and training expenses
  • Poor interactions between inexperienced staff and customers
  • Bad fits providing poor customer experiences
  • Lost vehicle sales, upsells and services

Today, the turnover number for the average dealership is more than 70 percent. Automotive consulting firm ESI Trends is familiar with the challenges faced by the industry: It also partners with the NADA to produce the annual National Automobile Dealership Association Dealership Workforce Study.

ESI Trends’ Ted Kraybill told Automotive News, “A 10-percentage-point increase in turnover will cost the average dealership $7,500 in gross profit per employee per year. With an average dealership head count of 70 people that means a 10-point increase in turnover costs the average dealership more than $500,000 in gross profit annually. Multiplied by NADA’s count of roughly 16,500 dealerships in the U.S., it’s an $8 billion-plus problem.”

Realizing the opportunity to recover millions in lost revenue, large dealership groups like AutoNation are beginning to address the problem head on. AutoNation recently shared several tactics with Automotive News to combat turnover:

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Combatting the Perception Problem
When it comes to hiring Millennials, there’s a huge disconnect between today’s generation of talent and the career trajectory present in the dealership world. Now comprising 60 percent of all new dealership hires, Millennials don’t want the high-risk, commission-based roles common at most dealerships.

Most Millennials would overwhelmingly choose a smaller, more consistent pay plan over the high-risk, high-reward commission structure that most traditional sales roles are based upon. This disconnect between the Millennial workforce and the comp structure witnessed at many dealerships has the potential to turn off an entire generation from the automotive industry.

Getting Ahead Of The Problem By Hiring Smarter
Most dealerships have a better process for buying office supplies than they do for hiring people. It’s already hard enough to be a dealer. Dealers can’t control cheap private-equity dollars consolidating stores. They can’t control interest rates, recalls or regulators. They can’t control ride-sharing or non-dealer models. The only thing they have 100 percent control of anymore is who they put on their payroll.

ESI Trends has recommended tactics dealerships should stop doing immediately to identify, hire and retain long-term employees:

Hiring practices to avoid:

  • Hiring someone without proper vetting for a sales position
  • Hiring someone after just one interview by a single manager
  • Failing to have a list of reasons to work for the dealership
  • Overselling the position — i.e., telling a sales position applicant that it’s easy to make $100,000 a year
  • Not running background or reference checks
  • Keeping applicants waiting past the appointed interview time
  • Not worrying about impressing the recruit
  • Hiring a training class of 10 applicants for just two or three open positions

The Importance of Perks And A Career Path
Increased vehicle sales, sophisticated onboarding technology, and Baby Boomer retirement in retail automotive are compounding a problem that’s been increasing for years: getting new, young blood into roles that require technical expertise such as mechanics and service technicians. Dealers across the country are feeling the squeeze as technical programs become scarcer, and students opt for other career paths.

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AutoNation shared recent success retaining employees by implementing incentives the Universal Technical Institute recommends all dealers adopt. These include tuition reimbursement, sponsored tool package, sign-on bonuses and relocation assistance.

A recent Carlisle survey found that many unhappy auto techs worked for dealers who would not fund their training efforts. The specific reasons for the dealers to not support training efforts varied, but the outcome was always the same: The techs soon left to work at a rival dealership eager to find new talent, leaving the original rooftop with an empty bay.

Beyond training, a designated career path is a mission-critical element to finding and retaining top automotive talent. The Carlisle study found that just one third of all dealership employees were satisfied with their career progression. Even more troubling, the most unhappy employees were considering leaving retail automotive entirely.

To combat this, top groups are starting to transition to product specialist and service advisors, hoping that dramatically rethinking automotive talent will lure back talent that wouldn’t have previously considered roles in retail automotive. As early as 2014, AutoNation led the charge with the dramatic push to service advisors to be the first point of contact for customers.

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The hope relied on finding an all-new kind of employee. Instead of the hardline salesperson who was a tough negotiator, they would instead focus on a customer-oriented host to walk them through the entire experience and provide great service. In the years since launching the service advisor role, AutoNation seems to be doing well. While the baseline average turnover is upwards of 70 percent, AutoNation is closer to 30 percent for these new roles.

The secret is thinking outside of the box — and the entire industry. AutoNation frequently recruits outside retail automotive to bring new experience into their rooftops from candidates who likely never thought of working at a car dealership.

Fighting Turnover With Better Hiring And Training Tools
Turnover is disproportionately affecting retail automotive, radically impacting dealership profits and the customer experience. A set hiring process and comprehensive training programs are critical to help dealers find and retain great talent. It’ll require a bigger investment in human capital upfront today, but today’s turnover challenges and a dwindling market for auto technicians, mechanics, and even qualified salespeople are forcing dealers to think in very unconventional ways.

For an eBook that provides a step-by-step overview of a well-oiled, effective hiring process, please contact me at [email protected].

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Alan Dodaro – Product Marketing Manager For Hireology

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