Lately, I’ve been rather frustrated at the lack of management in many dealerships. Yes, plenty of people have the title manager but are they really managing anything? Let’s look at the simple definition of management – “Management in business is the function that coordinates the efforts of people to accomplish goals and objectives using available resources efficiently and effectively.”
The keyword I want to focus on is “people.” I see too many dealers who are missing the boat when it comes to that keyword. First of all, managing people begins with selecting the right people for your team from the start. Hiring someone because you like them or want to give them an opportunity it not the way to hire. There are plenty of people to like, that would be horrible for the job that needs to be filled.
The revolving door of employees in some dealerships is actually more like a spinning tornado; people get picked up (hired) and thrown out (fired) in record time. The cost to your dealership is staggering! A Center for American Progress study published in late 2012 found that the cost of turnover across all sectors of business for those earning less than $75K per year was 20% of their annual salary or about $15,000. For experienced managers at higher compensation rates, the cost is much higher. So take $15,000 times the number of employees you replaced last year and see what your true cost of turnover is. A dealer recently told me that he didn’t have a turnover problem – his managers had been with him for years. That’s great, but let’s look at the rest of the staff. The rest of the staff was turning over in record numbers.
In this situation, the first thing I do is look at who is doing the hiring. Now, I’m not naïve enough to believe that every dealer can afford a dedicated human resource person to handle their HR duties, but there better be someone on staff who is really good at it. Let’s look at a typical setup. Mr. Dealer hires his top management staff and he’s feeling good because his management turnover is low. But who hired the sales team? Who hired the technicians or service writers? What about the BDC or accounting office? In many stores, the managers are interviewing and hiring their own teams – without a clue how to do it!
If you have a turnover problem you need to be looking first and foremost at the person doing the hiring. Have they ever been trained to conduct a basic interview? Do they know which questions they can and cannot legally ask in an interview? Do they know if it’s appropriate to write on an employee’s job application? And if so, what can they write? Do your managers actually use a job description as a basis to write interview questions and conduct an interview based on the skills required of the job? Does your manager listen more than they talk when conducting an interview?
Do you test any applicants before you hire them? I’m not talking about a drug screen here. I’m talking about skill testing. No, I am not suggesting you ask a detailer to detail a car to evaluate their skills prior to hire. but you can take them to a vehicle that you know needs detailing and ask them to walk around the vehicle and tell you what they would do to get the vehicle ready for sale. An interview can be set up to evaluate the skills necessary to do any job in the dealership. Don’t use canned junk questions that don’t give you data to evaluate applicants. Do I really need to know a five-year employment plan from a service advisor? Absolutely not, and if I ask a canned question I’m likely to get just as canned an answer.
Every hire should have three things that are non-negotiable:
First is the competence to do the job you expect (and you have to tell them what you expect). The second is a character that is in step with your operation. Notice I didn’t define character because my perspective of character may differ greatly from yours. My definition – because I’ve worked from the controller seat for so long – is a high level of trust, integrity, and honesty. I don’t want anyone involved in my accounting I can’t trust. You might not have the exact same character standards but if you seem to only hire individuals who don’t know how to read a clock and constantly show up late for work, maybe you should reevaluate your character standards in hiring.
The third is chemistry. Now chemistry is a good and bad thing. Chemistry is third because if you don’t have competence and character fits, it doesn’t matter what chemistry there is. Chemistry is how the potential new hire will work within your current employee base. Some people confuse chemistry with believing it either means I have to love this individual, or that all my employees have to be alike in personality. That’s not it at all. You don’t have to like the individual to hire them, although it does make things easier at times. Additionally, if everyone thinks alike you will not generate many great ideas. Chemistry is about the ability to work well with others and accomplish common goals. I’ve worked with more than my share of individuals who were polar opposites of me, but I didn’t have to become best friends with them. I just focused on bringing out the best traits they had to fit the task we needed to accomplish.
Management excellence begins with hiring the right people for the right position and that begins with the interview process.