By James A. Ziegler, CSP, HSG, “The Alpha Dawg”
If you know me, you know that I hate stats. I believe most stats are made up and created by individuals that want to influence the people receiving the stats. I’m not saying you should ignore stats altogether, but you should be skeptical and take a hard look at who is delivering the stats and what their motivation is to make you believe them.
Let’s say that turnover in the sales department is out of control, and depending on who you believe, more than 80% of salespeople don’t make it through the first year. Recently, I’ve seen stats published that said we have 112% turnover since the pandemic began. Excuse me, I still have a problem with anything being more than 100%, but I can show you the report. And we’re expected to take these people seriously?
After 48 years in the car business, no one has solved the problem.
But with turnover so high, why is it that still, no one seems to have the answer? Well, if you ask me, we never solved the turnover problem because the people doing the alleged research don’t get it. Sorry, but we’re relying on some intellectual goobers theorizing on how it should be, what should work, and what they perceive to be the problems and causes. With that mindset from the onset, they conduct alleged research and develop solutions that fit their preconceived narrative but have never solved the problem.
Unfortunately, the majority of dealerships- regardless of size or demographic, accept employee turnover as a cost of doing business and build it into their projections. So even though recruiting and hiring costs are approaching $10,000, and the cost of mass turnover in most dealerships equates to a loss of more than $200,000 annually, party-on Garth, we just accept it.
If the numbers are only partially correct when I read that we fire close to half of the people we hire before they resigned, that doesn’t just indicate they were the wrong people, but more so that we were crappy managers.
Flawed Dealership Hiring/Onboarding Processes
Now we’ve covered the problem, let’s dive into why it’s still happening and how we can fix it. There are several layers to the answer, but here it is.
First, let’s assume that 80% of new hires bailed out or were fired in the first year – that’s one problem.
Then, of the remaining 20% that stayed with the dealership, I’m hearing that only about 35% are still with the dealership after three years. So, we’re dealing with two different problems if you think about it.
Obviously, the first problem, where most new hires left the dealership, is a flawed hiring and onboarding process.
Most dealerships lose people because they were wrong for the job in the first place. I am a firm believer in aptitude testing. Not everyone is suited to car sales. Their personality type is more suited to a clerical or technician position- an entirely different aptitude and mentality. There are tests today that nail the predictability of success and longevity. I use Omnia out of Tampa, but there are many others.
I would never hire without testing. Some managers argue with me about that, but truthfully so many applicants are ‘professional interviewers,’ especially with creative online and written resumes. If the test said, “don’t hire,” I didn’t.
In most cases, it’s either loose and careless hiring of everyone that can fog up a mirror OR over-complicating the process with too many hoops to jump through.
A big reason for massive turnover in the car business is hiring out of desperation. Interviewing by more than one person with executive authority in the dealership is essential.
Another problem in hiring is losing top candidates due to delays in approving/contacting applicants. How many great applicants have we lost because they couldn’t get through the HR department approval in a reasonable amount of time?
Who invented the word “onboarding” anyway? If they can’t clear your HR department in two days, most quality applicants move on. I’ve seen HR hold up a new hire for weeks and then wonder why they are no longer available. I know we have drug screening and due diligence concerns, but if we want to hire the best applicants, we have to streamline the HR process.
How much of your website is dedicated to recruiting? And don’t be too quick to answer. I’m not talking about the bright red starburst on the homepage that says “We’re Hiring.” No, I’m talking about several pages with photos, videos, and messages from the managers describing your dealership’s culture, benefits, income potential, quality work schedule, and career path to management.
AND once you’ve got the recruiting pages on your website, let’s maximize SEO and PPC to drive the correct traffic to those pages. You did have someone at the college job fair, didn’t you? These are things I’ve been doing and advising dealer clients to do for 35 years. I even had professionally produced ‘Recruiting Brochures’ that would fit in a manager’s pocket folded and could be carried with them when they were out in the community. Whenever we came across a quality prospective person, we made sure they had the brochure.
More to Curing the Turnover Problem
Is hiring and attracting qualified applicants the cure for the turnover problem? Well, not exactly, but that’s a good start.
The real question might be, What about the 70% or more of the ones left after the initial 80% bailed out that didn’t last three years?
If you even vaguely believe the stats, then after three years, we’re only left with 30% of 20% of the people we initially hired at the cost of $10,000 each. Day-Um.
So, even if you do solve the hiring process and staff up with top-quality applicants with the right qualifications and aptitude, why are they bailing out and not making a career out of the car business?
The two things that immediately come to mind are time and money.
I’ve always said the number one reason people leave a dealership is “Spouse pressure.” We require salespeople to work 50-60 hours a week, on Saturdays, Sundays, and evenings when their spouse or ‘significant,’ children, and/or neighbors are off. They are required to miss a lot of social functions to keep the schedule. They are required to miss a lot of social functions to keep the schedule. That is why so many salespeople leave even though they make 30% to 40% more than similar experience levels in other businesses considering time on job. We’ve all seen a salesperson quit a dealer and then go to a warehouse job paying much less because of the quality of the schedule.
This is where dealers really mess up. Almost every dealership I’ve consulted for through the years was understaffed for the dealership’s potential. Over any other factor, the hours on the job create turnover.
I’ve always said – hire the best people and pay them too much.
Far too many dealers spend too much of their time wheedling down and reinventing pay plans.
My solution was always to have three teams (or more) of salespeople and managers. Creative scheduling with three teams is to have one team scheduled OFF 100% of the time the dealership is open. In other words, one team is not here at any time we’re open. That’s F&I and sales departments.
And one team is scheduled OFF at least one weekend a month. That is from Friday at noon until Monday at noon. So once a month, every team is OFF. They’re not allowed to be in the dealership during their time off, even if they want to come in. This way, nobody double-crosses their family and comes in when they’re supposed to be home. We legislate ‘family time.’
If you have a delivery on your day off, tough luck; somebody else will handle it. No exceptions. And management will never double-cross you and cancel your day off because we’re short-handed. Your day off is your day off, and quality time is part of our culture.
Two things that will create longevity are culture and career path.
Wouldn’t you agree that most car sales positions are “dead-end jobs?” Anyone who is a quality person with goals and ambition will quickly realize that the dealer has three teenagers they’re grooming for executive management. The sales managers and finance managers are pretty stable in their positions. They’re not going anywhere soon. Is this a dead-end job?
The big corporate dealerships and multi-franchise family stores have the edge over the single franchise family-owned dealership because they can create a management development program and show a career path to management. Some even have buy-in partnerships.
Creating a Career Path to Management in Dealerships
So, how do you create a career path to management in dealerships that don’t have growth opportunity?
When I was in Boy Scouts as a kid, one of my proudest achievements was when I earned my “Eagle Scout” badge. The rank of Eagle was the highest honor, but I had to climb through the ranks of ‘Tenderfoot,’ then ‘First Class,’ ‘Star,’ and Life Scout’ before I could qualify for Eagle Scout. Every level had merit badge qualifications you had to earn to advance, skills you had to learn, and events you had to attend. Even when you reached Eagle, you still had higher levels of ‘Palm’ awards you could achieve.
It took me five years from the time I began to reach Eagle.
When I became an executive manager and dealership consultant, I applied the same principles to car dealership pay plans. My thought process was, what if different salespersons earned different levels- from entry-level to professional to executive-level and master-level sales professional?
I talked several dealerships into introducing this creative pay plan with increasing pay levels and benefits. For instance, the master-level sales professional must sell a minimum of 25 units two out of every three rolling months to remain at that pay level and benefits. And the master-level sales professional might have a full-time paid assistant (paid for by the dealership). (That assistant eventually becomes a salesperson.) Master-level might have a two-week fully paid vacation every year if they remain at that level for the entire year, with similar and slightly fewer benefits and slightly less percentage pay plan for the executive level.
Why not consider a multi-level pay plan for sales professionals so that they always have a way to advance in their careers. All pay plans are performance-based. It has as much to do with competitive spirit and pride of advancement as it does with the money.
As it’s often said, people leave managers more than they leave jobs. In the best cultures, abusive or overbearing managers cannot be tolerated. But again, that’s the dealer’s or general manager’s fault.
As a quick recap, here are my recommendations:
- Stop hiring the wrong people for the wrong role. Did you put the applicant in sales when they should have been a service advisor?
- Create a plan to recruit quality applicants. Redesign your web pages and maximize the targeted traffic to those pages
- Create a plan to recruit quality applicants.
- Redesign your web pages and maximize the targeted traffic to those pages.
- Create a quality work schedule.
- Create a pathway to management, or at least to advancement.
- Have ongoing daily training and offer offsite education for your employees.
The suggestions in this article won’t eliminate turnover altogether, but I assure you it will significantly reduce the costs and help create a winning, stable team.
About the Contributor
James A. Ziegler, CSP, HSG, of Ziegler SuperSystems, Inc., for 45 years, has been a recognized industry leader, writer, magazine columnist, professional speaker, and super performer following a record-setting sales career as F&I manager/director and GSM with some of the top automobile dealerships in the country. Jim has worked with more than 15,000 dealerships nationwide, and more than 125,000 dealers, managers, and factory executives have attended his automobile dealer management trainings.
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