How To Solve Dealership Turnover & Staffing Issues Forever (PART 2)
TRANSCRIPT: Where are we? Where are we with turnover and staffing, and how did we get here? Well, it’s 2016. It’s crazy that we’re still talking about this stuff, right? You’ve seen the headlines. There was a great article by Jamie LaReau in Automotive News recently that actually spurred this lesson. It was all about NADA’s 2016 dealership workforce study. Basically there’s the headline, but really the gist of the article was this. Turnover is up and we need more women. The same thing as we’ve been saying for years and years in this business.
What was interesting to me in the article is that they basically said that it takes three years to recover the training investment that you’re making on new hires, but why are still talking about this? It’s 2016. It’s almost 2017. We’re talking about the same issues we talked about when I sold my first car in 1985. It doesn’t make sense. Let me tell you a little bit more about this NADA study. The data for the study came from last year. It came from 2015. That was a record year. What’s going to happen with our sales teams as sales continue to plateau or worse? Are you even ready for another 2008?
Listen, stick with me today and we’re going to figure it out together once and for all, I guarantee it. So where are we and how did we get here? I’m going to tell you right now it’s not about money. It’s not about the benjamins. In 2015 the medium annual income for all employees at new car dealerships was over $53,000. That’s about 24% more than employees in the private sector workforce, so we’re paying more than other industries. Why is turnover higher here? Oh, and by the way, this is alarming to me. It’s getting worse. The average tenure in 2015 for your people on your floor was 2.4 years.
In 2011 it was 3.8 years in our business when we were just crossing the 12 million annual sales mark. Yeah, five million units ago, five million per year. Remember, it takes three years to recover new hire training costs, so right now our average employee is staying 2.4 years; they’re not even staying long enough for us to recover the average training costs that we’re putting in to each new employee. By the way, you might say, “Well, Steve, that was the economy.” No, no, no. The rest of the private sector was steady during that time at 4.1 years, so what’s happening? How did we get here?
Let’s talk about the elephant in the room and that is sales cures all ills. Really the saying is the sales covers up all ills. See, the rising tide that raised all the boats in our industry also covered up bad leadership. It’s really easy to be a bad leader in an up market and it’s really easy to discard your processes. That’s what happened. Leadership tanked, processes were discarded because we had an up bus coming every day, but let me give you a hint. If you didn’t gain significant market share in 2015, if all you did was tread water market share wise, you didn’t actually grow.
You didn’t grow in 2015 and today you’re paying the price with high turnover, greater discounting in 2016 and beyond. While it’s true that most businesses will get better at process in bad times, this doesn’t mean that you’ll get better, that your team will get better or that you’ll get better right away, or that businesses get better in flat markets, and we’re going to be in a flat market for a little while. “Okay, so, Steve, I get it. Sales cures all the ills. How else did we get here?” Well, this is a saying. “People quit bosses.” People don’t quit companies. People quit bosses.
That’s absolutely true in your dealership. See, leadership from the desk does not exist in most dealerships that I work with today. You probably have deskers, not managers. Now there’s nothing wrong with deskers, okay? We all need good deskers. Unless you’re a one price store, you need a superstar desker, but they’re not leading your team. They’re not even sales managers. They don’t know how to lead, but it’s not their fault because no one ever taught them how to lead. They didn’t have to lead in this business. Oh, and by the way, it’s not HR, okay?
You’re going to find some people in our business, usually people who are selling HR services or staffing companies, they’re going to argue that we need stronger HR departments to attract and keep more women. I’m going to tell you what. This is a cop out or it’s a money grab. Here’s the reason. The role of the automotive salesperson, that’s perceived by society to be a man’s job. Society perceives it that way. A stronger HR team isn’t going to change society’s perception of that role. Just so you know, I’m not being sexist. We need more women in automotive, but they’re going to come by doing the things I’m going to talk about today, not by getting a stronger HR team that can recruit more women.
By the way, society perceives nursing as a female’s job and you did you know even today only about 10% of nurses in America are male? It’s because society perceives the position that way. It’s also not about training. Let’s be clear. You don’t need more training. The only person yelling for you the get more training are the professional trainers. You’ve already paid for enough training. It’s probably sitting in a drawer in your conference room right now. You probably got a drawer full of the Grant Cardone DVDs, the Joe Verde VHS tapes, the Stuker CDs or cassette tapes or even the eight-track tapes. I’ve seen it. I’ve been in your conference room. You’ve paid for enough training.
The problem is no one’s reinforcing the training that you’re getting today or the training that you got before. That’s the biggest issue that I have when I go work for a dealership. When I come in to your dealership to work with you, it doesn’t matter what I say or do. If your managers aren’t going to reinforce the training that I put in place, it’s worthless, so today I’m going to give you everything that you need to know so that you won’t ever need to hire a trainer. It’s basically this. Growing sales killed our processes, yep, and bad bosses. Yep, that’s pretty much it. Oh, and millennials, okay? But we can fix that. See, think about this. Ask yourself how much you wasted on staffing, on recruiters, on benefits, on HR and trainers from 2011 to today. Think about that.
What changed over that time, right? Obviously we’ve got this millennial problem, but you know what? All of our issues and the millennial problem, they’re all solvable with just a few simple steps. They are solvable if we will put in place some basic transparent rules. Transparent means everybody knows about them before, after and during, okay? Then we put in some fair, transparent pay plans, again, where everybody knows what’s going on. We’re going to talk about all this today. We put in good processes, which is direction. People want direction, they need direction.
We put in a sense of fairness. You know what fairness is? It’s enforcing. It’s enforcing and reinforcing our rules, our pay plans and our processes. We give a little bit of appreciation, right? We’re nice to the people we work with and we create a sense of pride in selling cars. If we can do those simple steps, truly simple steps, we can solve turnover and staffing issues in your dealership forever. Think about this. Think about your accounting department. Your accounting department, I bet, has clear rules. I’ll bet they have a transparent enduring pay plan. What I mean by that is you probably haven’t changed your accounting department pay plan in years because it works.
I’ll bet you your accounting department has solid processes and plenty of direction. The only thing that would dictate turnover now in the accounting department is whether or not there’s a sense of fairness, right? If they feel the manager is fair, if they feel the rules are fair, and is there a sense of appreciation or pride in that business. There’s a reason that you don’t have turnover in the accounting department and that’s because you have leadership. You have rules, you have enduring pay plans and you have plenty of direction, those solid processes.
I know what you’re thinking. “Steve, that’s apples and oranges. Accounting is nothing like sales.” You’re right. Accounting and sales are completely different. In fact, in accounting you couldn’t survive a single day without leadership. In sales, you could go months without it. You probably have. Some of you are probably going years without leadership in your sales team, but the world is changing. Turnover velocity is increasing. That means that it’s just going to keep getting worse and worse. The last year it was 2.4 years average tenure for the people on your team. What’s it going to be in 2017, in 2018? It’s getting worse, so whatever you do, let’s stop with the band-aids, okay? You’re wasting tens of thousands of dollars right now in ineffective training, on ineffective hiring firms, on ineffective consultants. These things are ineffective, by the way, because your foundation is wobbly.
I told you, most of the dealers I train do nothing with the training. It’s because they’re trying to put it on a foundation that’s wobbly. See, when I train dealers it doesn’t matter what I teach you if you have no rules in place. You can have rules, but if they’re not being enforced, it means you don’t have rules in place, or if your managers are just going to give my training lip service, or if everybody in your team just treats my visit as another box-checking exercise. You know what you do with your OEM? Every time they come in, they give you boxes to check and your team checks them off and, “Hey, look what we did?” No, you have to have a foundation. The things that we’re going to talk about today are exactly that foundation. Again, this is easy. It’s easier than the alternative.