Meeting the challenges of dealership recruiting, retention

How could you get many car dealers to groan?

Probably by turning the conversation to recruitment, retention and development.

But, according to Cox Automotive’s 2017 “Dealership Staffing Study | Meeting the Challenges of a Changing Workforce,” it’s also “one of the biggest sources of operational opportunity.”

“More than half of dealership gross profit margin goes to payroll and the impact that your employees can have on your customers and on your culture can be significant,” the study said.

100517 IL Meeting the challenges of dealership recruiting, retention

Citing an average cost of $10,000 per new hire and an annual turnover rate as high as 67 percent for sales positions, the study said, “a dealership with 100 salespeople can lose $670,000 a year … not to mention the knowledge and customer relationships that walk out the door with that employee.”

That sort of turnover can have broad operational consequences, according to the Cox study.

Examples include:

  • Hiring relatively inexperienced sales and service advisers because they seem to be a good personality fit can result in bad hires, high turnover and associated expenses.
  • Offering only cursory training/orientation on OEM products, which can lead to lack of job satisfaction and poor employee performance.
  • Failure to offer and/or discuss career development, which can result in short-term employment and difficulty recruiting the highest-quality candidates.

Despite the possible payoff in hiring and retaining quality salespeople, two in three dealers have no staffing strategy, the study reports.

When dealerships don’t have a strategic plan for hiring, staffing and training employees, don’t track turnover, don’t actively recruit and only hire as needed, provide little formal training outside OEM product training, and avoid discussions about career growth and development unless prompted by employees or job candidates, the study said, they can expect the following results:

  • Inconsistent in-store experiences, service/parts operations running at less than capacity and managers too focused on doing HR tasks themselves.
  • Inability to address problem areas such as ineffective sales management, broken or ineffective service tech onboarding processes, etc.
  • Lost productivity when positions are open too long and additional personnel expenses costing tens of thousands of dollars due to bad hiring decisions.
  • Lost revenue due to lack of skills and inconsistent customer experiences between visits.
  • Disengaged employees with lower productivity and loss of good employees.

So what does a solid staffing strategy get you, according to the study?

“High-quality, long-term employees critical to dealer profitability, longevity and growth, and people in the right roles, properly trained and operating in ways that reflect your desired customer experience.”

We’ll share what that strategy looks like in our second installment on the Inside Lane dealer blog.

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