A silent killer of business growth is complacency. Unfortunately, when business is good, we can become distracted by success, and without realizing it, we can allow complacency to gain a foothold in our business and our culture. Examples include becoming lax on expense control, not collecting receivables in a timely fashion, letting CITs build, letting labor percentage creep up, getting off process, and so on. If a dealer or GM were to become complacent in just one process, or just one area of their business, it would most likely be identified and corrected. The problem is that complacency doesn’t work that way, gone unchecked, complacency can spread from manager to manager, and from department to department.
So, how does a dealer guard against letting complacency gain a foothold in their business, or worse, their culture? The answer I get most of the time when asking dealers and GMs this question is: “That’s why I have department managers.” Fair answer…maybe.
Great managers know that their personal and professional success directly corresponds to the personal and professional success of everyone in their department. It really doesn’t matter, even if you have a great franchise, in the perfect location, and within a growing market — sustained success over time will depend on the people the dealer has managing the business and how well they manage their departments.
It has been said repeatedly in many business forums that for a business owner, people are the businesses greatest asset. And I believe that it to be true. What should follow that statement is that people are usually your greatest expense as well.
Ask any GM or dealer what is most challenging in the business, and I would guess you would hear things like, inventory or maybe manufacturer relations. I would also imagine that in the top three responses would be hiring and retaining good people.
Although the topic of how difficult it is in the dealership to attract and interview talented and qualified candidates certainly could fill a page or two of this publication, my intention is to focus on retaining the talent already in the dealership.
Employee turnover in the dealership environment is a serious problem. There are reams of data that prove how this hidden expense for dealerships can steal hundreds of thousands of dollars a year for the average dealership and for larger dealerships (over the average of 70 employees), millions of dollars from the bottom line each year. Depending on your source, dealerships are turning over employees at the alrming rate of 45% per year, give or take a point or two. Let that number sink in. If you are interested in quantifying turnover expense in your dealership, email me and I will share a worksheet you can use to define it.
It gets worse. Being understaffed can cause a negative cascading effect on profitability, customer experience, and employee burnout all feeding the cycle of managers struggling to bring candidates in the front door all the while letting talent leak out the back door. When business is good, as it is for many now, this is tolerated because grosses are up and so are revenue and income. It’s just the way the car business is, right?
This leads me to recall the words of a very wise and successful dealer Ed Lacey, who would say “Good habits are learned in bad times, and bad habits are learned in good times” He was right. Complacency is one of those bad habits that is learned in good times.
So how can a dealer ensure that department managers remain vigilant in identifying complacency creeping into their departments? I would suggest that there are two areas of focus for managers that are essential in fighting complacency: accountability and training and development.
In those dealerships that are really making it happen month in and month out, no matter what the market is trying to dictate, there is usually a common thread. They have a strong and unbreakable chain of accountability throughout the dealership that is relied upon every day. No opportunities slip through the cracks and no problems or issues go unaddressed because managers effectively communicate with each other, daily. The culture in these dealerships is positive, professional, and strong — you can feel the energy as you enter this environment if you are an outsider. As it turns out, it starts at the top with the dealer or GM, because having engaged executive leadership is essential to a strong chain of accountability. These leaders invest in their people and understand the impact retaining talent has on dealership success. There isn’t one or two proactive managers in these dealerships, they are all proactive.
Some common traits proactive managers share include looking at their department as business within a business, communicating clearly and interacting with each person in the department every day, setting clear goals for the department. They also assist everyone in their department to set professional goals, set clear expectations and hold people accountable, are visible, and bring out the best in their people through feedback, training, and professional development. Finally, they have a plan, focus on what is important, and invest in their team.
The opposite of this dynamic is a reactive manager. These managers look at their role as a job and defend the status quo. They do not hold themselves or people accountable, chase an objective versus setting goals, tolerate average, and fear scrutiny. They don’t have a plan, focus on what is urgent, and, as a result, high turnover within their department.
There is a problem. This isn’t a perfect world, and being a manager in the car business isn’t an easy job. Being proactive is very difficult in the 30-day cycle, highly competitive car business. It is easy to get caught up in the urgent nature of business rhythm of each department within the dealership. It takes awareness and intention to carve out time to focus on the important things proactive managers prioritize.
Training and Development
Training and development are at the foundation of proactive management. You must be intentional and objective in evaluating your talents and growth opportunities, as well as those of your people. Then you must take a risk and invest in developing talent to retain it. The adage, “What if I train them and they leave? What if I don’t and they stay?” applies.
Proactive managers most likely have benefited at some time in their career from enlightened leadership who identified the potential in them and invested the time and resources to develop their skills and hone their business principles. If you are a dealer or GM, be that person for your managers. If you are a manager, be that person for your team.
Training and development are difficult, inconvenient, interrupt the business rhythm of the department, can be costly, takes thought and planning, and never ends. It may not be your strength, but I encourage you to do it anyway.
One last reason why training and development is a risk, if you as manager are not committed to the long game of training and development, and your executive leadership isn’t committed either, it won’t deliver proactive employees and managers. It isn’t a quick fix strategy. To be successful, you will have to risk time and effort, and yes, resources.
Don’t let your current success allow complacency to creep into your chain of accountability or training and development efforts within your dealership. Be proactive in the management of your department by committing to training and development. Work hard to retain talent, it is much easier and far less expensive than continually trying to hire it. And finally, have the discipline of a proactive manager and guard against learning bad habits in good times.
John Tabar is Brown & Brown Dealer Services’ Executive Director of Training.
Originally posted on F&I and Showroom