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Contributing Author: Steve Roennau Vice President Compliance EFG Companies

Contributing Author:
Steve Roennau
Vice President
EFG Companies

When it comes to compliance, the ultimate responsibility lands squarely in the laps of the dealer principal and general manager. While everyone on the team plays a role – insuring they are owning compliance in their department – the culture of compliance is created at the top. But how do you set the tone?

The first step is to clearly communicate that compliance matters. Every dealer principal and general manager should have some level of compliance training. Even if you have a compliance manager, you need to have a general knowledge of the rules and regulations. Otherwise, how will you know if your team is performing correctly? And, when the auditor knocks on the door, it will be the GM’s door – not the compliance manager’s desk. There are several training courses available for upper-level managers that cover the details you need.

Frequently, dealer principals believe they can simply send their people to compliance training, giving them sufficient protection from personal liability. “If someone screws up – it’s on them” is an often repeated phrase. In fact, this simply is not true. Dealer priorities are team priorities. If the dealer principal or general manager has no focus on compliance, then neither will the team. Dealers who make compliance a priority will run a compliant dealership.

Management by Walking Around

One of the ways you can manage compliance simply and effectively is by regularly walking around your dealership, and observing your team in action. This will help your team clearly understand your focus on compliance. Understanding and executing compliant behaviors can be two different things. How do you enforce your compliance processes? Do you let the first infraction slide, counseling the employee to do better next time? Are there repercussions to failing on compliance?

When auditing your team, use your best judgement to discern minor versus major infractions. For example, a minor infraction could be a missing piece of paperwork. In this case, you can use the infraction as a training opportunity with that employee. Major infractions need more significant management decisions. For example, if an employee willingly and knowingly forged a customer’s signature on a product to increase their penetration rate, their actions could be grounds for termination. On the other hand, if an employee is ignorant of compliance policies and ramifications, and they unknowingly perform a compliance infraction, you should consider sending your entire team through formal compliance training.

Your team members need to be fully aware of the impact of compliance failure. Whether the mistake was a simple oversight – or premeditated – failure to execute a compliance process should carry some form of repercussion. On the flip side, an ongoing commitment to execute compliance processes should be recognized.

But there is something more subtle when it comes to setting the tone for compliance. At its heart, compliance relates to good business ethics. Before your next team meeting, consider the agenda:

  • Will you also discuss how compliance can be a competitive advantage in terms of cultivating better customer service standards, and potentially increasing customer retention and referrals?
  • Will you commend everyone who completed their compliance checklist – every time?
  • Will you make compliance a topic of conversation and provide any feedback from what you’ve personally seen?
  • Will you give your people the opportunity to ask questions regarding compliance and some of the judgement calls an F&I producer or sales manager has to make every day?

Be aware of how you prioritize the different functions of the dealership, and how compliance fits in to each of those functions. Reward compliant behavior as much as you do for strong sales behavior. Before you know it, you’ll have sales and finance managers that foster strong sales months while maintaining compliance.

The EFG Common Sense Compliance® podcasts are a great tool to use during your team meetings. Take 15 minutes to hear some actionable advice – in language you can understand – and you’ll be one step closer to compliance in your dealership.

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