Auto dealers have always had a difficult time with employee retention. It takes a certain kind of individual who can handle the long hours, commission-based pay, and constant pressure to make a sale and increase gross. It’s easy to think that turnover is just the nature of the industry. But, we all have those dealer principals in our 20 groups who brag about the tenure of their staff. What do they have going for them that most dealers don’t?
According to the 2017 NADA Dealership Workforce Study, the median workforce tenure in retail automotive is 2.5 years. But, it takes employees in key production positions, like F&I managers, an average of three years to reach full productivity.
So, why are dealers losing key employees right before they reach their potential? A lot of it has to do with the dealer’s recruiting practices.
A common trend in the retail automotive industry is to hire the first person interviewed, often on the spot. This is especially prevalent in high volume dealerships that need to fill positions quickly to keep production levels up. The problem here is there is no vetting to make sure the person being hired is the right fit for the dealership.
One interview does not provide the entire picture of a person’s strengths, weaknesses, energy level, and ability. It’s always better to build time into your recruiting model to conduct multiple interviews, background checks, and references checks to ensure you have the right person for the job.
If you’re like most dealers, your knee-jerk reaction is probably to say, “But what about my immediate needs? I need someone on the floor or in the F&I office now, not two weeks from now.”
The answer to this question is to look at your production levels. How productive do you really think that immediate hire will be? Take this scenario for example. Two different dealerships process 80 unit sales a month.
One dealership took the time to find and place a good F&I manager, who runs an average PRU of $1800 with 65% VSC, 60% GAP, and 60% After Market Product penetration. After one month, they bring in $145,000 dealership profit.
The other dealership hires a new person to fill the vacancy immediately, with no downtime for vetting. The F&I manager runs an average PRU of $1,000. After one month on the job, they only bring in $80,000 dealership profit.
That’s a difference of $65,000 of lost profit potential all because of a P.H.D.® (Poor Hiring Decision).
If you take into account the costs of advertising for a job opening, taking time away from selling to interview and select the applicant, and provide formal training and compliance certification along with one-on-one coaching, the total lost profit potential goes up to $75,000.
Hiring on a new employee is an investment. It simply makes more financial sense to vet that person before investing time, money and lost production levels into a new recruit. The good news is you don’t have to figure out how to find that right person on your own.
With more than 40 years of experience placing Top Performers at automotive dealerships across the country, EFG Companies has built a deliberate, proprietary core competency sourcing model for high-quality candidates. After extensive research, we have identified the core qualities of Top Performers to match individuals whose personality characteristics and work style will make them successful in the retail automotive dealer space. Put our recruiting to work for you. Contact us today.