Some concern arises when talking about how a dealership finance manager should get paid. 

I have seen many different types of pay plans: hourly plus bonus, salary plus bonus, straight commission, and on and on. The question often asked is which pay plan brings out the greatest performance. 

My answer: I don’t know. 

When thinking about a pay plan, first decide what you expect of your finance department. If the focus is going to be strictly on holding gross, then you would want a pay plan that rewards that. This type of plan may revolve around per-retailed unit.

If you want a department that is focused on a solid finance-and-insurance product spread, then a matrix pay plan may work best. This rewards achieving either an overall product mix or penetration of certain products that are important to the dealer. 

Some dealers are not so concerned with the large profit F&I can bring, but see the department as more of a legal backstop to protect against regulatory-compliance violations. In this instance, you may find that an hourly employee may fill your needs. 

A side note: Spiffs sometimes are used to promote certain products and banks. I am not for or against spiffs. However, be aware that this can lend itself to consumer-satisfaction issues if handled incorrectly. 

Whatever the pay plan, make sure customer interests are taken care of. A spiff can lend itself to pushing products on customers that very well may not benefit them.

Another variable to consider is the type of person you have in your finance department. Some people are motivated by money and money alone, although research shows this is the exception rather than the rule. 

Many employees are motivated more by the feeling of appreciation, time off, benefits, a safe work environment and job security. 

Figure out what motivates your staff, and structure compensation based on this as well.  If you know your manager cherishes time off, you could offer a bonus plan that offers days off for goals met.

For those who simply want to be appreciated, a pat on the back and a “thank you” may go much farther than $500 offered in a hyped-up or hostile work environment. 

Pay plans in this business seem to have the consistency of water: They go with the flow. If your department is struggling in a certain area, consider adjusting the pay plan. 

As long as the plan is fair to the dealer, the employee and the market, all is well. If your pay plan is not fair to all concerned, you will quickly find out.

If you are considering a change, I’d be happy to share more with you. I can be reached at 413-212-7342 or

(Chris Cochran is Finance Director of the Haddad Motor Group in Massachusetts.)