Exposed to several areas of risk, dealerships must assess such liabilities and then dive deep into ones identified as needing the most attention. To do that, ask yourself:

What is your organization's name and reputation worth? What risk areas could do serious damage? What risk management practices protect your name and reputation?

How much do you invest in your people? How much exposure can each employee create?

Now try these: How much have you spent on tackling risk-exposure concerns? If you suffered bad publicity, litigation costs and fines as a result of a breakdown in one of these risk-exposure areas, how would that affect your organization?

No wonder many dealers have a sense of fear, wondering where they're vulnerable.

Protect yourself by assessing where you are. Identify greatest risks that expose your organization. Trusted advisors can help.

When conducting an assessment and determining potential areas of risk exposure, don't overlook Human Resources. Many dealerships don't have a designated HR manager or staff member. Even if they do, that person often is stretched thin or not properly trained.

Failure to comply with HR rules and regulations can pose a significant risk. On the flip side, companies paying attention to HR issues tend to have a more productive and satisfied workforce.

A number of areas can be managed and tracked by an effective HR process:

  • Federal and State Legislation — The person or department responsible for enforcing legislation covering sexual harassment, a drug-free workplace, COBRA, HIPPA and the Family Medical Leave Act must understand the laws and make sure they are implemented correctly, fairly and consistently.
  • Safety — Workplace injuries can result in expensive litigation and workers' compensation claims. Safety training must be relevant, consistent, evident and documented.
  • Employee Turnover — Among other things, it creates additional expenses. This is a high-impact issue, given the dealership industry's high turnover rates. Turnover can be reduced by careful hiring practices that get the right person for the right job. Bad hiring decisions increase turnover and litigation risk.
  • HR policies and Procedures — These should be well documented (in an employee handbook) and consistently and fairly applied.
  • Fair Labor Standards Act — It defines the difference between exempt and non-exempt employees, and provides very specific rules on how overtime is paid. Non-compliance can result in back payments and steep fines.
  • Benefits — If your organization offers health insurance, life insurance and other benefit packages, review these programs periodically to ensure adequate coverage and cost-effectiveness.

Now let's ask some questions to see where this might take us in the area of hiring/personnel policies and procedures.

  1. Do potential employees go through an efficient, consistent and comprehensive applicant process when being considered for employment? Are they screened and positively identified, with valid credentials? Do you conduct background checks for criminal records and driving records? Do you understand why a background check is considered a best practice?
  2. Do new employees receive an immediate orientation to the company and to their specific job requirements, including training and compliance responsibilities? Is this orientation documented?
  3. Who maintains your wage and hour policies? Who monitors whether your company is in compliance with these policies?
  4. How do you handle job- or industry-specific training requirements? Who maintains the training records?
  5. Are any of your employees unionized?

A dealership may not have the in-house resources to handle all HR issues. There are firms that can help. For example, ADP offers hiring, compliance and screening services.

Consultant Wayne Fortier of Dixon Hughes PLLC is a CPA and former dealership group CFO. He is at wfortier@dixon-hughes.com and 877-357-2727.