Can’t Dealership Management Just Get Along?

Throughout my decades in this industry, one particular theme has emerged: It’s not the franchise or store location that consistently drives success. Rather, it’s leadership.

I’d like to dive deeper and explore an essential dynamic of successful leadership. Many general managers may believe they are good leaders, despite possibly being hacks. 

It’s often easier to find fault in others while remaining blissfully unaware of our own shortcomings.  Like the guy who reads Men’s Fitness every month yet remains 25 pounds (11 kg) overweight.

I’m not immune to this either: I’ll read about working with Millennials or emotional intelligence, yet I still find it difficult to let go of the “management style” I learned in the Marines…OOH RAH!

I’ve had a very fortunate automotive career in which I have been exposed to the inner workings of hundreds of dealerships in nearly every state. I have seen retailers of various sizes and management cultures. I have met and interacted with owners and their key managers.

Throughout these travels, I’ve not found two group’s management structures or balance of power to be identical. More often, the governing dynamics of ownership and its management team are as complex as some of the family relationships behind them.

But no matter how unconventional – or dysfunctional – a dealership’s management team may be, I’ve found that where there’s mutual and genuine respect among top management, that dealership more often than not will outperform its marketplace competitors long-term.

This mutual respect is especially important between the dealership general manager and controller.

This isn’t to say such mutual respect is a requirement for profitability. The reality is there are thousands of profitable dealerships with strong-willed general managers who treat their accounting departments with as much respect as an impertinent high schooler treats a hall monitor. For many general managers, accounting is nothing more than an expense burden. 

Conversely, some dealerships and dealership groups are so administratively focused, accountants and corporate personnel essentially run the stores. They  mandate their general managers to operate within a box of protocol. These mandates often come from individuals who never have sold a vehicle.

It never fails to amaze me how so many dealerships can remain profitable in spite of themselves and their management.

This brings me to a core message. A dealership can be good, maybe even great, with a strong-arm general manager or a governing accounting body, but that dealership never will be exceptional unless both the sales and administrative departments value each other and show a genuine mutual respect.

I’ve witnessed stores where the general manager and controller see each other as partners rather than antagonizing nemeses, although I don’t see that often.

Old dealership philosophies and mindsets still are very much alive today. The controller and accounting department are viewed as nothing more than an expense, incapable of producing revenue or generating gross.

This often occurs in larger or publicly owned groups where the leadership presence is diluted or convoluted. I’ve seen this especially in groups where controllers report directly to a remote corporate leadership and have limited interaction with a store’s general managers.

This marginalization often creates an environment rife with counterproductivity, self-destructive competition and finger- pointing.

The common elements outstanding stores share:

That latter point means never using one’s individual knowledge as a weapon against the other.

Because these departments are wired completely differently, there always has been and likely always will be some discord between sales and accounting.

There’s never of shortage of divisive topics or matters, and that’s not likely to change. It can be easy to be dismissive of the other side, citing lack of knowledge or understanding of an area of one’s own particular expertise, whether it’s how to unwind a deal or convert an “up” to a sale or where an incorrect VIN or payoff is the cause for demonizing an entire department. 

As with most things, it comes back to tone at the top. If an owner shows equal value and respect for both sides, this will permeate throughout the dealership. 

If it doesn’t start at the top, a store can never achieve its full potential.

Phil Villegas is a partner at Axiom Advisors & VVH CPAs & Associates, professional firms focusing exclusively on the specialized needs of auto dealers. He can be reached at [email protected] or 786-472-2800.