How Car Dealers Can Hire (and Keep) the Right People

Hiring is getting harder at auto dealerships.

About 10% fewer people apply, yet dealers need an average of 25% more qualified applicants than they did in 2018, says Adam Robinson, CEO of Hirelogy, a company that provides human-resource services to dealerships.

In a Wards Q&A, he talks about the tight job market, speeding up the hiring process, alternative payroll plans and the expectations of young people entering the workforce. Here’s an edited version of the interview.   

Wards: Why the drop in dealership job applicants?

Robinson: The demand for talent outstrips the availability in the current U.S.  job market because of high employment rates. It’s an acute pain point for employers.

Fewer people are looking for work. If everyone seeking a job today found one, that would be about 5.8 million jobs filled. Yet, there are 7.5 million open jobs right now. We’d be short 1.7 million people. That’s a strain on employers.   

Wards: Does that particularly strain dealers or are they generally among other employers who have that problem?

Adam Robinson 2019_1

Doing more with fewer people certainly is a trend. I haven’t seen head counts for dealerships moving anywhere. We’re just paying more. We used to talk about dealers competing with other dealers for employees. Now, we’re competing with everyone: every other retailer, every hospitality vendor, every financial services firm, every bank. Everyone is looking for talent.     

Wards: That’s a good problem overall in a way, but not if you are directly affected by it as an employer. What about dealership sales positions with that horrible annual turnover averaging something like 70%? What can be done about that?

Robinson: You run an effective hiring process that includes marketing the position, selling the brand, tracking people who are a good fit and hiring the right person.

And then ensure their onboarding experience is a good one. What is the speed of the ramp-up? What does it take to get that salesperson selling eight to 10 cars a month? The faster that happens, the faster they’re making money, the happier they are and the more likely they are to stay.

Dealers who are innovative in shift management and pay planning will have a leg up in 2020. Every year, we look at what’s most important to the workforce. It used to be career path. Now, it’s pay stability.    

Wards: When you look at those super-high turnover rates, intuitively you think it’s not because the wrong people are hired. Instead, it’s something about the job. Presumably, it could be about that pay stability. Studies say Millennials are concerned about that. Some of them would rather earn less money and have a consistent cash flow than potentially earn more money through a pay plan that’s heavy on sales commissions.    

Robinson: That’s right. And 85% of failed pay plans pay on a front-end gross. We have declining front-end gross. You are incentivizing people to produce a result they can’t control.

Wards: What’s the solution?

Robinson: The most prevalent pay plan today is a draw for 90 days – a guaranteed commission; $3,000 a month gross is most common. And then the theory is that by day 90, you should be selling your eight to 10 cars-plus a month to replace that draw, and then the person makes more money.  

But nearly 40% of all turnover happens in the first 90 days. That’s because people who are about to lose the draw and haven’t ramped up properly to be successful start looking for work elsewhere. They need pay stability.

So, innovation in pay plans might be something like just pay a $3,000 a month base salary. Take it off the table. And then pay beyond that based on units sold.   

Wards: Some people talk about Millennials like they are another species. Are they that different as employees?   

Robinson: Every generation is a little different. Ultimately, humans want safety and stability. They don’t want to work for a jerk. They want balance in their lives. Those things cross generations.

But the defining characteristic of Millennials, at least the older ones such as those turning 40 this year, is they came of age in the middle of the worst financial situation in three generations. They remember tough times. That desire for pay stability is pervasive. When you talk about workforce attitudes, and Millennials are approaching 60% of the workforce, their attitude will drive most of the market.

Behind Millennials is what we call Generation Z…        

Wards: I was going to say, we’ve got to talk about them, right?

Robinson: Speaking broadly, Gen Z has a far higher risk tolerance than Millennials. They’ve never known bad economic times. Times have been great for 11 years for the most part.

Gen Z members are more likely to take risks or an entrepreneurial path. As they enter the work force, their expectations as an employee closely mirrors their expectations as a consumer. Boy, dealers are in for an awakening there. If you thought it was challenging with Millennials and those perceptions of entitlement, Gen Z expects things to work and gets frustrated quickly if systems and processes don’t work.        

Wards: Talk about the need for a faster hiring process so good applicants don’t fall away or end up working somewhere else.

Robinson: It’s a matter of determining it’s important, and then putting process and accountability around it.

In 2019, it took dealers on average five days to reply to an applicant. Rhetorically, you could ask the question, “How many cars do you think you’d sell if it took five days to get back to an Internet lead?”  

Wards: What’s the balance between taking forever to hire someone and rushing into it? How do you do it methodically and yet speed it up? Aren’t those in conflict with each other?

Robinson: They can be if you are doing it manually. We’re investing in our technology platform to automate about 80% of the process over the next two to three years. Initially screening and vetting can be done with technology that includes artificial intelligence and machine learning.     

Wards: What would the technology do exactly?

Robinson: Most initial interviews generally ask the same five to 10 questions. Where are you working? What are your current job responsibilities? Let me tell you about us. That conversation need not be had by a human being. Most candidates today would prefer to communicate by text messaging.

Dealers aren’t long on time and availability. That five-day response rate is a function of dealer staffers doing everything else. Automating that initial conversation through text messages or video interviews is something we’re interested in right now. The beginning of it is on our platform today.