Manage Your People

How would you like to turn your biggest expense into a profit-making opportunity?

Your biggest expense probably is your employees – and they likely cost you a lot of money – especially if they leave. If you’re the average dealer, your turnover probably exceeds 60%.

Dealership consultant Mark Rikess tells me he has seen dealerships whose turnover is in the 300% range. That means you’re turning over your entire staff at least three times a year. I know of a dealership that wasn’t turning over its used-vehicle inventory that many times.

A couple of years ago at the National Automobile Dealers Assn. convention, I had a long conversation with Bob Murray, general manager for ADP’s tax and employment solutions. Murray outlined an idea he was developing to assist dealerships manage their human resources.

According to a study ADP did with DeltaTrends, reducing employee turnover at the average dealership from 60% to 50% will yield $300,000 in annual gross profit. That’s $300,000 you can add to your bottom line by keeping a few more employees from leaving.

But it’s not so simple for dealers to do. Many small and privately owned businesses, as many dealers are, tend to leave the HR responsibilities to the controller or the person that handles payroll.

That might work for a while, but with increased compliance regulations governing the interview and firing process, along with the importance of having an employee-friendly work environment devoid of sexual, religious and racial harassment, you cannot afford to rely on people who aren’t experts in such areas.

So Murray put together a hiring and retention services group within ADP for dealers. His group will conduct a turnover analysis in the dealership, designed to measure employee satisfaction and determine where problem areas exist.

Depending on what you want, ADP can either manage your human resources entirely or simply act as a consultant for you. That includes helping you recruit and hire the right people; train your management how to interview; and assist you in crafting the right benefits package so you don’t break the bank, yet have a dealership where people want to stay and work.

The point is, whether you hire ADP or another company to help manage your human resources, the advantages almost make it a no-brainer.

You’ll reduce employee turnover, adding money to your bottom line.

You’ll decrease your legal exposure to employee lawsuits arising from any number of issues, including sexual harassment. One of those suits can do real damage to your dealership. Recently, one well-known group in the Midwest paid more than $30 million in a sexual-harassment case.

You also will probably increase employee morale, which aids productivity. Also important, you may thwart potential union activity in your store, just by removing reasons for employees to want to unionize.

You’ll also find your dealership is hiring better, more quality employees. That in turn will decrease the chances of employees stealing from you.

Another benefit, according to ADP’s research, is that customer satisfaction scores tend to go up as turnover decreases.

More money, legal protection, better employees and fewer headaches – how can you afford not to do it?