High Employee Turnovers Hurt

Las Vegas — When it comes to staff turnover, some auto dealerships might consider installing a revolving door marked “Employees only.”

Dealership turnovers typically exceed 50% a year, according to the National Automobile Dealers Assn. Hardest hit are sales operations, with the departed either defecting to another dealership or finding new work altogether.

It's a serious problem and a frequent topic at dealer-related conferences.

The problem is so acute, some firms are offering new services to help dealers plug the personnel holes.

The Reynolds and Reynolds Co. — typically associated with information systems and services for dealerships — is expanding into human resources management; mainly the hiring and retaining of quality employees.

“You will see a lot in the future from Reynolds in human resources,” says Finbarr O'Neill, Reynolds' vice chairman, who describes it as a business opportunity.

“You see the turnover at dealerships, and clearly human resources is an underserved area,” he says.

Reynolds' efforts will center on “attracting and hiring the right people,” says O'Neill at an F&I Management and Technology conference here. “The turnover at dealerships is high and dealers cannibalize each other's employees.”

Reynolds will offer a variety of services, from online pre-employment testing to career-development programs.

The firm already offers many programs like that, most of them free. But they are “woefully underutilized,” O'Neill says.

Unstable work forces cut into dealership profits and hobble efforts to train employees in modern sales processes, especially ones using customer-relationship management software systems.

“It is hard to institutionalize processes when your turnover is so high,” says Scott Zientarski, director of database marketing for AutoNation Inc., the nation's largest dealership chain.

Zientarski says dealerships don't always attract the best and brightest.

Conversely, the good ones who do hire on, don't always see a bright future and consequently find new work.

“We've done it to ourselves,” says David Metter, chief marketing officer for Mile One, a 63-store dealership group.

He says many dealerships lack career-development programs that encourage employees to stay and think long-term.

“It's important to have a career path,” Metter says, recalling his first dealership job as a gung-ho salesman in Ohio. “Six months after I started out, I asked the sales manager, ‘What's next?’ He said, ‘Well, next month.’”

One way to attract the best is to give them the best tools, including modern software, Blackberries and flat-screen computer terminals, Metter tells an E.N.G. automotive conference in California.

Some dealerships, such as Acton Toyota in Acton, MA, try to attract and keep highly qualified, well-educated employees.

One of them is Matt Lamoureux, director of Acton's Internet business development. He graduated from college magna cum laude with a degree in finance.

“I like working at a dealership,” he says. “I like delivering a great customer experience. If you transcend the car-salesman stereotypes and people respect you, and you respect yourself, good things will come.”

Mike Baker, CEO of the San Diego-based Bob Baker Automotive Group, predicts that soon 85% of consumers entering a dealership will know more about the product than the sales people.

That's partly because more car shoppers use the Internet to research cars.

But it's also because high turnover rates result in a lot of rookie dealership sales people who lack proper product knowledge.

Either way, it's sobering for dealers. “That's so unfortunate,” Baker says.

The long shifts dealership staffers are expected to work can prod them to seek employment with better hours elsewhere, says David Cole, CEO of The Warranty Group, who began his career at a dealership.

“Long hours at dealerships have always been an issue,” Cole says. Dealerships would see better personnel retention rates if they maintained “more reasonable hours and better staffing levels.”

High turnovers can deter dealers from investing in employee-training programs. The fear is that after spending money on training an employee, he or she thereupon will serve notice.

There's a flaw to that way of thinking, says veteran dealership consultant Bob Kamm.

“Many dealers ask me: ‘Wonder if I train someone and he leaves?’” Kamm says. “My response is: ‘Wonder if you don't train someone, and he stays?’”