How to Lower Staff Turnover

Ford Motor Co. a few years ago added a section to its financial statement that allows dealers to track the tenure of their sales personnel and service advisors.

Using this information, I tracked the Ford and Lincoln-Mercury dealers I worked with and detected an implied correlation between such tenure and dealership profitability.

Carrying this research a step further, I concluded dealers with a lower employee turnover rate had aparently higher gross profits per retail vehicle (sales) and better performance in service, such as hours per repair order and effective labor rates.

Coincidence? I don't think so.

Consider the many costs associated with high turnover. The obvious savings are employee-benefits savings such as taxes and insurance. But hard-to-identify costs may include training and the impact on customer experience.

So, if my research is accurate, and if there is a positive result associated with tenure, how do we reduce turnover? It begins with the hiring process itself.

When you identify a candidate, who conducts the interview and what training do they have in this area? How many persons interview the candidate? In addition to management, does some senior person from the hiring department interview candidates?

Do you perform a background, reference and former place-of-work check on the candidate? Do you require some type personality test to see if the candidate's profile and aptitude matches that of the position he or she is seeking? I am a proponent of personality tests and have found them to be better than just using the “hunch system.”

Rarely do I participate in a dealership meeting that doesn't touch on turnover and the need to attract quality personnel. It's interesting to see the steps certain individual dealers are taking.

First, almost without fail, dealers are tracking, and can now quote, their turnover rate percentages. This is a major step in determining if there's a problem.

A general manager gave a great report on the steps his dealership took to control or lessen turnover. After the decision to hire a person is made, new employees, as part of orientation, spend a minimum of one day in each of the operating departments plus the accounting office prior to reporting to their hiring department.

Not only does this make new employees feel more at home, but consider the side benefits they will demonstrate in their interactions with the customers by having a working knowledge of the entire dealership.

If you have a higher than acceptable turnover rate in your dealership, take a look at a few of the following items:

Is there continuing education in you dealership? Is on-going training scheduled in advance? Is there a written training agenda or plan? Who conducts training and, with respect, are they qualified to do so? Are students given a written test that's graded? Are you tracking individual personnel performance to identify areas of needed training?

My wife was a teacher for a number of years. We often discussed the general performance of students. I would kid her by asking if, in general, students were failing to learn in certain situations, or if the teacher was failing to teach. I'd temper this with a reference of how this question applied in business as well as in the education system.

While I was working for a large dealership group, in order to improve our new salesperson success rate, we hired a professional trainer to develop and teach our new hires and existing sales personnel.

Initially this process was a dismal failure, but once we determined that our managers had to receive the same training and took that step, our success rate improved dramatically.

Fortunately, many dealers have identified employee turnover as a major priority. They are taking the necessary steps to correct many of the missteps of the past and to retain good employees.

Good selling!

Tony Noland of Tony Noland and Associates is a veteran consultant and former dealership manager. He is at [email protected].

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