Kinder and Gentler: The New Path to Reducing Employee Turnover
Auto dealers are moving toward a more flexible, more enjoyable, less rule-restricted workplace—in hopes of keeping staffs content and motivated enough to stay on the job.
When an employee at Bill Gatton Honda in Bristol, Tenneesee, needs to leave early to catch a child's afternoon school football game or to take an elderly parent to the doctor, General Manager Trace Bratton has a stock answer:
"I tell them, 'Of course,'" Bratton says.
"We want to be flexible with people and recognize that they have lives outside of work. People have families. I have children of my own. You find that people are conscientious and don't abuse the practice. And in the end, it makes for a better work environment where people respect each other."
Gatton's policy—repeated at many other stores on Automotive News'list of the 100 Best Dealerships To Work For—represents a major shift in auto retailing. It is part of an overall move to combat high employee turnover, one of the most persistent problems of dealership management.
"Effective sales come from good personal relationships," says Adam Arens, president of Patriot Subaru in Saco, Maine. "How can you run a dealership if the people who have developed those good personal relationships are unhappy with their job and walk out the door?"
Arens invites his staff at Patriot to bring their dogs to work. Two golden retrievers run around the showroom as the dealer describes his operating philosophy. Employees tend to an organic vegetable garden behind the store during their breaks. The store also contains an employee gym and health center in the basement. Arens pays 100 percent of employee medical, dental and vision insurance premiums.
By contrast, traditional retail management expected long hours, with sales employees anchored to the showroom floor or tied to their telephones. Service personnel stayed busy in their work bays with as little downtime as possible. Store managers focused on sales results, and employees kept their noses to the commission-check grindstone.
But increasingly, auto dealers are moving toward a more flexible, more enjoyable, less rule-restricted workplace -- in hopes of keeping staffs content and motivated enough to stay on the job.
Mark Rikess, a retailing consultant who assists dealerships around the country, says the shift in management attitudes is emerging just in time, or maybe a little behind the time.
"Dealerships should already have staffs that reflect their customer base, and by and large they don't," Rikess says. "Women buy or influence the purchase of 45 percent of car sales. But women represent less than 7 percent of sales forces around the country. Gen Y consumers -- those born between roughly 1980 and 1998 -- buy 25 percent of new cars, but they represent about 10 percent of sales forces.
"So the enormous challenge for dealers over the next few years is to learn how to recruit and retain women and Gen Y personnel. And those are different employees than the auto industry has traditionally known how to manage."
Female employees are often also mothers. They need job flexibility and, conversely, a predictable work schedule, with no sales meetings drifting into the dinner hour.
Millennial-generation employees exhibit different attitudes about money. They tend to be motivated less by paychecks than by recognition and personal advancement. They want clear career paths and they prefer collaborative work. They tend to recoil against the sort of head-to-head competitions that are typical of old-fashioned, high-pressure move-the-metal sales efforts, says Ted Kraybill, president of Delta Trends, a retail industry employee compensation and retention consulting firm.
For the past several months, Kraybill has led an industry work force study for the National Automobile Dealers Association, examining this personnel challenge.
Kraybill's team has surveyed 2,472 U.S. dealerships to identify successful practices in managing and retaining employees. The study ranges from compensation and benefits practices to the softer issues of human relations, including work-hour flexibility and the nature of performance reviews.
The benchmarking study will be distributed to NADA's 15,000-plus members later this year, but Kraybill already confirms that the industry is on the threshold of a new direction.
"Customer retention correlates to employee retention," Kraybill says. "It really takes about three years for an employee to become fully trained and to develop their skills. And we see that dealerships who have a higher three-year retention rate for their personnel also have higher grosses."
The NADA study finds that successful dealerships share many of the same practices as the dealers who made Automotive News' 100 Best Dealerships To Work For list:
• Time off and work flexibility. Life's demands sometimes require an employee to slip out early in the afternoon, and dealers who refuse to acknowledge that are likely to alienate their staff, Rikess warns.
Kraybill adds that younger workers are more likely to recoil against dealerships that enforce a rigid "bell-to-bell" workweek. Millennials tend to like their free time and weekends, he says, and who doesn't? Some dealerships now offer performance bonuses of a day off rather than cash.
Stores also can improve employee motivation by matching store hours to actual traffic patterns. If customers don't come calling on Saturday afternoons, you don't need nine or 10 employees manning the showroom and service department, Kraybill says.
• Collaboration, not conflict. A recent big sales month at Newton Nissan in Gallatin, Tennessee, earned 50 staffers a steak dinner at Fleming's steakhouse. Young employees want to be part of a team effort, not forced into me-against-you sales battles. Single parents may be interested in job sharing.
• More equal performance opportunities. High-flying sales stars can earn commissions of $200,000 or more a year. But Kraybill warns that when the average for the rest of the sales team is closer to $50,000 a year, such a high-flier breeds resentment, cynicism and low morale. "If you can flatten out the bell curve on compensation, the entire store benefits," he says.
• Acts of kindness. Productivity bonuses and sales spiffs are good. But new-generation employees also expect more human rewards, Kraybill says. Small rewards for simply being a valued member of the team are encouraging to employees. They will value a relationship that results in an occasional Starbucks gift card, a few words of praise or even a manager's effort to get to know the employee, his outside interests and his family.
"Since 2009, salaries and wages have gone up significantly," Kraybill reports of his findings. "But retention hasn't changed. What that tells us is that the people coming into these jobs are motivated by things other than money."