According to the NADA, the national average rate of turnover on the sales floor at car dealerships is 72%. Dealers and managers are well aware of this shockingly high statistic. It has endured throughout the years because the costs associated with turnover are easily buried in a dealer’s financial statements.
Adam Robinson, Co-Founder and CEO of Hireology says that not only is the turnover rate 72%, but if a salesperson is going to vacate their position, it typically happens in the first 90 days of employment.
Before starting Hireology, Adam spent over 20 years in recruiting and technology for dealer based businesses. While working in staffing in the 90’s, Adam focused on dealer portal solutions for dealer networks meant for sharing information between the dealer and the OEM.
For 200 days each year, Adam travelled around the country training and implementing these portals at dealerships. He realized that about every 90 days he was re-training the staff at each dealership because of employee turnover.
Adam shares a formula that calculates how much money a dealer loses from turnover each year. He finds it staggering that dealers often don’t want take steps to make changes that invest in hiring talented sales people. They simply state that it has always been this way and always will.
This high rate of turnover should not be ignored and left as status quo because it impacts a dealership in three ways:
- It’s a cash furnace. Dealers burn thousands of dollars that cannot be recouped if the employee leaves.
- The constant cycle of hiring and training burns out managment.
- It impacts the great employees that dealers want to keep because they tire of working with new, unqualified co-workers.
Adam believes that if a dealer invests a little time and money in human capital, they’ll see an almost immediate increase in customer satisfaction and retention. This competitive advantage is created through hiring qualified candidates and assembling a great team.
During the most recent economic downturn, Adam observed that the candidate pool for available jobs was practically unlimited. Hireology was born out of the need to equip a dealership with the skills and software necessary to put an actual hiring process into place.
Here are the components of Hireology’s system to create a competitive advantage through hiring:
–Build a branded career site.
-Create a connection to candidate sources.
-Handle pre-hire filtering and assessments.
-Provide customized interview question grids and scored responses.
-Offer 400 skill sets and assessments.
-Handle drug and background screening.
-Paperless collection of onboarding forms and paperwork that integrates into payroll software.
Once the process of attracting and hiring the best talent is in place, dealers will see a cycle where they find better quality candidates, make better hires, which become better managers, and the dealership finds it is consistently attracting the best talent.
To attract young talent, dealers must address what appeals to Millennials:
- Career Path- Millennials want a defined path from day one to at least two years out.
- Pay Stability- With college loan debt to pay back, Millennials are seeking a base pay plus bonus structure, rather than a commission based selling plan.
- Work-Life Balance- A 45 hour maximum workweek consisting of at least one evening off per week and every other weekend off.
This is a departure from the way dealers have structured hours, pay and career path up until now, but it MUST be addressed, because as Adam explains, the cost of high turnover is very expensive.
Another component of Hireology is training managers in the skill of selecting and building a team. Adam recommends a scripted and consistent interview process which is controlled and has an expected outcome. This leads to better conversations in regard to whether the candidate will be a good fit for the team.
To help predict the success of a potential candidate, here are four key characteristics to help determine if a candidate is a higher or lower risk hire:
- Accountability – Does the candidate have an external locus of control, in which they look outward to place blame for their shortcomings, or do they have an internal locus of control, in which they “own,” their shortcomings? People with an internal locus of control have a higher likelihood for success.
- Prior Related Job Success – If a candidate has worked in a job where their performance was formally evaluated, then they will be used to setting goals and working towards achieving them.
- Culture Fit – The degree to which the candidate does business the way the manager and the company does business.
- Attitude – Does the candidate have a positive disposition towards work, even in challenging situations?
Once a candidate has been hired, management must get onboarding right, by looking at process through the new hire’s point of view. Adam recommends visualising what it might look like when the new hire gets home from their first day of work. Will they tell their family that it was a terrific day and they can’t wait to go back, or will with they tell their family that accepting the job may have been a big mistake? Management can make the first day as smooth as possible by preparing for the new hire’s arrival in advance, so when they walk through the door, someone is expecting them.
In conclusion, Adam reminds us that the dealership is always on stage for prospective new employees in the the showroom, the service department and online. You never know if someone is there looking for a car or looking for a job.
IN THIS EPISODE YOU’LL LEARN:
- The importance of a tight hiring process.
- Interviewing for traits rather than skills.
- The hidden cost of turnover.
- How to attract young, qualified talent.
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