Industry report exposes why some dealerships lose employees
Conventional wisdom would say the more hours a salesperson works, the more money he or she earns.
Not so, according to a new industry report on the automotive dealership work force.
“Burning people out, working them all four weekends, makes them less productive,” says Ted Kraybill, founder of DeltaTrends, an automotive research and consulting company in Clearwater, Fla. “Two-and-half weekends a month seems to be the optimum amount for maximizing salesperson productivity and profit.”
That’s just one finding in the 2012 Dealership Workforce Study Industry Report prepared by Northwood University and NADA University to study employee compensation, benefits, retention and turnover, hours of operation and work schedules. NADA University is the education and training arm of the National Automobile Dealers Association.
“What’s working best to retain employees is also the biggest opportunity for most dealerships to improve upon,” Kraybill says. “And that is reducing the number of hours that employees have to work.”
That’s because dealerships that offer a work-life balance have a higher employee retention rate, he says.
Kraybill’s company, DeltaTrends, designed the study and completed the data collection from nearly 2,500 U.S. dealerships between March and May.
The main findings include:
Most key jobs in dealerships, such as those of salespeople, finance and insurance officers, parts counter people, service advisers, service technicians and managers, pay higher individual salaries than the national average individual wage index of $42,980.
But when broken down by hours worked, those salaries tend to become less attractive and lead to less employee retention.
Offering generous benefits helps recruit employees but not keep them.
As retention rates increase, so do gross profits. At the average mass-market brand dealership, a 10 percent drop in the turnover rate results in an increase in gross profit per employee by about the same amount.
About half of all salespeople stay at a mass-market brand dealership less than 1.8 years.
The study found that as the number of hours salespeople were required to work increased, the rate of salesperson turnover rose and retention fell, Kraybill says.
“But the study shows the more hours a dealership is open, the better their sales. So what a dealership needs to do is work with their employees to teach them how to control their own schedules,” Kraybill says.
“Dealers who have a very proactive business development department and Internet department are the dealerships where employees can do a better job of managing their work and personal life.”
Health care benefits
And while dealerships have to be competitive with other industries in offering employee benefits, the study found dealerships that paid 80 percent of health insurance costs did not have higher employee retention than dealerships that paid 50 to 60 percent of those costs.
“Employee benefits are very important in the recruiting process, but there is no correlation in it helping to retain an employee; there are other factors that override that,” Kraybill says.
A balance between work and personal life is especially important to Generation Y employees, who prefer paid time off to pay incentives and spiffs, which tend to be the “lifeblood of the industry,” Kraybill says.
Another key factor for employees leaving is treatment.
“The industry has a long way to go to attract women, too,” Kraybill says.
The payroll data collected show that less than 10 percent of the salespeople were women, he says, and a lot of that has to do with culture.
“Women feel more of a need to maintain a balance between work and a personal life, and I don’t think the industry is satisfying that need,” Kraybill says.
And each time a salesperson quits, it costs the dealer a lot of money to recruit and train another employee and keep customer satisfaction scores high.
Dealers can purchase the full industry study for $150 through NADA University. Those dealers who participated get the study for free as well as a personal report for their dealership.
Those interested in purchasing the 2012 Dealership Workforce Study Industry Report should contact NADA University Customer Service at 800-557-6232 or complete the form at nadauniversity.com/workforcestudy for more information.
You can reach Jamie LaReau at firstname.lastname@example.org. -- Follow Jamie on