Creative compensation motivates staffers

Stores offer ownership, profit sharing

Compensation comparisons
Do you offer a profit-sharing program?
Yes: 18
No: 81
No reply: 1

Do you offer an employee stock option program?
Yes: 20
No: 80

Do you offer a retirement savings program such as a 401(k)?
Yes: 100
No: 0
Source: 2015 100 Best Dealerships To Work For respondents

In an industry that typically suffers from high turnover, dealerships are getting creative about how to keep their people motivated and inspired -- and happy about their pay.

At some of this year's Best Dealerships To Work For, that means using profit sharing, benchmarking salaries and even offering ownership opportunities.

"You can only offer employees so much money," said Kelly Hayes, audit and compliance director for Warren Henry Auto Group. The Miami group owns five stores -- three of which are Best Dealerships To Work For -- and two more are planned. The group is among the few Best Dealership honorees that offer employees the chance to own a piece of the business itself.

Instead of contracting with an outside towing company or parts distributor, Warren Henry opened its own companies to do that work. It then offered employees the chance to buy into the businesses.

"You have to offer them something to show that they are what they do," Hayes said. "Make it valuable to them so it's 'Not only do you work for me, but I'm willing to go into business with you.'"

To date, the group has opened two leasing companies, a towing and transportation company, a rental-car company, a parts distributor and an event-production company. All have at least one employee co-owner.

Alvarez: Bought into parts unit

Nestor Alvarez is one of those employees.

The service manager at Land Rover North Dade has been working for Warren Henry for 35 years. In 2011, when the group was looking to open a parts distribution company, Alvarez was given the chance to buy a 13 percent stake. He didn't think twice.

"There is never a downside when you grow with the company," Alvarez said. "There is a downside when you don't offer it."

Loyalty begets loyalty. Knowing the dealer principal is willing to put his money where his mouth is means top-quality talent sticks around. Several employees at the Land Rover store have been there for 30 years or more, Alvarez said.

The chance to become a partial owner isn't offered to everybody, however. Of Warren Henry's 314 employees, just 10 have been offered the chance to buy into a side business of the group. And employees aren't given the opportunity to buy into the dealerships themselves.

When employees have a vested interest in the fortunes of the company, everybody wins.

Dave Wright figured this out three years ago. That's when the owner of Dave Wright Nissan-Subaru in Cedar Rapids, Iowa, started offering his employees profit sharing.

If the company has a good year and meets its goals, Wright will contribute 3 percent of an employee's salary into his or her 401(k) account. If the stores exceed the goals, it's 4 percent.

"Every employee gets that," Wright said. This is on top of paid holidays when the store is closed and paid sick days. "I don't want anyone to stress out that they're sick and not making money."

Plus, Wright keeps a close eye on the National Automobile Dealers Association's averages for compensation and makes sure he's above the norm for most employees and well above it for his standouts.

This has helped him retain top talent in the region. "At least in my market, I don't think anyone else does all this," Wright said. "And honestly, when you're hiring employees, they see the value in it."

Terry Lee also watches the NADA averages. The owner of a Honda store and a Hyundai store in Indiana that each bear his name aims to pay his 148 employees at least 10 percent more than the NADA composite. Terry Lee Honda made this year's list of the Best Dealerships To Work For.

"Happy employees make happy customers," Lee said. "Treating people like your mom or dad or your buddy is not an option here. People buy when they're convinced, not when they're pressured."

It's also important to listen to employees' ideas for compensation and keep an open mind. "If someone can convince me there's a better process, I'll try that," Lee said.

Keith Hudson agreed.

"Pay plans are going to drive the behavior of the salespeople," said the COO of Jim Hudson Automotive Group in the Columbia, S.C., area. Management can't be "close-minded about that."

The group includes Jim Hudson Lexus, Columbia, which made this year's list.

Heightened transparency helps. By pulling back the curtain on all its holdbacks, dealer cash and other rebates and incentives -- and then sharing those back-end profits with its 125 salespeople -- the Hudson group can motivate employees who might not otherwise work hard on a sale that's a loss on the front end.

"There are more front-end deals being penciled in our industry these days that are losers in terms of front-end profit," Hudson said. "But that's not going to stop us now."

Compensation comparisons
Do you offer a profit-sharing program?
Yes: 18
No: 81
No reply: 1

Do you offer an employee stock option program?
Yes: 20
No: 80

Do you offer a retirement savings program such as a 401(k)?
Yes: 100
No: 0
Source: 2015 100 Best Dealerships To Work For respondents
You can reach David Undercoffler at undercoffler@crain.com -- Follow David on Twitter: @autonews_west

0

Shares

ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Newsletters