A unique managerial style at a Mississippi dealership is proving that innovation doesn't always come from the big city.
At Star Chevrolet-Chrysler in small-town Wiggins, Miss., vehicle sales are handled by a triumvirate of managers. This management team has found a way to eliminate the backbiting and confusion that sometimes occur when new-car, used-car and finance managers are all working for their own interests.
One key to success at Star is the way the managers are paid. At the end of the month, the three split a percentage of the profits on vehicle sales.
'It appears to be an outstanding way to do it,' says Robert Regan Jr., Star's owner. 'It solves a lot of problems for the dealer.'
Sherron Bond agrees. 'It makes the dealership function so much smoother,' says Bond, the business manager and a member of the management team.
The triumvirate idea was the brainchild of Jerry Lampley, a former Star employee who handled marketing for the dealership. Lampley has since left to form his own company. 'Jerry sold me on the idea, we tried it and it has worked well,' Regan says.
Bond, who handles the finance end of things, says that before the team concept was put into place about four years ago, there frequently was tension among the three managers. Sales managers often made deals that left little room for add-ons that could mean profits for the finance department, for example.
Regan also saw that happening. 'If you have one manager making a lot of money,' he says, 'the others begin to resent that person.'
Now that the profits are split equally, the focus is on boosting profits on the front end, Bond says. This recipe bakes a larger pie to be sliced at the end of the month, with less pressure to make money off the customer in the finance department, he contends. And no manager resents the portion of the pie another is receiving.
The idea is to make the maximum gross profit on a vehicle. 'I can't understand,' Bond says, 'why some dealers have a hard time understanding that when you make the gross, that's money you're not going to lose.'
When dealers can't make enough on the front end, they have to try to load the sale with add-ons in the finance department, Bond points out. And that income is 'fictitious to some degree,' he notes.
He explains that when all the smoke clears and buyers are at home with their vehicles and paperwork, they sometimes resent all the extras they were sold. That can mean the loss of a return customer and future profits.
'You start giving it up down the road,' Bond says of some of the finance department income, 'unless the contract is a deal the customer understands and the deal is not out of line.'
Bond says he is grateful for the lack of tension among co-managers compared with conditions under the traditional sales method: 'It's a piece of cake now. We don't have anything to fight over anymore.'
The other two managers echo him. 'For our store, it seems to work better than under the old plan,' says Bobby Dunn, general sales manager. 'The key to it all is that the used-car manager, finance manager and sales manager are all ... under the same pay plan; there are no differences.'
Dunn says this eliminates 'the finance manager saying that he can't make anything because the new-car manager made it all on the floor. It eliminates one manager saying another one is trying to rob me.'
Walter Turan, who oversees the used-car operation, is the newest member of the team, having joined just over a year ago after operating an independent lot and buying wholesale from Star.
'It seems to work pretty well,' Turan notes. 'We help each other' by brainstorming or problem solving as a team. Say I have an appraisal question; we all get together and talk about it.'
The system has some incentives built in to encourage the managers to move vehicles. Their monthly pie shrinks if cars sit too long.
A car that has stayed on the lot for 90 days gets 'a good bonus put on it' to encourage a quick sale, Bond says. But if a car reaches the 120-day mark, the team is penalized by an amount that is deducted from the end-of-month profits.
The trio practices self-discipline if someone gets out of line, even holding enough power for two to fire the third if they both agree that a goldbricking manager should be gone.
'If one is not pulling his weight, they don't have to come to me,' Regan says. 'They can get rid of him.'
But that hasn't happened yet. The three have worked well together and feel comfortable discussing potential problems before they become serious.
The concept of 'majority rules' also applies in decision making.
'If we have a major decision to make and one doesn't like it, the other two can override him,' Turan says. 'But it very seldom comes to that.'
He pauses, then adds: 'In fact, I don't think it ever has.'
Michael Bradford is a free-lance writer in New Orleans