FCA to offer free college education to dealership employees

Fiat Chrysler, seeking to curb the industry’s “dramatic” turnover rate among dealership employees, said  it will offer “no-cost, no-debt” college educations to workers at participating U.S. dealerships.

The cost of the education -- for individual classes and associate’s, bachelor’s and master’s degree programs at Strayer University in about 40 fields of study -- will be paid for entirely by FCA and its dealers.

The program, which FCA says is the first in the automotive industry, is voluntary for U.S. dealers and will start today at the 356 dealerships in FCA US’s southeast region of Florida, Georgia, the Carolinas, Alabama and Tennessee.

It will expand to the company’s other eight U.S. regions in the third quarter, said John Fox, FCA’s director of dealer training.

Fox declined to discuss the costs of the program but said that dealers who choose to participate will pay a flat monthly fee, regardless of the number of their employees who take classes.

Fox said the reason for the move is simple: “The turnover rate is just dramatic in this industry, and it impacts a dealer’s bottom line. We think this will attract the best talent in the marketplace.”

How it works

FCA has negotiated the arrangement with Strayer University, a private, for-profit accredited university based in Washington, D.C., with an enrollment of 40,000. The students take classes either online or at one of Strayer’s 77 campuses, located in 15 states and the District of Columbia.

Students working at participating FCA dealerships will pay no out-of-pocket costs for tuition, fees or books. Unlike a similar program announced last year by Starbucks, students will not need to advance the money and seek reimbursement.

FCA has approximately 118,000 employees in its 2,600 dealerships, including about 18,000 in dealerships in the southeast region. Any employee of a participating dealer -- lot attendant, service tech, sales representative, general manager -- is eligible to take classes through the program.

As part of the joint program, Fox said that FCA will work with Strayer to incorporate some industry- or dealer-related course material into class curriculums where possible. It also will work with the school to make sure that a student’s previous college classes, life experiences or both will transfer toward a degree from Strayer.

Karl McDonnell, CEO of Strayer Education, which owns the university, said it has educational arrangements with about 300 Fortune 1000 companies, but all are smaller than the one it has arranged with FCA.

“Part of what we’ve done internally is stood up an entire dedicated team to work on this,” McDonnell said. “We have a team to work with employees to matriculate them into the university. And every one of these students will have an individual success coach” to help them navigate their educational paths.

McDonnell also declined to discuss the cost of the arrangement but called it a “major commitment on the part of [FCA] to develop their talent.”

About retention

Like many employers, FCA dealers often complain about the difficulty of attracting and retaining qualified employees.

For example, FCA said that roughly half of its sales force in its dealerships leaves in any given year. Those departures cost dealers huge amounts of money in wasted training and make it harder for customers to develop relationships with the dealership.

FCA isn't the only automaker wrestling with this issue. In 2013, the average dealership had a 66 percent turnover rate among sales consultants, according to the National Automobile Dealers Association's 2014 Dealership Workforce Study. Turnover was higher at mainstream brands vs. luxury brands.

“The No. 1 thing dealers tell us is that the hardest thing they do is attract talent, develop talent and maintain talent,” said Al Gardner, the newly appointed head of FCA’s dealer network. “What we’ve tried to do here is give the dealerships a lever that no one else has.”

Gardner said the typical cost of a four-year degree at Strayer is between $42,000 and $50,000, and that the deal FCA has worked out is much less. He also declined to lay out the exact cost structure but said it would be a significant competitive advantage for FCA dealers.

“A dealership will look at this price and say, ‘What does it cost me to replace the person that just left?’ For the dealer, it’s an absolute no-brainer,” Gardner said.

Fox said the program with Strayer -- which it calls [email protected] -- should help FCA dealers stand out to applicants and to those who might not otherwise have considered a job in the auto industry.

The opportunity for a no-cost, no-debt college degree should help attract the best and brightest employees, Fox said, and those employees will help FCA dealers improve customer interaction and satisfaction scores. Employees in the program also will be far less likely to leave the dealership or the industry, at least until they finish their degrees, he explained.

“In this industry, it’s all about people and customer satisfaction,” Fox said. “There are a number of people out there that would love to have a college degree, and they might see that as unattainable today.”