Updates, incentives help VW dealer retain staff

Between last October and this summer, dealer Matthew Welch has been pleasantly surprised: He has had three personnel changes in his dealership -- two new hires and a rehire.

"I was surprised it was that low," said Welch, owner of Auburn Volkswagen in Auburn, Wash., about 20 miles south of Seattle. "Even in the normal course of business, without anything wrong, we get a half a dozen changes."

Welch expected higher staff turnover after VW admitted in September that it had cheated on its diesel vehicles' emissions testing. That put a halt to selling diesel cars, hurting sales at many VW dealerships. The VW brand's U.S. light-vehicle sales fell 14 percent through July, below the industry gain of 1.1 percent.

Diesel vehicle sales had accounted for about 27 percent of Welch's new-car sales. Auburn Volkswagen sells about 1,500 new and used vehicles a year. But the scandal has not dramatically hurt his sales or profits, and his staff has stayed put largely because Welch tweaked his operations.

First, Welch improved communication with his staff.

He shared with employees every update on the crisis. That meant the regular weekly team meetings with service advisers, parts consultants and sales staff grew more frequent "to get to everyone the minute we had information," he said.

"We explained to them the situation and that they're all ambassadors for Volkswagen," said Welch. "When Volkswagen was in the news last September every day for a month and their friends and neighbors were asking questions, having them armed with information was vital."

Next, Welch increased his incentive pot by about $1,000 to a total of $3,500 a month. He urged his managers to devise more competitions among salespeople to win cash prizes.

"Our intention is to make sure we keep it fun," Welch said.

Welch had done the competitions once a quarter before the scandal but upped them to once a month. Some of the competitions include who makes the most appointments, who does the best walk-around presentation of a vehicle and who most accurately enters customers' information in the database. The prizes range from $50 to $300 plus a gift certificate.

"They started paying us for stuff we should be doing anyway, like setting appointments," said Matt Reynolds, a salesman at Auburn Volkswagen.

Reynolds worked at other dealerships before joining Auburn Volkswagen six years ago. But the thought of leaving never occurred to him because almost immediately after the scandal broke, Welch increased his used-car inventory by about 20 percent to help offset a slowdown in new-car sales. It's helped push his used-to-new sales ratio to 1.5-to-1 from 1-to-1.

Welch lets salespeople sell both new and used cars, so Reynolds said his pay has not decreased given Welch's boost in used-car inventory.

"That demonstrates Matt's commitment to us," Reynolds said. "Nobody's really seen a big drop in their pay, and nobody's had to leave and worry about starting anew somewhere else, which can be incredibly stressful and devastating."

Welch also made it easier for sales staff to hit volume bonus targets, Reynolds said.

"It used to be you had to sell 12 cars to get the highest tier of the pay plan. Now it's 10," Reynolds said. "He's also paying an extra $150 per Golf wagon we sell over and above anything else. That's phenomenal."

Welch also pays a referral bonus to employees who recommend a hire who stays a minimum of 90 days, Welch said. And he has a makeshift library in his office where employees can borrow self-help and business books to advance in their job and be promoted.

All of his tactics have kept his staff intact and will help him hire product specialists going forward, Welch said.

"Losing people during the crisis? That never crossed my mind," Welch said. "We were too engaged in how to deal with it. When people leave, we want them to leave because they are opening their own business or doing something upward in their life. We want to celebrate when they leave."