Turnover set off alarm bells at Toyota store

Rick Evans figures bad hires at his Toyota dealership in Fort Wayne, Ind., were costing his store at least $500,000 a year. Probably even north of $1 million.

"I was not happy," Evans told Automotive News. "I knew we weren't keeping as many people as we should. We weren't hiring all the right people, and we weren't selling as many cars as we should because we didn't have the right people here."

Evans' estimate totals up the wasted cost of hiring and training people who didn't work out, plus the sales potential lost in all the churn. Evans Toyota, a 90-person store selling 175 new and used vehicles per month, has gone through "an everyday constant battle" to fill positions, with five to 10 spots open at any one time, said Evans, who in 1991 took over management of the store founded by his father. And the problem was persistent.

Evans considers Evans Toyota a fairly typical dealership when it comes to hiring and retention. The store's turnover numbers generally fit that description, slightly worse than the national average for dealerships.

Annual turnover at Evans Toyota has been about 50 percent for all positions and 75 percent for sales positions, Evans said. That compares to 40 percent for all positions and 67 percent for sales positions for all U.S. dealerships in 2015, according to the National Automobile Dealers Association's 2016 Dealership Workforce Study.

In recent years, Evans already had put into place tools aimed at improving the store's track record. Evans Toyota had a designated employee handling human resources. A strict process called for a minimum of two managers to interview a candidate before hiring. Evans himself would do a final interview when in town. New hires received two full weeks of training. And the store has a good reputation in the community, Evans said.

But the resulting turnover set off alarm bells that something was was wrong with the approach.

"We'd hire people, and I'd put them through the training and get them up and running, and they'd either quit or would get fired because they couldn't do the job," Evans said.

Evans knew he needed to do more: "The people in your store are the No. 1 most important asset the store can have."

In June, Evans Toyota launched a hiring approach guided by Hireology, a hiring software vendor and consultant. It includes a customized employment website that shows candidates a career path. Candidates can apply online, even via mobile devices. Applicants are screened via questionnaires. Evans has developed a list of reasons to work for Evans Toyota.

The initiative is paying off "absolutely, 100 percent," Evans said. It has resulted in a higher volume of better-quality candidates. For example, 327 applied for three open sales positions last summer. The store hired about 25 people across all departments. Retention of new hires is "much better," with 75 percent still employed. He would have expected to lose at least half under his old approach.

Evans has been able to increase his sales force, which has allowed him to reduce the number of hours employees are scheduled to work to 42 from 50. He's also changing the store's pay plan to give more salary upfront with incentives such as volume and tenure bonuses.

The store sold two-thirds more cars in December 2016 compared with the previous December. This year, Evans anticipates boosting monthly sales to "well above" 200 vehicles on average and annual sales by 40 percent. If the progress continues, profits will rise dramatically, and he'll have a good chance of recapturing much of that $500,000-plus lost annually to bad hires.

Said Evans: "It's really changed my store."