Is it fair to reward for doing the right thing?

Finance and insurance experts agree that compliance is an integral component of an F&I manager's job, but methods to ensure compliance laws are adhered to range wildly among dealerships. When it comes to compensating for compliant behaviors, should F&I managers be incentivized?

Experts' responses are mixed.

Jenn Reid, vice president of automotive marketing and strategy at Equifax Automotive Services, suggests dealers initiate a pay plan designed to curtail fraud throughout the dealership and encourage ethical behaviors among employees.

"Pay plans have evolved to focus on product sales, but I would challenge, maybe we should have pay plans in place that protect the dealership as well, and protect the consumer in that transaction," Reid told Automotive News.

Many dealerships that now manage compliance and training sufficiently first suffered the consequences of facilitating fraudulent deals, Reid said. Dangerous deals ultimately cost the dealership far more than a sale. Lawsuits, insurance deductibles, negative press and lost business often follow a fraud incident.

Reid suggests that dealers offer employees who spot red flags a monetary reward, such as a $150 spiff, for halting unsavory deals. The dealership could lose a sale, but it is ultimately protected from a fraudster — or the liability of enabling fraudulent activity.

"You can't have an incentive plan in place that rewards turning a blind eye," Reid said. "I'm going to reward my employees for identifying things that put me at risk."

Lori Church, director of corporate compliance and training for John Elway Dealerships in Denver, gives F&I managers spiffs when they hit F&I product penetration goals. Small rewards also are tied to audits on deal jackets — managers are given $100 if their deals are clean and lose $100 when there's an error, no matter how small.

Protecting the dealership is the No. 1 responsibility of the F&I office, says Tony Dupaquier, director of The Academy, an F&I training center in Austin, Texas, which is why he sees a spiff as earning extra money for doing what is already part of F&I managers' job descriptions. But adding a bonus for video recording F&I transactions or using a menu for each sale, for example, ensures the process is adhered to.

Sometimes, managers don't like to use the technology, Dupaquier said. "They're unfamiliar with it; they're going to skip it this time."

When a dealer ties a spiff to consistent video recording, "They use their tools 100 percent of the time," Dupaquier said. "They're giving them a spiff for what they're supposed to be doing in the first place."

F&I trainer Matt Woods, south regional manager at Service Group, says he's not a fan of "bribing" employees to do the right thing, but he doesn't consider a pay plan a bribe.

"Almost all of us are coin-operated, motivated by the fact that if we're paid well to do a job, we tend to focus on doing that job well," Woods said. "The question is, how do you structure a pay plan around that?"

Ethical behaviors begin with the hiring process, Reid said, and to engender that culture, dealerships should screen employees based on what training they have received in fraud prevention and compliance.

However, screening for knowledge of compliance is much easier than screening for ethics, says Jim Ganther, CEO of Mosaic Compliance Services.

"We have ethics training; we have tests on ethics. Unethical people can get a score of 100 percent," Ganther said. "People know what the right thing to do is. It's just that truly ethical people actually do it. And they do it no matter what the cost is, not just when it's convenient."