Building a hiring plan around good behavior

If dealership employees fail to follow policies and procedures that are rooted in the company's ethics, fire them.

That's Bruce Schindler's take.

"No exceptions. If someone does not follow them, you fire them. Period," said Schindler, owner of Bob Davidson Ford-Lincoln in Baltimore.

"Customers want car dealerships to be perfect, and they are not," he said. "There are human elements."

Those human elements can lead to more ethical missteps than anyone likely knows, according to auto experts. That's why many dealers leave nothing to chance with ethics. Internal training, external audits and promoting from within as often as possible are the top tactics used to prevent compliance and ethical land mines.

This fall, Automotive News reported on an array of scandals at auto dealerships including the "likable" salesman at Florida's Champion Porsche who allegedly siphoned more than $2.5 million in customer deposits.

In most cases, if the wrongdoing is the work of a renegade, Lori Church, director of corporate compliance and training for John Elway Dealerships in Denver, agreed that the dealership should cut employees loose.

Some finance managers would "sell their mother's soul to get whatever they have to," Church said. "Better that one person lose a job than all of us."

In an age of compressed margins, F&I is a dealership's profit center, said Max Zanan, president of Total Dealer Compliance in New York. "As an owner, you need to know who is working for you."

Schindler has many longtime employees including his son Blake Schindler, who serves as general manager and diligently spot-checks deals. He also monitors individual sales both by sales consultants and F&I managers.

Of course, not all dealers have the luxury of working with second-generation auto professionals and long-term employees.

Dealers' ability to shape their teams as they choose is one of the best parts of managing auto dealerships because it allows managers to hire top candidates for job vacancies without worrying about arbitrary minimum requirements, said Zanan.

The downside, he added, is that it's easy to make poor hiring decisions from an ever-shrinking candidate pool. High employee turnover in dealerships fuels that likelihood.

The 2017 NADA Workforce Study showed turnover was 43 percent for all dealership positions in 2016, up three points from the year earlier, and 74 percent for sales consultants, a seven-point increase.

The best way to prevent unethical behavior is promoting from within, said Tyler Corder, CFO for Findlay Automotive Group, based in Henderson, Nev., with 33 stores in six states. "There's always a danger when you are hiring from outside, bringing in someone who doesn't quite know your corporate philosophy."

There's no room for doubt about Findlay's philosophies. Both new and seasoned employees at the dealerships must complete regular training on a host of topics and are consistently reminded of the zero-tolerance policy for unethical behaviors. Dealership general managers are charged with monitoring employees' actions and practices, but outside auditors also regularly analyze deals.

Jackie Charniga contributed to this report.