In this episode we interview Nick Jackson, manager of dealer training for Ally, to discuss how dealers could form bridges across dealership departments by encouraging communication and teamwork.
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Jackie Charniga: Hi everyone. This is Jackie Charniga again with Automotive News and welcome to the All Ears podcast. This podcast is sponsored by Ally Financial and is produced by the Automotive News Content Studio. In each episode, we delve into topics important to executives in automotive retailing. We tap Ally’s leaders to share their expertise and knowledge to help dealers and others successfully navigate transformational changes in the industry. Today we catch up with Nick Jackson, manager of dealer training for Ally, to discuss how dealers could form bridges across dealership departments by encouraging communication and teamwork. Hi Nick. Thank you so much for taking the time.
Nick Jackson: Hey Jackie, thanks for having me.
JC: For years, management consultants and business magazines have discussed the problems that arise with employees in corporate departments when they work in silos rather than as a united team. What are some of the specific problems that working in silos might create at dealerships when sales, service and F&I operate with their own rules and structure and don't communicate with each other?
NJ: I think that's a great thing to kind of tackle for the dealership business specifically, it seems like it's an issue in a lot of different types of businesses, but dealerships being complicated as they are, it almost lends itself to having different departments function in their own little silo. It's something my team talks a lot with dealers about when we do training in dealerships or in a public setting. If you think about the complex nature of the dealership business, you have part of the organization that sells parts, labor, new and used vehicle sales, financing and insurance type products and it's very easy for each of those things to operate in their own little silos. But when that happens, it creates a lot of conflict between those areas of the business that we know are highly dependent on one another to accomplish what they want to accomplish. It creates a lack of communication and inefficiencies between departments.
If you think of it all the way from the back end of the dealership starting with the parts department, if your parts department doesn't have the parts to allow the service department and the technicians to complete their work, they don't have the parts to do the job. Your tech can't turn the wrench. If the tech can't turn the wrench, then you might be holding up the sales department, new or used, from getting inventory that's available for sale. If you can't do PDI's and you can't do reconditioning work because you don't have the parts and the techs can't do the work without the parts, then you don't have a car to sell to a customer. And if you don't have a car to sell to a customer, you don't have an opportunity for F&I income, an opportunity to take a trade and all these other things. There’s a lot of importance that needs to be placed from leadership on down and dealerships to create enough communication to create the right type of culture where people understand how important the other roles and other areas of the business are for them to be as successful as they can be.
JC: Could you share some first steps dealers might consider to break down silos at their dealerships?
NJ: The first place my mind goes to in terms of pain points when departments operate in silos is between the used car department and fixed operations. Across all departments, one of the simplest first steps dealers could take is to sit down with people from all different areas of the business and acknowledge what are the pain points that you have between departments and find ways to increase the level of communication or collaboration that needs to occur to eliminate those pain points.
Maybe that starts with department managers. Maybe you get some input from individual contributors and stuff like that. And another thing dealers could consider doing if they're not already, is to sit down and forecast with managers as a team instead of forecasting for departments individually. One thing we do in our training, especially in our simulation class, MRO, or managing retail operations, is we have people from the variable side of the business, a GSM or even a GM who came up through the front end of the business sit down and say, “if you would like to sell X number of used vehicles this month, for example, let's figure out what that means for your service department and how we can communicate to them what we need from them to accomplish what we want to accomplish.”
A lot of times that's a bottleneck between used cars and our service department. A lot of used car managers will say, I can't get my cars to reconditioning fast enough. And a lot of times what I do is I try to spin that question back on them or that pain point back on them and ask them what they could be doing. And a lot of times, if you think as a used car manager or variable operations manager of any kind, if you could tell your service manager exactly how many hours of reconditioning work you need from them in a month, hopefully that will help them prepare to help you the way that you need to be helped throughout the month and not create those bottlenecks that we often see between those two departments. You could ask yourself as a manager, what could you do differently to help eliminate those pain points and those bottlenecks between departments.
JC: The dealership is such a competitive space and the most variable element in dealership operations is sort of the human one. How might a company build teamwork as well to get its department leaders, sales, F&I, service, parts, marketing, and administration all on the same page?
NJ: A lot of that starts with the culture. If you foster an environment where people are required to communicate across other areas of a business very clearly, very frequently and very efficiently, then you start to eliminate a lot of those butting of head type situations, especially going back to that example between maybe a used car department and a service operation. If I'm a used car manager and I decide I'm going to hold a tent sale extravaganza over the next couple of months, and I start acquiring inventory more than I normally would be, if I don't properly communicate that with my service manager, I'm just fueling those problems that may even already exist. To be able to communicate, “I went out and I purchased 40 vehicles that are going to land here on the dealership's lot in the next couple of weeks,” be prepared for that in terms of technician scheduling and understanding what the demand for labor is from your internal customers, like your used car department, as opposed to just not telling those people at all.
It starts with a culture and an understanding of what information others within the business need from you to accomplish their job and to support you in trying to accomplish your goals and objectives. Culture definitely one thing, but also compensation plans, different types of pay plan ideas can help foster more of a cohesive type of environment in a dealership, as opposed to one where the used car departments only worry about themselves and the same goes for new, F&I, for service and for parts. I think pay plans have come a long way in communicating to individuals what needs to be done for them and for the organization to be as successful as possible.
JC: I'm really interested Nick in your pay plan idea. Could you share an example of how a dealership successfully removed a silo with a change in pay structure?
NJ: We had a dealer attend one of our MRO classes that shared with the group one of the ways that they were successfully able to break down these barriers, these silos between departments and encourage people to work more closely together for the benefit of the organization as a whole, is what they referred to as their "bucket concept." It started with paying managers instead of out of the gross profit or the revenue generated from their individual departments, they were paid out of the bucket of gross profit for the dealership as a whole, for example. For them what that proved to accomplish is if you have a used car manager, that person is no longer just solely working their pay plan for their own benefit. In order to be as fruitful in their pay plan as they could be, they need to support in any way they can the service department, the parts department, the new car department and F&I and everything else in order to create the pot that they get paid out of and make that as healthy as it can be. That was definitely one way to kind of leverage a pay plan and just look at that bucket concept where managers in different departments need to get paid a different percentage out of that bucket. But if they're all being paid out of the bucket as a whole, if someone needs help somewhere to kind of turn around a struggling department or some challenges that they're facing, it's really going to create that culture where it's going to be all hands on deck from a management perspective to create the best outcome for the dealership as a whole.
JC: I'm glad it's working out in the field and thank you so much for that insight and your time. That's it for this episode of the All Ears podcast. Thank you again to Nick for providing those insights and on behalf of Ally and the Automotive News Content Studio, thanks for listening.
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