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High Turnover is Not a Recruitment Problem, So What is It?

[I’m happy to share this guest post from my friend and colleague, Michael Kennedy—a veteran of the automotive industry and renowned automotive recruiter. Aside from the specific statistics, the challenges and solutions that follow apply to all industries. Read on! –SF]

Car dealerships, like many other organizations across the nation, continue to face a hiring and retention epidemic. They’ve figured out how to move a lot of iron over the curb, but they just can’t seem to keep their employees. It’s hard enough to attract and keep the good ones— but to attract and retain the best employees is even harder.

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As an automotive recruiter I should be laughing all the way to the bank—but this is no laughing matter. Good, talented people are asking themselves, Is this all there is? And they’re escaping their employers any chance they get, taking with them their knowledge and client lists. This doesn’t bode well for the companies that just invested time and money in hiring and training these individuals.

Here’s a sample of how bad things really are:

The National Automobile Dealers Association’s 2015 Dealership Workforce Study (the most current study of its kind) found that car sales consultants had the highest turnover at 72 percent annually (non-luxury turnover was 80 percent, luxury turnover was 48 percent). More disturbing, nine out of ten female sales consultants move on within a year.

Ted Kraybill, president of ESI Trends, said in an Automotive News article, “Poor employee retention is a big money-wasting opportunity when you consider the retention and training costs and lost productivity issues, and the link to poor customer satisfaction and customer retention.”

Sales staff turnover is “alarming enough that the OEMs are taking action,” Kraybill said. He’s working directly with OEMs (Original Equipment Manufacturers, companies making parts or subsystems used in another company’s end product) on better ways to attract and retain employees. “Low Retention,” he added, “hurts profits.

This isn’t a recruiting problem, it’s an environment problem. And the general manager plays the lead role in shaping the right kind of environment, one that inspires the best possible employee and customer experience.

Gallup research shows that poor managers create “active disengagement costing the U.S. an estimated $450 billion to $550 billion annually.” Successful managers, on the other hand, stay ahead of the curve by knowing what motivates their employees and keeping them engaged.

Jimmy Herlocker, General Manager of Infiniti of Charlotte, a Sonic Automotive dealership, is an Extreme Leader. When I asked him what he thinks is the root problem in the automotive industry, Jimmy’s answer was swift and direct:

“The automotive industry is heavy on management, light on leadership. Managers tend to be ‘old-school,’ expecting employees to do as they’re told, without argument. Leaders tend to listen more and care more about their associates. Leaders know what makes their associates tick; what motivates them – and they design an environment around each associate that inspires their best work and effort. Unfortunately, much of the leadership training in the automotive industry is nothing more than management training cloaked in a leadership disguise. And people usually quit because of their manager, not because of their company.”

Steve Farber, listed as one of Inc’s global Top Leadership and Management Experts, recommends creating an environment of LEAP – Love, Energy, Audacity, and Proof. If this sounds uncomfortable or a little bit “out-there,” know that organizations across the country have already incorporated LEAP in everything they do, and they’re getting amazing results. From recruiting and retention to employee and customer experience, LEAP is causing the most skeptical managers and leaders to reconsider their improvement initiatives.

Talking about values like “Love” and “Audacity” in the automotive industry may not sit well at first with grizzled dealer owner/operators. But one thing’s for sure, the automotive industry is ripe for disruption and if LEAP leads to less turnover, higher retention, better CSI scores, increased sales and greater market share, or any combination of the above, even the toughest of the tough will pay attention.

How can they afford not to?

–Michael Kennedy

Michael Kennedy, Chief Recruiter, M-Power Automotive Recruiting, LLC, has over 20 years of experience in the automotive industry, having served with AutoNation, Southeast Toyota Distributors/JM Family Enterprises (SET), Mercedes-Benz USA and Sonic Automotive. Michael has held increasing job responsibilities, from sales to GM; from retail sales trainer to regional sales manager. During his 10+ years at SET, Michael helped launch the Scion brand in the southeast region. After SET, Michael was instrumental in the successful re-launch of the smart brand for Mercedes-Benz USA and today he runs his own automotive recruiting company from Charlotte, NC.

Graphic Image used by permission from www.GapingVoid.com

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