Combat Turnover Through Retention and Hiring Best Practices

If your dealership has been experiencing high employee turnover rates, you’re not alone.

According to the NADA 2021 Dealership Workforce Study, “Turnover varied significantly by region from a high of 54 percent in the East South Central and Mountain regions to a low of 42 percent in the New England region. That’s more than half the actual dealership turnover rate identified by NADA, which is 46% for employees and a shocking 80% for salespeople.”

Why do high employee retention numbers matter to dealerships?

Terry Schwer, Encompass Dealer Services and the Brady Ware Dealerships Services team says, “Turnover rates like these correlate to an industry loss of billions of dollars, annually. High employee turnover rates not only cost dealerships a monetary loss in the form of search and training expenses, but ultimately result in lost vehicle sales due to inexperienced sales staff and a lack of continuity with customers.”

What are the top things dealerships can do to lower these numbers?

Schwer feels dealerships can reduce turnover by:

• Pulling the weeds. Good employees leave because they grow weary of watching you tolerate other employees that cause a toxic or unproductive working environment. In today’s job market we are sometimes put in a position where we just need a body to get through. But it is important to remain mindful of the working environment. People want to be successful and work on a successful team. Ultimately, top performing employees will seek out an environment that allows them to flourish. It is often better to run shorthanded and have all your team members swimming in the same direction than allowing that toxic person to fester within your organization.
• Closely monitor compensation. While money isn’t everything, it is definitely a major component of employee retention. At least quarterly, you should be comparing each employee’s compensation to same time period from the year before. (i.e., 1st quarter of 2022 vs. 1st quarter of 2021). That allows you to catch some problems before they grow into a good employee beginning to explore the job market. If an employee’s compensation has a huge variance, these are some questions to ask yourself:
• • Is there a logical explanation?
  • Have there been any changes within the department that could have caused this?
  • Is there something happening in the employee’s personal life that may have caused this?
  • What can you do to get the employee back on track?

Implementing a procedure to routinely monitor employee’s compensation can quickly identify potential employee issues, and also help you find opportunities to improve the policies and procedures within your organization.

• Incorporating good benefits. In today’s recruiting environment, there is a need to match the recruit’s tenure-related benefits. When trying to attract a highly-coveted technician, the dealership needs to match the recruit’s previous employer’s vacation time to avoid a situation where a good, 3-4 year employee has less vacation time than a new hire. When it comes to benefits, make sure the loyal employees don’t get left behind.
• Leading from the front. Employees want to work for a strong leader. One that is engaged. One that recognizes the issues and can resolve them quickly. One that treats people like people. Make sure the leaders in your dealership are fully invested. The speed of the leader will be the speed of the team.

What costs are associated?

According to AlignMark Corporation, there are four main categories to quantify the expense associated with employee turnover:

1. Separation – unemployment compensation, exit interview costs, etc.
2. Replacement – advertising, pre-employment testing, time, and materials
3. Training – time and effort required to bring new hires up to speed
4. Productivity – lapse in morale and production, as well as low-quality output

Combat Turnover Rate with Retention Best Practices

With the turnover rate for automotive dealerships already traditionally higher than other industries, coupled with a lack of quality technicians, it is not likely to improve. Schwer cites the common four causes for mass departures: dealership culture, unengaged employees, lack of sales, and a lack of incentives for non-sales employees.

So, how can a dealership combat that?

In order to attract, retain, and maintain today’s top talent for the long haul, there are several things you can do to reduce turnover, including:

1. Focus on recruitment and hiring processes
2. Create an exceptional onboarding process
3. Encourage creativity
4. Create a good reward and recognition program in addition to stable base wages
5. Create career ladders
6. Focus on employee wellness
7. Build employee engagement
8. Keep job descriptions updated with relevant, accurate information
9. Implement a business development center to funnel sales leads to salespeople

Avoid These Potholes

You want to maintain the upper hand in the hiring process and avoid recruiting for the same position in just a few months, or worse weeks.

If you’re doing one or more the items on the list below, you may be sabotaging your own efforts. The Performance Loyalty Group recommends dealers avoid these potholes during the hiring process:

• Hiring out of desperation
• Hiring after just one interview
• Overselling the position’s earning potential
• Not impressing the recruit

How can Brady Ware Help?

Our team of automotive dealership experts can help you put a recruiting plan in place to maximize the recruit quality, while reducing employee turnover.