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What the Numbers Say About Retaining Your Top Dealership Talent


It’s no secret: High-achieving individuals on your sales and service teams have a tremendous impact on your business. Most likely, you’ve invested significantly in attracting them and nurturing them within your dealership. How do you retain these high-caliber professionals and ensure that they continue to perform for you?

It’s a dollars-and-cents equation. DrivingSales.com estimates that for the average dealership, 70 of gross profit margin goes to payroll. And according to Hireology, developers of a data-driven hiring platform for the franchise and retail-automotive industries, the cost of a bad hire can approach $25k in lost productivity, time spent recruiting and training a new hire, recruiting and training expenses, and the negative impact on morale and client relationships.

That the automotive industry has high turnover among both sales and service personnel is well known. What’s concerning is that in many areas it continues to rise seemingly unabated. According to the NADA Dealership Workforce Study 2015, overall new-car dealership turnover rose from 36 percent to 39 percent over a 12-month period. The sales consultant ranks have been particularly hard hit, with 72 percent of these employees leaving their positions in 2014, the year the study data was compiled. More broadly, only 33 percent of a new-car dealership’s sales personnel reach the three-year anniversary mark.

The Corporate Executive Board notes that the very first months of an employee’s tenure are critical to whether or not they decide to stay. According to the Board’s research – which was part of a presentation to dealers at the 2016 NADA Convention & Expo – 60 percent of employees decide to stay or go within the first six months of employment.

For its 2015 report, “Fast Forward: How U.S. Auto Dealers Can Drive Sustainable Economic Performance in the Digital Age,” McKinsey & Company surveyed more than 800 U.S. dealers and found that internal operating practices, specifically people management, play a critical role in differentiating highly-profitable dealers from their competitors. According to the report, if dealerships retain top talent in critical positions such as service management, it puts them in a much better position to increase dealership value.

According to Todd Fitzgibbons, Sales Manager at Zumbrota Ford in Zumbrota, Minnesota, finding and keeping top achievers means a lot more than completing a couple of interviews. “We welcome them to the team and treat them like family,” he says of the culture at his dealership, the 2016 DealerRater Dealer of the Year in Minnesota. “I do a lot of research in advance before I even invite somebody in. We use social media to determine whether or not they’re going to be an appropriate fit. If I can look them up, I’ll check their DealerRater reviews and see who they are and what they do, all as a process of elimination.”

Fitzgibbons also extends his hiring search beyond the automotive industry. “I’ve found some awesome bartenders and servers who adjust easily to our business,” he added. “There are a lot of parallels, especially in terms of customer service.”

Human resource professionals say attracting and retaining top talent means focusing on both short- and long-term goals and objectives.  According to Kathleen Korpita, Vice President, Global Talent Management & Diversity at Cox Automotive, some of these include:

  • Attracting high-potential talent by becoming a “destination” employer
  • Designing a recruiting and hiring process that reflects your culture and what you want your culture to represent
  • Retaining, engaging, and empowering employees immediately after they come onboard

For dealerships that make a commitment to retaining high-caliber professionals, the rewards can be both immediate and long lasting.  A second McKinsey study noted that top-performing dealerships had turnover rates that were 17 percentage points lower than dealers in the bottom quarter of those surveyed (54 percent versus 71 percent, respectively). In short, top talent equals a top-performing dealership. It’s a pretty simple math equation.