If you own or run a dealership, you know firsthand how employee turnover is not just rampant but costly. Based on a recent NADA Workforce Study, the highest turnover rate in the industry belongs to the sales consultant, with an annual turnover rate of 71.9% and a three-year retention rate of only 32.8%. The turnover rate for all dealership positions is just under 40%. Statistically, one in three new hires looks for a new job within the first six months.
ESI Trends, a consulting firm that conducts the annual NADA study, estimated that employee turnover can cost the average dealership half a million dollars a year. If we extrapolate that across America’s 16,000-plus dealerships, we’re looking at an $8 billion problem.
Obviously, there are many reasons why an employee might leave your dealership, from the work hours to your store’s unique culture. But by following smart hiring practices, you can better control this problem upfront and reduce your odds of expensive turnover later on. Here are four pillars you can rely on:
1. Reconsider Your Hiring Practices.
Start with the big picture. How important is hiring to your store? Adam Robinson, CEO of Hireology, put it painfully in perspective when he said, “Most dealerships have a better process for buying office supplies than they do for hiring people.”
Above all, avoid hiring just to fill an open seat. Any warm body with a pulse is not exactly a professional standard and one that is certain to end poorly.
2. Train Hiring Managers to Succeed.
Determine what your managers know and may not know about hiring. Are they familiar with best practices for hiring top performers? Do they practice interview techniques? Are they aware of any potential biases they might display? Do they understand your store’s culture?
Moreover, do they understand all their legal obligations during the hiring process? First, educate your managers on equal employment opportunity and anti-discrimination laws. Next, train managers to spot and recruit top talent.
One way to ensure nothing falls through the cracks is to give your hiring managers checklists, such as those offered by the Society of Human Resource Management.
Consider bringing in HR consultants to help develop skills for your hiring managers. Just because they’re managers doesn’t mean they automatically know how to “manage” an interview.
3. Plan for the Interview.
Decide which team members will participate in the interview. It’s strongly encouraged that you have more than one person from your store participate. In addition to the hiring manager, consider bringing in those who will work most closely with the new hire.
Also decide how many interviews will be required before a decision is made. Review the job description and each candidate’s résumé just before the interview, to keep it fresh.
4. Master the Interview.
Don’t be aggressive. Be an active listener and pay close attention to what the candidate says. Avoid asking potentially unlawful questions, such as about an applicant’s race, age, gender, or prior salary. Ask follow-up questions, when appropriate, and drill down.
Interviewers should have a useful list of prepared questions. But they also will need the chance to improvise and seek follow-up details. Take quick notes during the interview and expand on those notes, as needed, later. Remember to allow the prospective employee a chance to ask questions. Like all true conversations, it should flow in both directions.
As the interview winds down, let the candidate know about next steps. And always try to end on a positive note.
You might believe that a good hire is hard to find, but by training and empowering your hiring managers and asking them to follow these simple guidelines, you reduce the chances of picking the wrong people. Get it right the first time to protect your store’s profits and reputation.
Toby Graham is director of marketing for KPA and editor of the Compli compliance blog. Contact her at [email protected]