As mentioned in a previous article on training, turnover is expensive.  

There are a number of factors that can reduce turnover – from providing skills-based training to providing ontime reviews – but the single most impactful metric is in the hiring process. Simply put, if you hire the right people for your jobs, you will experience less turnover.  

According to NADA Chief Economist Steven Szakaly, the high turnover associated with the sales consultant position (72%) can be attributed to two things:  1) hiring entry-level workers who have little sales experience (and decide they don’t like it), and 2) changing industry norms and compensation for sales professionals. To me, this translates into sales managers hiring the wrong people and setting the wrong expectations.

What does this look like?

From a cost standpoint, the average dealer is spending over $500,000 in sales recruiting costs every year.  See below:

Formula Inputs:

• The NADA 2015 Dealership Workforce Study reported:
  • Car sales consultants experience the highest turnover at 72%
  • Median weekly income for all new-car dealership employees:  $1026
• The Society for Human Resources Management (SHRM) estimates that turnover costs run between 100-300% of the base salary of the replaced employee.   Let’s use 150% as our standard.
• The average new car dealership employs 10 sales consultants.

Formula:
10 sales consultants X $53,000 ave. salary X 72% turnover X 150% turnover cost

Formula Output:
The average dealer is spending $572,400 in turnover costs for the sales floor alone.

How can a dealer fix this?  The best way to fix this is to establish a recruiting and hiring process and train your managers to follow it. This will take extra time to put into place, but the reward will be lower turnover and associated recruiting costs.  Below are the basic elements of a dealer’s recruiting toolkit.

Recruiting Toolkit

1. Standard job description

Each position in the auto dealership should have its own job description. The top portion of each job description should feature a paragraph about your dealership. This is a branding opportunity to distinguish your business from others in recruitment media.

2. Standard hiring worksheet

When you begin the hiring process, set up a grid to help identify the requirements for this role. Use a worksheet and grade each candidate. This will help focus the interview on the important factors, and repeat the same questions to each candidate. It’s the single most important tool to help you create an objective evaluation of each candidate. Get a copy here.

3. Standard referral worksheet

Call referrals. As many as you can. And, as with the hiring worksheet, use a standard referral questionnaire. This will ensure that the most important questions are asked every time. Get a copy here.

4. Multiple interviews

Never, ever make an important hire without multiple face-to-face interviews. At least two personal interviews are critical for the manager to determine if the candidate is being transparent in the interview process.

5. Staff interview

Empower at least one team member to have a one-on-one interview with the candidate, using the hiring worksheet as noted above.  Counsel the team member on effective interview questions and review the results after the interview. This does three things:  1) Provides training for a valued employee in an important managerial skill, 2) Provides the manager with additional feedback about the candidate, and 3) Exposes the candidate to multiple people within the team to get a good understanding of their own fit with the team.

6. Profile Test

If possible, use a personal assessment tool to assist you in the interview process. These help me identify strengths in candidates, and verify if my instincts are correct about the candidate’s strengths. I routinely use the DiSC profile from Personality Profile Solutions.  

This toolkit, while not foolproof, is undeniably successful. I wish I could claim it as my own device, but the truth is, I have learned about these tools through years of trial and error. I hope you will take these suggestions seriously. Feel free to email me with any questions:  jennifer.sanford@drivedominion.com.