The “new age” generation of employees is upon us, and curbing the automotive retail issue of hiring and retention will require looking at people differently, and shifting tactics.
Hiring and retention remains an issue for a number of automotive retailers who are up against large corporate disruptors, and a new generation of workers with very different ambitions than their predecessors.
Part of the issue stems from the disconnect between what dealers are offering now, and what the so-called “new age”, purpose-driven employee expects from the retail industry, according to Bri Newman, Vice President of The Minery. The Ontario-based company offers tools to help dealers manage employee recruitment, hiring, developing, and retention.
“I think there is a bit of a disconnect in terms of people coming into this world as the new age, and our inability as the automotive industry to really kind of impact that from a proactive standpoint,” said Newman. “I think we are up against that challenge.”
More specifically, that challenge has to do with a younger generation of people coming into the market with a strong drive, and that need to be driven by a higher purpose. Growing up, their parents told them they could accomplish anything, and they are searching for an opportunity to do just that.
Newman said the dealership, and even the auto sector as a whole, will need to re-conceptualize what used to work in the industry and what no longer works with this generation, who are educated but struggling to manage student debt and balance work-family life with their children.
In other words, we need to break out of the old-school way of commission-only roles.
“Newman considers these companies, ones like Walmart, Deloitte, Google, Facebook, and certain consulting firms, as disruptors who are approaching hiring and retention from a different angle.
What changed after the recession?
A recession, a technology revolution, and a major shift in consumer buying and purchasing habits and preferences towards the online and in-store experience have left dealers with little time to focus on talent from a people-strategy point, said Newman. Their time was being spent on trying to reinvent themselves to create a digital presence.
But during that time other players in the retail space have been looking at people and talent strategy differently for years. Newman considers these companies, ones like Walmart, Deloitte, Google, Facebook, and certain consulting firms, as disruptors who are approaching hiring and retention from a different angle.
For example, Walmart invested in Virtual Reality (VR) technology for employee training and development. They are using the technology to upgrade their training at Walmart Academies across the U.S. These kinds of things can help upscale the business a lot faster, and it helps boost engagement levels, said Newman. These disruptors understand the next generation of workers have different expectations.
“As a potential candidate coming into the workforce, you’ve got all these very intriguing options,” said Newman. “And then there is autos, who is like, ‘We are not going to pay you unless you sell something, and we are not going to offer you training development because it’s too expensive, and you’re going to have to be here on Saturdays and work late nights.’”
Meanwhile, the disruptors are shifting their strategy to suit the needs of a new generation of employers — including ensuring they are prepared when someone shows up for their first day on the job.
“We’re not doing a good job of positioning ourselves as an employer of choice,” said Newman, adding that the majority of the auto retail industry is still lagging quite far behind.
The “new age” employee
Seventy per cent of millennials are willing to work at a dealership that is more like an Apple store, using modern technology, according to an October 2017 survey from Roadster, a U.S.-based digital commerce platform for car buying.
“What we realized with some of our partners here in the U.S., such as Toyota and Honda in Seattle, is that they were having success attracting younger people to the car business because of the technology,” said Michelle Denogean, CMO of Roadster.
She said the technology itself, for a majority of the people surveyed, was a big attractor to working at a dealership. This is because the younger generation of workers grew up with technology, so these types of things that they are more comfortable with is an asset for them.
Research also shows that 56.9 per cent of survey respondents want a higher salary and less commission-based compensation (55.2 per cent of women versus 59.3 per cent of men). And nearly 61 per cent want a less high-pressure sales environment (67.4 per cent of women versus 51.2 per cent of men).
Nearly 30 per cent would also prefer a more predictable work schedule, 26.3 per cent seek more transparency, and 11.5 per cent prefer to work in an environment where they are surrounded by a younger and more progressive culture.
“Moving more to a salary-based position versus where a lot of dealerships are primarily commission is something that would appeal to them (millennials) and draw them into the industry,” said Denogean. “And then another thing that I would point out too, which we have heard personally, is the work schedule — just the more predictable, work-balance schedule.”
She said dealers need to think about their people strategy. After all, retention is expensive. “If they come on and leave very quickly, that’s a lot of wasted assessment.”
Improving your strategy
Approximately 43 per cent of dealership employees leave the company every year, and for every salesperson that leaves it costs the company $45,000, according to an infographic from Dealertrack. Furthermore, the total turnover costs the average dealer $439,000 annually.
Compare that to 80 per cent of dealerships that do not have a dedicated person or team focused on hiring, retention, and training, and we can begin to understand why the turnover rate and costs associated with it are so high.
Some tactics that dealers may consider to curb those costs, based on Dealertrack’s research, include tracking employment statistics, offering better compensation, and employing a stronger human resources department.
The Minery’s VP also advises looking at the training and development side of the equation, while also considering how traditional roles within the store might change. Taking the time to hire properly is also important.
Here are some other tactics that Newman advises:
Get really clear on your employer brand: Who are you? What are you trying to accomplish? Are you trying to be a high-performing store, or do you want to be more family centred? What is your mission, and what are you trying to drive?
Get a really good candidate tracking systems: Similar to Dealertrack’s research, Newman said it’s important to consider a good candidate tracking system, as well as candidate experience. How are they going
to go through each stage of the interview, and is it productive to have three interviews?
Training and development: What are you doing today, beyond trying to sell a vehicle or a service, to train and engage people differently? Do you have a leadership program? Are you creating an inviting experience for the candidate? And what would that look like? Millennials want to see their growth potential within an organization, said Newman. In this case, a management training program in which employees are rotated through the organization — about six months per position, starting with sales and service — can prove useful and help them understand the opportunity within the dealership.
While some millennials may not relate to a retirement savings plan, they may connect with something that helps and meets their immediate goals.
Non-traditional conversation: According to Newman, a dealer in the U.S. decided to do away with the idea of commission and offer a better salary with a bonus at the end of the year based on the company’s performance. This means everyone is responsible for the same goal, which is to increase the store’s bottom line. The dealer told Newman his retention “has gone through the roof.”
Feedback and recognition: Newman said she would love to see the industry shift more towards a formalized monthly check-in process, where dealers and their employees work through things like goal setting, touching base on action items, and so on. Employees need to hear from their leaders.
Digital tools: There are a number of integrated tools within dealerships right now, and they can be intimidating or hard to use, or there is no one to train them to effectively use them. “People get disengaged because they can’t do a quote, for example. Or they don’t know how it will be integrated into the overall sales process,” said Newman.
Overall and from a hiring perspective, Newman said many dealers are doing the “same old thing” they have always done — which is poor interviews with “gut feelings” about hiring someone, versus having a science behind it.
“We are not preparing ourselves adequately (and) we are not reviewing different recruitment strategies, which would look like anything from going and speaking at local colleges and universities to attending career days and job fairs that are outside of the automotive (industry).”
Employee benefits
Another approach is to get creative with existing employee benefit programs that set the dealer apart from its competitors, according to Karen O’Connell, CADA’s Director of Governance & Plan Management, Benefits 360 Health & Welfare Trust.
The association offers an HR Automation program meant to help dealers efficiently onboard employees, monitor compliance and health and safety activities, and manage routine HR activities. The program is currently available to dealers across the nation.
“There are creative ways that you can take existing programs, considering things like the age of your new hires and where and what life stage they are at,” said O’Connell. “If they are young people who are saddled with a lot of student debt, or they are looking to get into the new home market as a first-time home buyer, is there something that you can offer them that might help them with their personal goals?”
While some millennials may not relate to a retirement savings plan, they may connect with something that helps and meets their immediate goals. That could mean setting up a savings program, or drifting away from traditional benefits like prescription drugs to focus more on wellness items like a gym membership or massage therapy.
“I think they (dealers) should be mindful of what age people are at when they are coming on, and how their needs will be different than somebody at a different life stage,” said O’Connell. “It doesn’t mean you can’t offer the same benefits to everyone, it’s just that the usage will be different depending on a person’s life stage.”
It’s clear there is a lot to consider when it comes to hiring and retention, and choosing the right strategy for your business may not be as simple as it seems. But one thing is clear: it’s time for dealers to change their tactics.
