When Pay Plans Are Designed to Manage People, the Only Thing People Manage Is Their Pay Plan

jeff ryan newsletterAs a traveling consultant I have had many opportunities to visit dealerships across the country. There are some common themes I have come across regardless of the location. First, let me say that every dealership operates under its own set of dynamics and structures; however, when the subject of customer acknowledgement comes up, many dealerships struggle with getting their people to greet and acknowledge customers in a timely fashion. The comparison of fast food restaurants often comes up and the verbiage usually goes something like this, “I don’t understand how you can go to a drive thru at a fast food restaurant and get a consistent friendly greeting every time and they are getting paid minimum wage, while my people are making 60k-70k per year and it’s a struggle just to get them to acknowledge our customers.”

 Sound familiar? Bring this topic up at a group 20 meeting and see how fast people start chiming in! So what’s the answer? There is no magic bullet here. As mentioned earlier, every dealer operates on its own set of dynamics. More times than not, the dealers that are suffering from this phenomenon are typically still paying their advisors based on a graduating percentage scale of hours per R.O. or dollars per R.O. and factoring in EVERY service, including first time oil changes.

 I recently participated in an OEM training session. As part of the session we had the dealers talk about some of their successes and some of their pains. When the topic of customer service greeting and acknowledgement came up, a very sharp young man named Zach got up in front of the room and spoke exactly to this point. I was not surprised that the subject came up. I was, however, very surprised that this 23-year-old young man recognized this pattern so early in his career and put it out there to the group of his vastly more experienced peers. There were some in the group that abruptly called out, “What do you suggest, paying them a salary? Nothing will get done!”  To which he replied, “Retention and gross profit go hand and hand. If we build our pay plans to manage our people, the only thing they will manage is their pay plan!” WOW! Needless to say this discussion went on to the point it had to be interrupted to get back on track! But it serves as a perfect example of how important this area is and how many dealerships experience it on a daily basis.

 Now put your customer hat on and think of how you feel when you enter an establishment and no one looks up to acknowledge your existence.
Pay Plans are key a factor in having your customers greeted and treated correctly.  All the advisor training in the world won’t correct the problem if low paying jobs are going to affect their pay negatively.

 The other major factor is how work flow and shop capacity are managed. If advisors don’t have a clear vision of what the shop can get out (through-put), they will shut down when they reach whatever number of R.O.’s is their comfort level. To most managers this does not make sense. The thought process is they are commissioned sales people–they should want to take in all the customers they can. Then there are some advisors whose main concern is “Get my name on the ticket; I will get paid eventually.” They are typically seen as “producers” so their low customer service scores are often overlooked. In either case it often comes down to what level of brain damage outweighs the paycheck.

If any of what’s been talked about in this article sounds familiar, start by looking at the number of carry overs you have each day. If it is a significant number, the next area of focus should be analyzing the dispatching process. There is no one-size-fits-all here. Whether it be central dispatch or some form of lateral support, you will need to drill down to ensure that the people handling the distribution of work are capable and that the technician ratio is within industry standards (central dispatch 15-20 technicians per dispatcher, latter support 4-5 technicians per group leader). Keep in mind that sometimes your own people will have some of the best ideas on how to correct the situations they deal with every day. Taking the time to conduct weekly meetings with all customer facing personnel can pay great dividends. Any way you look at it, retention and customer advocacy are the new buzz words and for good reason. Observe the drive, check the flow, keep it simple, and watch it grow.

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