General Manager Qualifications

[Qualified]

It seems that most General Managers have a backgound in sales, with little or no experience / knowledge in the other departments. It seems that good business experience with knowledge of the entire operations (sales, financial, fixed) would be tremendous qualifications for GMs. Why are there not people with stronger business backgounds filling these important dealership positions?

[sallen1]

Dear Qualified,

The answer to your question is pretty easy: The typical dealer looks to vehicle sales as the most important function of the business. As an employee moves up the sales ladder to ( or is hired into) the GSM position, that person becomes the most visable candidate for GM.

Sounds more political than logical but keep in mind what's on the mind of the dealer: selling cars. Besides, what's the learning curve for GM anyway?

Also, you won't see too many biz-school grads looking to the car dealership for a career. They get sucked into a larger corporate structure or persue other entreprenurial avenues. Too bad, there's lots of opportunity (read: money) in running a dealership.

scott

ps. I know of body shop managers, parts dept. mgrs, etc. that became dealer/operators and they are very sucessful.

[kage]

Dear Qualified,
I'd like to agree with those comments made in the first response from Sallen (Scott).
Also that the situation is not unique to the U.S.
In the U. K. things are no different.
There is a pre-eminence here of large dealer groups largeley dominating the Retail Motor Industry sector with the top 20 companies turning over between $750M and $2700M each.

This really is in the realm of big business and logic should dictate that professional practices exist where recruitment of senior managers (Dealer Principals / General Managers) is concerned.
Not so....Most Dealer Principals/GM's gravitate from a car sales background (as Sallen says) because this is the dominant function of the dealer.
The balance is however changing here and Aftersales will have to provide a greater contribution to business profits, which should raise its profile.

Further, my experience shows that the learning curve is very steep for any new GM/DP purely because there is limited facilities in the way of support.
Quite often a new GM will understand his/her own area of expertise, but may have limited understanding of other operational areas.

Perhaps most crucially in many cases the biggest area of weakness (and risk for the business) will be the persons lack of understanding of the fundamental financial business principals which determine any businesses survival/success.

Sallen (Scott) was also correct in that our industry (UK or US) still does not attract graduate calibre business people.

However, sooner or later the industry will have to drag itself into the 21st century simply to survive against new entrants to market.
Here we are just facing the challenges associated with FMCG companies with their financial might and vast customer databases as well as financial institutions and entrepreneurs like Richard Bransons Virgin Group.
Dealer groups will either rise to the challenge or lose significant market share.
Assuming they do meet the challenge, we can hopefully look forward to more progressive approaches to all aspects of strategic and operational management.

Scott

[DaveS]

I also agree. I have heard from one of our former GM/EM's that Lexus has a GM bootcamp. The bootcamp gives a new focus to GM's on what their focus should be and how to measure results. In addition, they are given a view that includes the overall dealership. Too often, the GM is sales focused to the extent that gross and profit are lost through the fixed end. Since the fixed end is asked to carry or absorb a large part, if not all, of the expenses associated with running the dealership, it seems only right that a much heavier focus on learning how the gross profit retention is greater through the fixed end. This realization will cause more harmony through the dealership since the emphasis comes from the owner/GM down through the ranks. Otherwise, there is a growing division and resentment. Fixed end people resent having to "jump through hoops" to satisfy the ego of the sales dept when they receive almost no recognition for the load they carry and in some cases give up profit for the gain of the sales departments. More GM training will help focus on where the fixed end fits into the overall scope of operations and will help him/her recognize the value and importance of their contributions.