hiring/paying service managers

[LAFell]

I am looking for ideas on hiring and paying service managers for a newsletter story. How do you find the right people? How do you pay them to achieve the best results? Looking for new ideas, success stories, opinions.

[Michael White]

Our industry is far behind others like the computer industry when it comes to hiring and keeping good quality service managers. There appears to be a trend of Service Directors or parts and service directors have profitable departments, but get outside consultants in and say he/she is paid too much and you can save $XXX per year by getting someone else with less experience. Compare the average software engineer or manager. the ratios of managers to employees is much less than typically in our businessand the job tasks are less as well, yet they come in with major stock options, far superior retirement, and when they do retire, their insurances are covered. Service Directors have a intense, thankless job that constantly changes day by day. With the constant push to get more for less, and more functions to do in less time, Service Management must be extremely involved in all aspects of their business. Fixed op managers in general, even though we are "the backbone" of the industry, are never quite treated in the same way as sales. Case in point, our fixed department out grosses our sales departments almost every month and do about $1.2-$1.3 million in sales monthly. To celebrate a good month and to keep the lines of communication going, our dealer takes us to lunch to a very fine chinese restaurant. I personally love chinese food. But when he takes the sales managers out, they are probably spending $30-$65 per person. Even though dealers know the importance of fixed operations, most feel we are here so they can "take the glory in the sale" approach to their department. Now my dealer does treat me very well and I work very hard for him and always do what it takes to protect him and make him profitable. There is a strong trust here. But most dealers really do not take fixed op seriously enough. In our dealership we have a very good relationship between our sales managers and myself and the "spirit of the team" is definitely there. But I do take the second class citizen approach. In my way, I do everything I can to try and get the sales department to out gross us. If sales are good, my business is booming!!. So its OK with me to have all the emphasis in sales, but it is annoying sometimes, and sometimes unfair How many new car sales contests have their been compared to service contests with GM in the last 12 months" The answer is dozens of sales and zippo with service. I rest my case on this.
Almost all troubled fixed operations stores have owners looking for the 30 to 90 day turn-arounds. It is fairly easy to show immediate changes in expense controls and reductions,and account recievablerepairs, but the issues of CSI, low gross profit problems, effiency concerns when there is training and personnel problems may take longer than 90 days. CSI responses take longer than 90 days just to get. But many are all into instant gratification and immediate results. Everyone should ask the question" How many service managers actually retire from the same dealership after being at that dealership for 20 years?" I would imagine the number is pretty low. There are burnout issues here and so many dealership buy-sells going on I think the actual % will be going down even more.
So what do we do? I think dealers need to look down the road longer than 60 days. There should be a 1-3-5 year plan made with each manager. Identify the needs and expectations of the boss and the service manager both. There needs to be a cultural change and constant communcation and honest communication between he dealer and his/her managers. Expectations need to be rational. There needs to be counseling sessions between dealer and manager when there are expectations not met. Many managers that get the "bullit" do not even know this is coming.
The electronic industry is far more advanced in the develpoment of communication and team work than our industry as a hole. Our industry should take a serious look at how they manage effectively, and take approaches to hiring and in terms of long term approaches and not just short term fixes. Now I do realize there are radicl differences in abilities in service managers out there. A lot of this has to do with training and expectations and dealership culture. But do major metropolitan service managers see themselves working at the same dealership for 20 years? Is it still possible in this day and age??
I know I have rambled on about this but I think many people will relate to what I have mentioned, and may even be hindered by thier dealers "micro managing" them. Now in terms of compensation, this is radically different, depending on location and size of the dealership,compensation amounts. But some basics I feel are importantis to develop a pay plan that unites all the fixed operations managers together. Many dealers feel if all the managers are fighting with each other then the dealer ultimately wins, even though the field is bloody. I feel fixed operation managers should share in the gross profit of all fixed oeprations, the profit of their department and the fixed operations CSI standings. But compensation is tnot the real issue. Long term security is more important. Dealers need to be partners and counselers with their managers and help them when they do not meet expectations and encourage them when they dow. When we fall short, they whould help the managers realize it and come up with action plans to help resolve the problems, as well as monitoring systems. this takes a lot of work and in the long term, will show emazing benifits. But do dealers have what it takes to do this??
To close, service managers need to have their act together as well. They need to be experts in all aspects of their job and constantly looking 6 months down the road, in spite of what their deale is dowing. He/she must have a real feel for managing assets, understanding the business part of our dealership, be able to delegate and followup, and help eveyone as required. There are dozens of hats he/she has to wear from shrink to auditor. But most of all he/she must be self motivating and constantly asking "what if we do/try....., what will happen? The moment we dow just what everyone else does, is the moment we loose and need to look for another job.

Mike

[sallen1]

Wow, Michael, what a statement.

I like the part where most fixed-ops people represent the 'back-bone' of the business. You are, but you also represent the most overhead, too. Consider this: Have you ever counted the number of CSI reports a service department gets for a single new car delivery report? Probably the same ratio as the gross dollars you state...

First, if you have outside consultants telling you that they know the best way to run your dealerhip, ask them why they don't run their own.

Anyways, my experience with this topic goes more towards the pure objective of the business. What's the goal? Make Money! Internal competition does not accomplish this objective, does your department compete against others in the dealership?

When I took over my dealerships, I found that the fixed ops departments were in total competition with the sales depts. How so? Primarily, the vehicle sales managers were compensated on variable gross and the fixed-ops managers were paid on fixed gross with no commission on expense control. Ask yourself this: what do most used car managers complain about the most? Reconditioning expense. The dealer's service department is too expensive, so the typical u/c manager farms out recon work inspite that the best quality comes from within. Therefore, the service manager was in competition with the sales departement on where the work was done. Sometimess, the u/c department would acutally have their own service department. How about tires and accesories? Once again, most new and used car departments farm out that stuff too. How do you motivate a different behavior? Compensation! Pay the car managers on service gross... Also, the service dept. must treat the u/c and n/c departments as the customer they represent.

Likewise, pay the fixed-ops managers on variable gross, too. Keeps 'em interested in the 'front-end'.

How about this idea: Pay every manager the same way, on the same number.

Michael, as far as your reference to the computer industry goes... While the automotive service industry may, at times, be a thankless job, you are providing a 'service' vs. providing a product. The car business is a people business and managing people (including customers) will always be the priority. Our job is to make people happy with a product manufactured by someone else. How many happy experiences have you facilitated?

A software engineer makes the product that someone else supports, and that service is also thankless in most respects. How many complaints about R&R, ADP, UCS, are written in these forums? Also, how many computer people actually hit the homeruns (stock options, fat retirements, paid benefits)? Not as many as you think. Besides that, how many have car problems they can't get fixed?

Suggestion: If you work for a dealer that doesn't respect the job you do, start looking around because you are probably on the short list. Also, if your dealer/GM is always looking at the short term, maybe they, themselves are short timers. There are many of us out here looking for quality people who desire the best that the job brings. But be ready to produce: It's not what you have done in the past but what you are about to do that makes the difference.

scott

[RMARTIN]

Mike and Scott-Well said! As service professionals we take pride in performing our jobs with the highest level of quality possible yet it seems the emphasis is always on sales dept. Why is this? Because the dealers (at least from my experiences) are in business to sell the products for which they are franchised. The "back end" was just a necessity to get the store. Additionally, when was the last time you met a dealer who came from a service background? The enlightened dealers realize with shrinking gross profits on new units and with intensified competition for CP service dollars combined with the manufacturer's constant search (being polite) to decrease warranty expense, the fixed operations must expand their paradigms and learn from other businesses how to improve their gross profit and control expenses. This requires more time than the "quick fix" artists that seem to be circulating in the industry. It also requires more education and leadership abilities. This means the pay scale should be continually ascending for the managers who perform. I agree with Scott that fixed op managers should be paid similarly to keep everyone "on the same page". Mike is right that managers need to keep on top on the industry changes and cultural changes along with constant, honest communication with their dealers. Consider this...fixed operations managers should also provide constant, honest communications with their subordinates. In my experiences as a service consultant, many times the manager would not share with us his goals, needs, and ideas. (Other than to issue edicts re:procedures, sales $, r/o averages, etc.) And we were all surprised when that manager was terminated without warning! WE could have solved his problems if only we knew what was really happening. I agree that the automotive service industry is far behind the other major industries in compensation, respect, and even continuing education. But it is up to us to improve it. Let's make our service departments the kind of place people want to come to. This includes employees as well as customers. Let's lose the "back end" mentality. This starts with your internal customers (parts, UCD, NCD,and B/S) and expands to your external customers and continues into your community. A constant, consistent improvement in corporate responsibilty, responsiveness and empathy will bring about the positive changes we desire. Thank you for letting me share my perspective. Randy

[Michael White]

This format is a great for open discussions. Even though I have assumed the "second place" role in our dealership, because the glory is in the sale and the not service, our owner would not be in business if it was not for the significant contribution our dedictated fixed operations has. Don't get me wrong about my relationship with my owner; it is good and I can freely talk to him about anything. Fixed operations poeple are easier to deal with for him than sales because we are more loyal, supportive and long term than the traditional sales people. Our main owner, who owns many many stores, is unique, wise, and a straight shooter and is the epitome of a gentleman tiger. You can trust him with anything, but you must always be straight with him, and never slack off. I am very fortunate to be associated with this group. I do know, as with the case of most service directors, that the moment I let my guard down and do not perform as expected, most likely there will be do counseling sessions or warnings, just the final check. Scott, I know I have value and the performances to back it up. But it is self motivation and personal drive that gets me there.
Now Scott, I would not have a problem in theory with sharing some kind of financial goal with the sales managers. But for me to be paid off of portions of the sales, I want to have input in what they are doing. Currently I do not participate DIRECTLY in thier gross profit. But indirectly I am rewarded in their successes. We do all used car smog and safeties, detailing, and accessary installations. I have a very good relationship with my sales managers. I can have their business as long as I do a good job for them. Those used car managers who think they cannot make as much money on their used cars if the work is done in house is still living in the sixties. In fact, our vehicle gross profits went up when we did all the work in house. Granted we may be a couple of hundred dollars more maybe, but the work is better, and we take pride in telling our customers we do our own inpections. With 80 or so used cars per month, this is quite a lot of money for me. Now there are times our used car manager comes to me and says, "Mike, I'm introuble on this car and need your help" He does not abuse it. When he askes for help, I will give him a deep discount to help. I might win on 70-80 cars and loose on 1. With our team work among departments working like it is, we all know the value of the others help, be it direct or indirect. I know if we do 230 cars a month, what that means for fixed operations. It means money in the bank. Team work, like ours is rare. In fact it is the first time in my management life to have it this good. A lot of it is my willingness to cooperate with sales. The last poeple I see when I go home at night is the sales managers. WE shoot the bull, talk about their successes and ours, give each other a "great job" and look forward to tomorrow.
I must admit a hole oflot of our team work successes has to do with our owners. He has set it up and made his demands in a way that actually requires it.
So to conclude, I do know the purpose of a car dealer is to sell cars and promote repeat business. In order to do this, I know the fixed oeprations must be strong to have a high fixed absorption rate, so the pressure to generate grosses in sales is lowered, so they can sell cars because they are pumped up to do it and forced to do it with a baseball bat. I hope this makes sense.
RMartin, you are so correct about having a direct line of communication going up and down.Service advisorshave the most imprtant job in the dealerhsip, far more improtant than mine. My role is to support them and help them succeed by giving them the directions, support training and tools to do it. Same thing goes for all the employees of the fixed operations.
thanks to all, Mike

[sallen1]

This is a great topic.

Mike, I challenge the statement that the service dept. is not "directly" involved with new car gross.

How much would someone pay for a vehicle as it is delivered off the truck? What if it doesn't run right or doesn't look right? What would your sales volume be if you never PDI'd any cars and only worked on customer pay stuff?

Want to gauge of your direct effect on the sales department? Try this experiment: Tell the sales managers that your service, parts and bodyshop departments are taking the month of August off for vacation (if you can do it with a straight face).

Hey, the fixed-ops departments are my favorite and I fully respect all the jobs done "in the back shop".

Remember this: The dealer's service department defines his/her competitive advantage.

Keep smiling.

scott

[Michael White]

Well Scott, your are right. It all boils down to team work and cooperation.If we all try and look after each other and help the other department and not be flind sided by your own emphasis of maximum profit and look at what is best for long term, we will all be smiling all the way to the bank.

By the way, what is Cadillac telling you about all the new conversions to rear wheel drive? Will they pull it off?? It appears the alternator recall is a real, a nuclear bomb CSI problem. How are you dealing with it?

Hapy selling,
Mike

[sallen1]

As far as RWD Cadillacs go, I believe GM can do anything they want to, it just takes money. Down in So. Cal, RWD is a competitive advantage, but my dealer-friends in the north don't want RWD. However, my buddy in Des Moines sells a bunch of RWD Lexus cars and it has been know to snow there...

Some of the new product (coming in 3-4 years) all look very modern and have the appeal of the Evoq. The BOD has commited the resources, now we will wait for the factory to begin production. There will also be 'activities' vehicles like the RX-300 in time for the 100 year anniversary. Will they pull it off? Depends on how serious GM is in saving the Brand. I spent a couple of days with the so-called 'brand managers' for the vehicle lines and they tell me the Zarella is chaning his view on 'brand management' whereby the nameplates will be treated as the actual brands and the models will be treated as the 'flavors' of that particular nameplate. What's ironic is that GM tells the dealers to listen to their customers, but the real customers, the dealers, were immediatly critical of the past 'brand managment' strategy and wanted the nameplate out in front. Well, things change albeit slowly. While Chevy has done a good job at marketing Chevorlet, the first nameplate to have the new 'halo' marketing is Olds (starting Sept.), followed by Cadillac (with the intro of the 2000 DeVille), then Chevrolet, Pontiac-GMC and Buick (the last three probably at the same time next year).


The generator issue has not been a CSI crusher for us (although we have no survey returns yet...) because we were able to collect 40 units prior to the PDC shutdown. One thing on the CSI front: Do you find that Emmery (sp) transportation seems to loose stuff? Last Monday, we had a pallet of generators coming to us, 2nd day air, from Flint but they were sent to San Jose and subsequently lost. Emmery is trying to find them, will let us know next Weds.

scott

[sallen1]

prior was posted twice and I erased it

scott

[This message has been edited by sallen1 (edited 07-04-99).]

[Garry House]

Wow! What a discussion! I'm almost afraid to touch this topic, because TODAY I'm one of those "feared, and mis-trusted" consultants. But I was a VERY SUCCESSFUL DEALER for 20++ Years, and no matter what you may think, some of us "Advisors, Consultants, Trainers, etc." really do know what we are talking about, and make a Serious Attempt to identify with the "Value and Income" concerns of Fixed Department Managers.

I firmly believe that many Dealers recognize both the "Income and CSI" contribution of their Fixed Department Managers. And I think that most of these dealers attempt to try to compensate these Managers "In Line" with their contributions.

Most Dealers, as you obviously recognize, came from the Vehicle Sales Departments. This is their "Comfort Zone". Many are not comfortable inter-relating with you "even about your departmental successes or failures", and "Most" are not comfortable relating with you on a "social" basis! LIVE WITH IT! It probably will never change, at least significantly!

However, any ASTUTE dealer that I have ever met (Client or Acquaintance) has always believed in the Golden Rule..."He who Provides the Gold, Rules the Compensation Plan!" I have numerous client-dealerships, at which Fixed Operations managers earn equal to, or more than, Sales managers. Is this Industry Standard? Certainly not...but it is more prevalent than you may think.

My suggestion to those of you who feel you are "under-paid and under-appreciated" is this: "BLOW YOUR OWN HORN!" You can be sure that your counterparts in the Vehicle Departments are doing it, "every chance they get"!

Garry House
NCM In-House Consulting