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Brandiss Drummer

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Employee Retention: Why Just Having a Pay Plan Won’t Work

Hispanic businesspeople talking

The automotive industry faces some unique challenges managing people, as evidenced by an average dealership turnover of 40.5%, with some positions, such as sales consultants, reaching up to 67%. Also, over 42% of dealership personnel are classified as millennials, whose turnover rate exceeds the average at 52%. In black and white terms, the average dealership will spend half a million dollars a year in turnover costs.

Retention problems are personal

I’ve heard of many approaches to combat retention issues in automotive. Some dealers recommend defining a career path and creating stability through a pay plan. Others point to providing a work-life balance or empowering people to make their own decisions. While all of these points are valid, I prefer to concentrate on a singular approach: relationship.

There are two reasons why I think all roads lead to relationship building: 1) perks are easy to find, and 2) one-size-fits-all solutions don’t work.

Perks are replaceable

First, let’s look at perks. If we’re honest, even the best benefits package is easily replaced. And there are a lot of businesses out there offering flexible schedules, bonuses, and other benefits. That’s the problem with focusing on material things: Your great employee could jump to the next job as soon as there is a better offer!

Everyone is different

Secondly, focusing on specific items like pay plans or flexible schedules leads to a “one size fits all” solution. But each employee has different ideas of what is important to them. For example, it may be vital to Betty that she works in a job where she gets weekly feedback on her performance. However, for Mark, that may make him feel micro-managed. Mark may prefer to have more autonomy, which makes him feel trusted and important.

Relationship building with each of our employees ensures that we are giving them what they need as individuals. Perks can be replaced, but it’s hard to replace a person you genuinely believe cares about you.

Think about it like a marriage. There is always someone out there who may have just a little bit more in this one area than your spouse, but they can never replace the feeling of someone who knows and loves you, the relationship that you have built with your partner over the years. This is the reason why factors such as “I have a best friend at work” and “my supervisor seems to care about me at work” show up on the Gallup study on positive business outcomes, “First, Break all the Rules.”

Building better relationships

So what can you do today to start building or cementing your relationships with your people?

  1. Recurring, one-on-one meetings. Take this time to get to know your employee. Let them lead the first part of the meeting, and be sure to ask questions about things going on at work, as well as significant events in their personal life. The point is to make them feel comfortable around you so that they will open up and you can get to know them. The key is consistency. Set up recurring meetings in your Outlook calendar and try your best not to cancel or move them. By keeping to the schedule, you will demonstrate their importance to you.
  2. Keep track of personal information for each of your employees. This was a great tip I got from one of my mentors. He kept a memo on his phone of important dates for each employee, such as their birthday, work anniversary, and wedding anniversary. He also stored information he learned in his casual conversations with them, such as favorite food, hobbies, children, interests, etc. This information became very helpful to give personalized gifts, or to help personalize the conversation in their one-on-one meeting.
  3. Be relatable. Relationships are two-sided, and your employees want to know you are human, too. Share things you have going on in your life with your employees, when appropriate. And remember, the old-school way of being the “stoic” manager doesn’t work anymore. It is OK to share concerns or stressors that you have, as long as you do so in a way that still conveys stability and competence.

For the skeptics, I am not entirely idealistic. I know that retention starts with hiring the right person in the first place. I also realize that you can’t win them all and that some factors go beyond a relationship. However, I genuinely believe that when you build a healthy relationship with your employees, the other more tangible factors, such as flexible schedules and professional development, will become more effective. As Simon Sinek says, build a great relationship with your people, and they will believe what you believe. They’ll work for you with their blood, sweat, and tears.

For more information on retention and great leadership, attend our Leadership Program in June.

About the author

Brandiss Drummer

Brandiss Drummer

A member of the NCM team since 2011, Brandiss is charged with leading and expanding the NCM Institute to better support our growing clientele in the United States and Canada. As Director of Education, Brandiss oversees the daily operations of the Institute and the full range of training and development programs it offers. She collaborates with clients and subject matter experts to identify training requirements and develop appropriate learning and instructional strategies to meet those needs. Brandiss is a graduate of Duke University in Durham, North Carolina.

Permanent link to this article: http://blog.ncm20.com/2017/03/employee-retention-why-just-having-a-pay-plan-wont-work/

2 comments

  1. Jerry Owens

    Great article; I have managed by these rules for years and it works. Everyone should read First Break All The Rules and the One Minute Manager as a prerequisite to leading people. Many people can be a manager not all can be leaders.

  2. Stephanie Martz

    Its great to see an article that supports my chosen management style. As a General Manager who was a former Controller I subscribe in the belief that taking care of the little things bring big results. People are our biggest asset. I am looking to break the stereotype of working at a dealership.

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