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Adam Robinson

Employee Turnover is Killing Your Dealership

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The auto industry has dealt with a number of changes in recent years, largely in response to new spending habits and expectations of millennials both as consumers and employees. While dealerships have made great strides in connecting with this new generation of consumers, many businesses are still in need of significant improvement to retain their employees. In fact, the employee turnover rate within the industry is currently at an average of 67 percent according to the NADA Dealership Workforce Study, correlating to an industry loss of billions of dollars annually with the average dealership suffering an average of half a million dollars lost each year.

An issue half a decade in the making

This decline in employee retention has been steady since 2011, with the average sales position lasting a little over two years, according to the NADA, compared to nearly four years ago when the study began. Furthermore, data showed that while only 45 percent of dealerships had an average retention rate of three or more years; that number fell to about 33 percent when looking exclusively at those in sales positions. The private sector, by comparison, reported an average of 67 percent retention for the same amount of time.

Not surprisingly, the best-in-class dealerships with the highest revenue and profitability also suffer the lowest turnover rates. What’s more, dealerships across the board seem to be notably lacking at hiring and retaining women, with less than 20 percent of the workforce made up of women in 2015.

Another factor accounting for the loss in dealership employee retention is the changing landscape for consumers. Instead of going into a dealership and meeting with a salesperson when looking for a new car, customers are now spending up to 11 hours researching online and less than four hours inside a dealership speaking with a representative. With significantly fewer trips to a dealership, the salesperson has less of an opportunity to interact with, and push product on, customers. This new lack of negotiation skills, however, provides dealerships with the opportunity to hire a more diverse, and perhaps qualified, pool of candidates.

Retention issues impact sales

The employee retention rates not only cost dealerships a monetary loss in the form of search and training expenses but ultimately result in lost vehicle sales due to inexperienced sales staff and a lack of continuity with customers.

According to AlignMark Corporation, there are four main categories to help employers quantify the expense associated with employee turnover:

  • Separation – unemployment compensation, exit interview costs, etc.
  • Replacement – advertising, pre-employment testing, time, and materials
  • Training – time and effort required to bring new hires up to speed
  • Productivity – lapse in morale and production, as well as low-quality output

How to find the right employees

By 2020, millennials are expected to make up 40 percent of all new-vehicle buyers. Millennials also now form the majority of the workforce and currently account for 60 percent of new dealership hires, making it critical to maintain a focus on retaining this demographic to keep dealership floors stocked with quality salespeople. Millennials, however, dislike the conventional dealership commission-based compensation and instead prefer salaried positions with more steady income and advancement opportunities. This makes it difficult for many dealerships to retain their new hires, requiring those in hiring positions to reevaluate the interview process and hiring strategies altogether.

According to ESI Trends, common mistakes dealerships should avoid during the hiring process include:

  • Hiring quickly out of desperation
  • Hiring someone after just one interview with one person at the dealership
  • Overselling the position’s earning potential
  • Not trying to impress the recruit

Some additional best practices dealerships should consider to boost retention include:

  • Keeping job descriptions updated with the most relevant, accurate information
  • Implementing a business development center to funnel sales leads to salespeople
  • Offering creative compensation in addition to stable base wages
  • Providing a career growth and professional development plan

By switching to more base-waged positions with bonuses, dealerships make room for employees to meet customer needs versus negotiating the best price for the dealership. Dealerships that take things a step further and create a career path for their employees will significantly increase employee retention rates, especially for today’s millennial who places priority on career advancement.

The auto industry has recognized there is a problem in its employee retention and has taken steps to improve retention rates. However, there is still a long way to go in creating the industry culture and offerings to not only attract today’s top talent but to keep them there for the long haul. Until then, employee retention will continue to wage a significant toll on your dealership and the industry as a whole.

Thanks to NCM Associates’ partner, Hireology, for sharing their guidance on attracting and managing millennial employees. Learn more about Hireology and join NCM’s experts for more actionable advice on hiring the best people for your team in our Hiring Top Talent and Success-Driven Pay Plans classes.

Permanent link to this article: http://blog.ncm20.com/2017/04/employee-turnover-is-killing-your-dealership/

Adam Robinson

Should Your Dealership Host a Career Fair?

Networking

Dealerships need bright and eager employees to fill their fixed operations and sales departments. Hosting a career fair at your dealership is a great way to find the right candidates and an opportunity to let them know about the benefits of working for you. While you may think career fairs are an anachronism, these events can deliver fantastic results—for example, AutoNation successfully held over 15 annual job fairs in cities across the country in 2016.

AutoNation was not alone in this endeavor. Hoehn Motors, an Audi dealership in Temecula, Calif., along with Charlie Clark Nissan in El Paso, Texas, conducted career fairs of their own in the last couple months. Each of these dealerships reported results that met or exceeded their expectations.

Dealerships must focus on ways to better attract millennials. The current pool of potential employees is largely made up of this incoming generation, who range in age from 18 to 34 years old. Fewer members of Generation X, who are between the ages of 35 and 54 years old, are seeking jobs at dealerships, and those in the Baby Boomer generation are beginning to retire.

In 2015, the National Association of Colleges and Employers found that employers attended an average of 31 career fairs. The youngest millennials are still currently college students, and they frequently show up to career fairs held at their campuses just to see what options are out there.

A career fair has two benefits: First, it allows your dealership to meet several potential job candidates in a short amount of time. Second, it gives candidates an inside look at how your dealership operates and the overall culture of the workplace. Sales managers, service managers, and other high-ranking employees can speak candidly with attendees about all aspects of their respective jobs, make a lasting impression, and collect resumes. The purpose is to inform job seekers about the careers and the positions available at your dealership and how they can fit into the broader picture.

Career Fairs Still Matter

Job seekers attend career fairs because they’re useful for plotting a career path. It’s possible your fair attendees are just there to find out about dealership culture and if it aligns with their current ideals and lifestyle goals; this is your chance to engage potential candidates and let them know about the day-to-day operations and responsibilities they would have to take on.

Career fairs are also networking magnets. People show up not only to meet with potential employers but also to network with each other. This networking creates a dynamic atmosphere where candidates and employees are mixing and building rapport. Relationships can pay dividends when an applicant is deciding whether or not to apply somewhere.

How to Prepare for Hosting a Career Fair

Much of the advice for job seekers attending career fairs applies to the hosts as well.

  • Be ready to introduce yourself: Have a concise statement ready about your dealership and the opportunities available. It’s likely that the job seeker is looking for work at other companies, including dealerships, so make sure you put your best foot forward.
  • Always maintain your enthusiasm: Make that job seeker feel like you want them there. Be warm, conversational, and engaging so that he or she feels comfortable.
  • Follow-up with the people you meet: After the conversation has ended, jot down a quick note about that person on their resume or business card so that you can recall them from the many faces you met at the career fair. If you’re interested in bringing that person in for an interview, they will feel a personal connection in your follow-up email or phone call.

Plan Your Career Fair

Your career fair will require some planning that will include a budget for venue space, marketing, printed materials, food, and more. You will also need to determine who from the dealership will attend the fair and whether job seeker registration is required.

Should your dealership host a career fair?  Yes—but you need to plan properly if you’re going to achieve success. If you want to try a career fair on for size, attend one at a local college or chamber of commerce where other companies also have booths set up. Study how the process works and see if you are interested in holding one of your own. Once you create an atmosphere for job seekers to come to you, then you can sit back and watch the applicants stack up.

Thanks to NCM Associates’ partner, Hireology, for sharing their guidance on attracting and managing millennial employees. Learn more about Hireology and join NCM’s experts for more actionable advice on hiring the best people for your team in our Hiring Top Talent and Success-Driven Pay Plans classes.

Permanent link to this article: http://blog.ncm20.com/2017/03/should-your-dealership-host-a-career-fair/

Adam Robinson

Dealership Culture: 3 Ways to Create a More Modern Workplace

business team winning a trophy

The need to foster a robust and positive company culture has gone from a “nice-to-have” to a “must-have” as millennials become the majority of the U.S. workforce. Retail automotive dealerships must evaluate their workforce culture to ensure they not only attract, but also retain, today’s most qualified talent.

By offering an environment that contains the benefits, flexibility, and career structure important to the millennial demographic, companies will create a better place to work and improve job satisfaction resulting in higher productivity and higher sales.

Shaping existing culture with a more modern approach is a growing trend implemented by some of the top dealerships today, and most others can easily follow suit.

Here are three ways to get started:

1. Involve the Leadership Team

Millennial employees are not interested in office politics and the traditional “rat race,” but rather want to be part of an energizing work environment where they feel like they matter. They want to feel like management is honest about what is expected to be accomplished by them and where they stand, at all times. Leaders should maintain transparency to prevent employees from feeling like they are being kept out of the loop because employees will quickly lose trust in management. Leaders should also consistently and concisely convey expectations and ensure that their vision is known and shared by all.

Employees want to get to know who their bosses are as real people, and there are many ways leaders can step out from behind their titles. For example, Audi Des Moines holds monthly barbeque lunches where employees have a chance to interact on a more personal level and cultivate relationships, as well as several sponsored events such as bowling nights and baseball or hockey games.

Today’s leaders are encouraged to facilitate an engaged team, promoting dialogue but not controlling the conversation. Employees should be allowed to show passion for their job, by being invited to step outside their traditional roles and explore other responsibilities within the company, trusting in their leaders along the way.

2. Provide Recognition and Resonate with Ideals

Studies show that out of the top perks employees appreciate from their workplace, half appreciate more employee recognition, a higher percentage than those who say they’d prefer cash incentives. A company providing substantial recognition and rewards to its staff will provide top talent with an incentive to stay and remain highly productive.

Companies must not only provide meaningful feedback to employees but should do so in a timely manner. Employees report a 20 percent increase in work satisfaction after receiving feedback. When feedback was delayed, however, it increased employee suspicion, making them nervous and less productive. Gone are the days when annual reviews were the bulk of management face-time, replaced by a constant stream of engagement.

Feedback can include non-financial incentives and personalized employee rewards. For example, Capitol Subaru of Salem recognizes an employee of the month from multiple departments, providing them with recognition at the company meeting, dinner certificates, a wall plaque, and entry into an Employee of the Year program for cash and other prizes. Not only does this make the employee feel appreciated in between periods of promotion, it strengthens the relationship between managers and employees—and studies show workers are loyal to their managers more than they are to the company.

Millennials want to work for a company that aligns with their values and ideals, and they appreciate a company who talks the talk and genuinely walks the walk. For example, if your dealership claims to support a local charity or organization, employees want to see how the company plans to make a difference in the space. Will they host a fundraiser, volunteer, or donate money? At Capitol Chevrolet-Cadillac of Salem, employees are provided with eight hours of paid time off to spend volunteering in the community. As part of Yark Subaru’s partnerships with local animal shelters, the company pays half the adoption fees for any animal adopted by an employee.

3. Employ a Casual Dress Code

When employees feel comfortable, they project those positive feelings onto customers. In the auto industry, a positive experience can help instill the confidence needed in potential buyers for what will be one of the biggest purchases of their lives. Allowing employees to dress casually on the sales floor is not only beneficial to their moods but also can help them be more productive. For example, if an employee must wear a suit and take customers outside in 90-degree days to show cars, the heat may cause them to show customers fewer cars than they would if they were comfortable enough to be outside for longer periods of time.

By taking into consideration the needs of today’s employees and altering the company environment in small but meaningful ways, employees will feel a deeper connection to your organization, resulting in increased loyalty and higher productivity.

Thanks to NCM Associates’ partner, Hireology, for sharing their guidance on managing millennial employees. Learn more about Hireology and join NCM’s experts for more actionable advice on hiring the best people for your team in our Hiring Top Talent and Success-Driven Pay Plans classes.

Permanent link to this article: http://blog.ncm20.com/2017/02/dealership-culture-3-ways-to-create-a-more-modern-workplace/

Adam Robinson

Recruiting Strategies to Attract Millennials

Business people waiting for job interview

By the year 2020, the U.S. workforce will be comprised almost entirely of millennials. What’s more, Generation Y is projected to account for 30 percent of new vehicle sales in 2016, and that number could double next year.

Millennials are much more apt to make a purchase from—or develop brand loyalty to—a company with whom they identify and are even more trusting of purchases from employees who are like them. As a result, companies must now clearly communicate their viewpoints and company culture to potential millennial customers, and perhaps most importantly, employ individuals who connect with that target audience.

Unlike previous generations, millennials care more about fulfillment from their careers and evaluate potential jobs on a number of factors that can cater to this need. To retain these workers, organizations must tailor internal positions and programs to meet the needs of this growing workforce demographic. Also, recruitment strategies must be updated accordingly, to attract the best candidates effectively.

Companies must first identify what millennials want. Here are key traits of what they look for in potential jobs, and how that plays a role in the recruitment process.

What Does Millennial Recruitment Mean for Dealerships?

The dealership model has been in play for decades with little to no change. But these days, millennials want to work for a company that is not only profitable but making a difference in society and providing them with perks that will fit into their personal lives. Millennial needs from employers include:

Income Reliability

Due to the challenges of making large student loan payments and covering basic living expenses, millennials as a demographic are not interested in a commission-based position where pay is unreliable. Rather, they are interested in a base pay plan that gives them the confidence of a guaranteed stream of income. In the auto industry, providing base salary positions in lieu of commission will not only attract better talent but can provide a better customer experience, as well.

Work Flexibility

Fewer millennials today believe in the 9-to-5 workday but prefer instead the flexibility to integrate their personal and professional lives. In an interview with Forbes, Chief Strategy Officer for the Intelligence Group Jamie Gutfreund stated that 88 percent of millennials consider how a potential job will cater to their work-life balance. While it may seem more challenging to provide scheduling flexibility in your dealership, there are a number of options that can work for your organization. Examples include running two shifts—9 a.m. to 3 p.m. and 3 p.m. to 9 p.m.—and perks such as giving every other weekend off.  Some innovative dealerships have even moved to a “four days on, three days off” format where sales associates work four ten-hour workdays.

Clear Job Titles and Descriptions

Job descriptions and position titles must be updated for the millennial audience, highlighting the aspects that will fulfill their wants and needs. Outside of salaries and benefits, millennials are looking for a job with a higher purpose—one that makes them feel fulfilled. As a result, they are interested in companies focused on helping solve problems in society.

In addition, because millennials are still relatively early on in their careers, they want job titles and responsibilities to outline the scope of the work clearly. They are interested in learning as much as they can to advance in their careers and want to know if a company is willing to invest in them through ongoing training and development programs.

Lastly, when placing job openings online, be sure to use concise keywords and descriptors that your target audience will most likely type into search engines when looking for open positions to help better connect you with ideal candidates.

Consistent Communication

In addition to clear communication of job responsibilities, millennials are interested in real-time feedback on the job. Because they appreciate knowing where they stand, along with the opportunity to consistently learn, maintain engagement with them by providing periodic, consistent check-ins as opposed to an annual review.

A Bigger Picture

As mentioned, millennials consider a number of factors from a potential position so as to feel fulfilled, maintain a work-life balance, continue career advancement and align with a company’s values. In exchange for their productivity and devotion, millennials are looking at what a company can offer them not just in monetary compensation, but how a job will fit into their overall life and society.

Once you’ve successfully recruited top talent, it becomes imperative that your dealership retains that employee. This is a particular challenge with the Gen Y employee. In fact, according to a recent 2016 Gallup report, 21 percent of millennials have changed jobs within the past year—more than three times the number of other generations. This turnover is estimated to cost the U.S. economy $30.5 billion annually.

One of the biggest complaints millennials have is a lack of opportunities to move their career paths forward. One explanation for this is a company’s preference to hire externally rather than promote from within. Hiring from within is more cost efficient and provides your millennial employees the chance to further engage with, and invest in, your company.

Tailoring recruitment strategies to attract top talent to your workforce, and providing them with ongoing opportunities for advancement and support, will help ensure your millennial employees will connect with your company and provide loyalty and dedication for years to come.

 

Permanent link to this article: http://blog.ncm20.com/2016/12/recruiting-strategies-to-attract-millennials/

Adam Robinson

How to Hire the Most Important Sales Role in Your Dealership: Service Advisors

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There is no question that a successful dealership has both skilled technicians and knowledgeable salespeople to maintain profit margins. But an oft-overlooked—and equally (or arguably even more) important—component is the service advisor.

When people take their cars to a dealership, the service advisor is the first face they see. The service advisor quarterbacks the entire service experience and serves as the critical link between the customer and the work. This dynamic means service advisors have a heavy influence on customer experience, which can either keep them coming back or drive them away.

While a basic understanding of how cars work is essential to helping the customer navigate their needs, communication skills are even more crucial in ensuring the customer has a positive experience and feels confident about the work and service your dealership provides. Critical conversations had between the advisor and customer include such topics as explaining invoices, deciphering warranty coverage, explaining necessary or suggested additional repairs and providing the customer with updates on the progress of the work. All these conversations require someone with good people skills as well as excellent car skills.

Here are the key elements I recommend to identify quality service advisor candidates and how to hire them.

Recognize the Traits of a Solid Service Advisor

As mentioned above, a service advisor is the first face your customer sees and the person with whom they communicate the most, if not exclusively, throughout their service experience. A good service advisor should possess the following traits:

Mechanical Knowledge and Ability to Articulate – Because the service advisor is the one to communicate with the customer from start to finish, it is important they understand the industry enough to be able to answer questions, suggest options and explain the process to a customer who may otherwise be unfamiliar with the work needed or performed. Additionally, the service advisor should be able to relay the information without overusing technical jargon, making it simple for every customer to follow and understand.
People Skills – The service advisor should have the ability to read and adapt to different customers’ communication preferences: some like a plethora of details while others prefer to be in and out. The service advisor must also possess good listening skills to clearly understand what the customer needs or wants and be able to relay that information correctly to the technicians doing the work.
Integrity – In addition to communicating information between customers and technicians, service advisors have a responsibility to provide the client with accurate information that is in their best interest, instead of using every interaction as an opportunity to upsell extra work. A service advisor with honesty and integrity will quickly earn the confidence of your customers, ensuring they look to your dealership as a trusted place of business, returning for additional needs and sending friends and family your way. Also, a good service advisor will provide updates or call customers back in a timely fashion, keeping them looped in every step of the way

Things to Consider When Hiring a Solid Service Advisor

Now that you know what to look for in a service advisor, there some factors to keep in mind when considering hiring one. For starters, consider how your dealership and employment brand will appeal to women candidates. Half of your customers are women, so having at least one female service advisor on staff will help you better connect with that demographic. Consider advertising the job with a title other than “service advisor,” so as to appeal to a larger number of applicants. Alternate titles can include customer service representative, service secretary or customer service associate. While technical knowledge is beneficial, you might consider advertising the position with “no experience required” to welcome applicants who have all the other necessary skills without potential bad habits that will require much more aggressive retraining to break. Lastly, consider the number of service advisors your dealership needs to meet demand to give your customers the full attention and service required.

Benefits of a Solid Service Advisor

Hiring the right individual for a service advisor position will yield lasting benefits, including an increase in repair order count, CSI and owner retention. It will also increase your technicians’ productivity, resulting in a boost of customer loyalty.

A service advisor typically touches a customer five times more than a sales person, making proper candidates for this position a crucial component for your dealership’s success. As new car sales are expected to plateau or decline next year, a stable of high-quality service advisors will keep your customers coming in for repairs and services. Preparing for 2017 means staffing up with skilled service advisors who can create a lasting, positive impact.

Thanks to NCM Associates’ content partner, Hireology, for sharing the guidance on employee referral programs. Learn more about Hireology. And join NCM’s experts for more actionable advice for hiring the best people for your team in our Hiring Top Talent and Success-Driven Pay Plans classes.

Permanent link to this article: http://blog.ncm20.com/2016/11/how-to-hire-the-most-important-sales-role-in-your-dealership-service-advisors/

Adam Robinson

3 Simple Steps to an Effective Employee Referral Program

Asian businessman making handshake with smiling face

Most business owners understand the importance of referrals when it comes to their customer base. According to a recent survey conducted by Harris Poll and Nielsen, 82 percent of Americans indicated they look for recommendations from friends and family members when they’re deciding on a purchase. Input happens organically, especially with big-ticket items like a vehicle when advice from trusted advisors is even more valuable.

Meanwhile, brands have tapped into the fact that incentives help facilitate the referral process. In fact, that same study found that 88 percent of American consumers said they would want to receive money, products or services, loyalty points and other reimbursements for promoting or referring a product over social media or email. By doing so, businesses can put themselves in a strong position to grow and generate new revenue through new customer acquisition.

Now, what does your employee referral program look like? As critical as new customers are for your dealership’s continued growth, your employees are equally important to your business’ sustained success.

An effective employee referral program allows you to tap into your talent and make them proxy recruiters. The foundational aspect of this approach to hiring is ensuring your existing employees are precisely aligned and identify with your company culture. In other words, they have the motivation to recommend a friend because they feel comfortable and appreciated at work and have a positive outlook of the business.

How to Build an Effective Employee Referral Program

Let’s assume your dealership’s company culture is in excellent condition, but your recruitment costs are exceeding what you had forecasted on a yearly basis—with average turnover rates for salespeople at 71 percent, this is a likely scenario.

With this in mind, here are three simple steps that will help you build a referral program that takes much of the headache out of recruiting:

1. Expectations

As you put your program policy down on paper, you have to begin with clearly defined objectives and expectations—both from an employer and employee’s perspective. As the business, you need to run an audit of your staffing needs and how to best optimize your referral program to bolster specific departments. Are there a few employees reaching retirement age in the sales or service departments? Has someone in billing and accounting recently relocated? Are you rebuilding your marketing team? Whatever your short- and long-term needs may be, these goals are critical to the strategic success of your referral program. If you’re already sitting on a large stack of high-quality resumes for salespeople, direct your referral efforts elsewhere.

At the same time, your employees need to know who qualifies as a referral. Can it be their high-school buddy? Should it be a former colleague? How about a friend or classmate from college? Can employees refer candidates who have already applied for a position? Another consideration for your referral program is who can recommend candidates. In many organizations, those at the highest levels—including vice president and above—or those directly involved in hiring decisions are restricted from making referrals.

2. Incentives

As mentioned above, participating in an employee referral program comes with the expectation of some reward. The extent to which you choose to compensate employees for their successful referrals may depend on the role. For instance, a management position may offer an incentive at a higher rate than an entry-level candidate. That’s up to the discretion of the dealership and how you assign value for each referral. However, having a consistent, documented incentive is a way to show your employees that you take the referral program seriously.

Another significant consideration with your incentives is timing. As an employer, it feels better to wait to reward the referring employee—especially monetarily—until the new hire proves themselves to be a successful member of the dealership staff. From an employee’s perspective, this sends a confusing mixed signal. On one hand, you trust their referral enough to hire the candidate; however, you don’t have confidence that the new hire will last. So, you withhold the reward until six to 12 months down the line. This policy produces a net loss in terms of employee engagement and culture. Consider a two-step process where you pay a portion of the financial incentive at the time of hire and deliver the remainder after the new employee proves themselves.

3. Process

If you truly want your employee referral program to get off the ground, you have to make it as simple and straightforward as possible. The fewer obstacles employees have to go through or around to make a referral, the better the results. If you want to take a bare bones approach, you can simply ask employees to email HR with a name and contact number for the referral. Or you may ask them to provide the candidate’s resume as well. Regardless, your employees aren’t the one applying for the open position, so avoid making the process that complicated.

No matter how simple you make the process of submitting referrals, an integral, ongoing step is consistent communication with staff. Make sure they know to whom they send referrals, and that they understand their role in the review process and the employment requirements through the onboarding stages—meaning some organizations require the referring employee to remain on staff throughout the first 30 days of employment. It’s also a smart idea to include a communication plan in the case you don’t hire the referral. If a candidate doesn’t meet the established requirements, you must clearly explain that so that your staff doesn’t perceive it as a slight against their recommendation.

What Employee Referrals Mean for Your Dealership

What would you think if you weren’t getting any customer referrals? Clearly, this is bad. One on hand, you likely have operational issues in one or more department that are keeping your clients from telling their friends and family to visit your dealership. On the other, you have to invest significantly more in other marketing channels that are an expense on your P&L sheet.

The same rules apply for your employee referral program. Forbes contributor Liz Ryan explained that if you’re not getting any referrals from your existing staff, it’s could signal a couple of issues:

  1. Your dealership’s culture is suffering. Your employees are telling you that they wouldn’t want their former colleagues and friends working at your dealership.
  2. Your existing referral program is filed away somewhere that hasn’t seen the light of day in the past 12 months. Nobody remembers this is even an option.

As a result, you have to increase your budget for job board advertisements and other recruitment channels to get the attention of prospective candidates. Either way, it’s not an ideal case.

An effective employee referral program doesn’t replace other recruitment strategies, but it certainly alleviates much of the strain—after you’ve put in the hard work to build a dealership culture where talented people want to work.

Thanks to NCM Associates’ partner, Hireology, for sharing the guidance on employee referral programs. Learn more about Hireology. And join NCM’s experts for more actionable advice for hiring the best people for your team in our Finding Top Talent and Success-Driven Pay Plan classes.

Permanent link to this article: http://blog.ncm20.com/2016/09/3-simple-steps-to-an-effective-employee-referral-program/

Adam Robinson

Recruitment Best Practices from DrivingSales’ Most Valuable Insight Competition

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Recently, Hireology was fortunate to speak and present at the DrivingSales Presidents Club 2016 event as a finalist for the Most Valuable Insight Awards. As a way to share our “most valuable insight,” Hireology presented the findings from an in-house study on how effective employment branding drives quality hires and improved store performance at dealerships. After conducting our research, we found something to be true across all retail automotive dealerships: employment brand matters.

Strong employment branding, when combined with a data-driven evaluation process, is one of the best investments a dealership can make. When dealerships build a strong employment brand and utilize procedures to manage the recruiting and hiring effort, the results are staggering.

How we did this study

(Short on time to read? Jump to the results and learn how to use them.)

While conducting our research, Hireology studied two control groups (for easy reference, I’ll refer to these as “Group A” and “Group B”). Group A consisted of a six-rooftop dealer group from the Mid-Atlantic region, and Group B was composed of a three-rooftop group located in the Midwest. Management teams were surveyed electronically, which covered their approach to employment branding and recruitment process as well as their results from such efforts.

Before diving into the results, let’s take a look at some of the industry-wide data related to human capital:

Therefore, we anticipated a correlation between the way dealerships present themselves as employers to today’s younger workforce online and the harmful effects of their staff turnover.

What we found: A branded career site yields better candidates

Our survey exposed numerous challenges facing the automotive industry when it comes to finding and hiring employees. Hireology discovered that there was a clear difference between utilizing job boards and a company career site when it comes to recruiting talent. Here are our results.

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Applicant conversion by source

We analyzed the rate at which inbound page traffic to Group A’s career page converted into candidate applications and found that conversion rates from organic traffic delivered as a result of a branded career site substantially over-performed the conversion rates generated from paid job board traffic:

  • 0.2% conversion rate from job boards
  • 11.5% conversion rate from organic traffic

Candidates by source

In this analysis, “candidate” is defined as someone who has applied for an open position via the career site and who has been deemed qualified at the first review so that a next step, such as an interview, is warranted. What Hireology found was that nearly 94% of candidates who applied for an open job were attributable to a paid job board, versus organic traffic due to a career site.

  • 6.1% career site
  • 93.8% job boards

Hires by source

Our analysis of Group A data showed that 77% of all hires resulted from organic traffic generated by the dealer’s career site versus job boards. This insight, when examined against conversion rate and candidate source data, shows that even though organic traffic attributable to a dealer career site generated just 6% of all candidate traffic, the career site cohort produced a whopping 77% of all hires. In other words, 6% of traffic generated 77% of hires.

  • 22.7% job boards
  • 77.3% career site

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Quality of hires by source

Our analysis defined “quality hire” as “a hire who was able to meet or exceed 75% of their states production or performance target.” In sales roles, this might be a monthly vehicle unit sales quota. When controlling for the candidate source, 75% of all “quality hires” originated from the candidate pool generated via organic career site traffic. Just 25% of Group A’s quality hires came from a paid job board.

  • 25% job boards
  • 75% career site

Turnover percentage by source

Most importantly, the results show that turnover rates diverge substantially based on the cohort. The new variable ops hires that originated from a candidate attributable to a branded career site turned over at a rate two-thirds less than the industry average.

  • 25% from Group A
  • 72% industry average

Group B (Three-rooftop control group—Midwest)

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For this second control group, we similarly analyzed the rate at which inbound page traffic to Group B’s career page converted into candidate applications. Hireology found that conversion rates from organic traffic delivered as a result of a branded career site substantially over-performed the conversion rates generated from paid job board traffic.

Applicant conversion by source

We examined the rate at which inbound page traffic to this dealership group’s career page converted into candidate applications and found that conversion rates from organic traffic delivered as a result of a branded career site significantly over-performed the conversion rates that came from paid job board traffic:

  • 1% came from job boards
  • 13% came from the dealership’s career site

Candidates by source

In this analysis of Group B data, we defined “candidate” as someone who has applied for an open position via the career site and is a qualified applicant warranting a next step, such as an interview. Hireology found that nearly 82% of candidates who applied for an open position were attributable to a paid job board, compared with organic traffic due to a career site.

  • 82% job boards
  • 18% career site

Hires by source

Our analysis of the data showed that 71% of all hires resulted from organic traffic generated by the dealer’s career site versus job boards. When evaluated along with conversion rate and candidate source data, we concluded that even though organic traffic attributable to a dealer career site generated just 18% of all candidate traffic, this cohort produced a whopping 71% of all hires made. In other words, 18% of traffic generated 71% of hires.

  • 29% job boards
  • 71% career site

6

As previously mentioned, Hireology defined “quality hire” as “a hire who was able to meet or exceed 75% of their states production or performance target.” When controlling for the candidate source, 70% of all “quality hires” came from the candidate pool generated via organic career site traffic; only 30% of quality hires resulted from a paid job board.

  • 30% job boards
  • 70% career site

Turnover percentage by source

What’s essential here is that the results show that turnover rates deviate significantly based on the cohort. The new variable ops hires that came from a candidate attributable to a branded career site turned over at a rate that’s nearly 50 percent less than the industry average.

  • 21% from Group B
  • 70% industry average

A branded career site for improves hiring and turnover

So, what’s the value in having a branded career site for your dealership? Here are four things to consider:

  1. Organic applicant traffic and process is over 5x more cost-effective
    1. Organic cost-per-hire: $245
    2. Third-party sources cost-per-hire: $1,700
  2. Organic applicant traffic and process yields the majority of hires—20% of the traffic yields 80% of the hires
  3. Hires sourced this way are 2.5x more likely to be an A or B player
  4. Hires sources this way have higher retention rates—
    1. 27% versus 67% industry average

Key takeaways for dealers

Retail automotive dealers who want to build better teams and reduce turnover should invest in employment branding and adopt a data-driven hiring process. The financial benefits of such an approach far surpass nearly all potential operational improvements through which dealers can generate a return on investment.

Assuming your dealership has 55 employees (the average) and a turnover of 67% per year, turnover is costing you nearly $600,000 per year, every year.

                        37 turns (67% x 55) @ $16,000 cost-per-turnover ea.  = $592,000

Based on our study, dealerships can anticipate dramatic changes in turnover after adopting a structured hiring process and creating a branded career site. As soon as you produce a turnover rate similar to the cases studies discussed above (i.e., 25%), your dealership turnover calculation would improve:

                        14 turns (25% x 55) @ $16,000 cost-per-turnover ea. = $224,000

That’s a profit add-back of $368,000 per store per year. Dealers are hard-pressed to figure out a more straightforward way to generate a higher return in this amount of time.

The bottom line is that dealers must take charge of the hiring challenge by taking control of the recruitment process. Strong employment branding, when combined with a data-driven evaluation process, is one of the best investments a dealership can make.

If you’re not already taking this approach, it might be time to reconsider the way your dealership hires employees because your employment brand most definitely matters.

Special thanks to NCM Associates’ partner, Hireology, for sharing the results of their study. Learn more about Hireology.

Permanent link to this article: http://blog.ncm20.com/2016/05/recruitment-best-practices-from-drivingsales-most-valuable-insight-competition/

Adam Robinson

The Three Components of a Strong Employment Brand

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Auto retailers spend a fortune building their consumer brand. In the hyper- competitive world we live in, your local brand is one of the most valuable assets you control. A strong brand establishes the credibility, good will, and trust that buyers want when purchasing a car.

But what about your employment brand?

Your brand as an employer really matters. It’s the way that your local market’s talent pool perceives your organization as a potential employer. And make no mistake, you’re competing with other businesses for the best talent to staff your stores. Just like a strong consumer brand, a strong employment brand can differentiate you from the dealer down the street, and land you the best candidates. A weak or nonexistent employment brand all but ensures that you’ll be interviewing your competitors’ cast-offs.

The best demonstration of your employment brand is your career website. It’s a well-established fact that consumers are shopping online for hours before raising their hand and asking you for information about a particular vehicle. But did you realize that these same consumers are doing the exact same thing when considering whether or not to apply to your open job?

You’ve invested time and money getting your dealer site to a point where it’s producing leads, and your career site needs the same attention to detail to attract great job candidates. In addition to impacting applicant quality, your career site has real financial consequences. Chances are that you’re spending a lot of money on job boards and employment ads, but you can’t recoup that investment if you’re not directing those leads to a strong career site that speaks to your candidate pool.

To see an example of what I’m talking about, Schomp Automotive out of Denver, Colorado absolutely nails it. Check out one of the best career sites in the industry at http://careers.schomp.com. (Full disclosure: they’re a Hireology customer)

Here’s a fun exercise: open up a new tab in your internet browser and bring up your dealership’s website. Now, find the section of your site where a job candidate would research your business and apply for a job and ask yourself how your employment brand stacks up against these three critical success factors:

Can I easily submit an application?

Think about your digital marketing programs that are focused on your market’s consumer base. How much information do you ask of them in order for them to submit a lead? Pretty much a name and email address, I’m guessing? And you know the reason why: the more fields on a leads form, the fewer leads you get.

 

It’s no different with online job applications. The experience is everything. If you’re asking applicants to give you their name and email address along with a resume, then you’re in good shape. If you’re asking your applicants to completely re-create their resume on an online web form with dozens of fields, then you’re making it much, much harder to apply for the job than it needs to be.

Our research shows a nearly linear correlation between fields on an online job application and the conversation rate of traffic to form submissions. We strongly recommend keeping online job applications to 8 fields or less. Like car buyer leads, the point is to generate interest and make contact; if you’re running an effective interview process you’ll have plenty of opportunity to fully vet candidates.

Does it work on a mobile phone?

You know that you’re really missing the boat if your consumer site doesn’t render well on a mobile device, but did you realize that in 2015, 50% of all candidate traffic in the US and Canada originated on a mobile device?

That means that if a candidate can’t open your careers page on a mobile phone, you’re throwing away half of your applicant traffic, drastically restricting your access to the strongest candidates in your local job market, not to mention wasting half of your investment in recruiting.

Go ahead, try researching jobs at your store from your phone. How’s the experience? Ask yourself: if I were looking for a job, does my dealership make this experience a good one? If the answer is anything other than “yes,” you’ve got work to do.

Does it tell a compelling story?

The labor market is as tight as it’s been in a decade, and you no longer have the luxury of being undisciplined when it comes to attracting the best talent. Job seekers, especially the 50% of the workforce that’s made up of GenY, want to work for an employer that provides a great working environment and a defined career path.

A career site is more than a listing of open jobs – it needs to build excitement and reflect your company’s history, culture, community involvement, and employee quality of life. Ask yourself: does your career site explain the professional growth potential for a new employee? Does it tell the story of who you are and what you stand for?  Does it give me a compelling reason to want to work for you?

With these best practices in mind, take another look at the Schomp site from earlier. Take note of how they’ve built a site that supports any device, streamlines the application process, and has mastered the art of telling their own story. The site clearly shows potential applicants all the reasons why Schomp is an employer of choice. If I’m shopping for a job, Schomp presents a compelling case for why they deserve my time and attention.

It’s time for dealers to treat their employment brand with the same level of rigor and quality control that they do their consumer brand. In these increasingly competitive and uncertain times, the difference between your success or failure may very well rest on your ability to hire and retain great people. Great people want to work for great companies; make sure that your employment brand meets today’s standards.

Permanent link to this article: http://blog.ncm20.com/2016/02/the-three-components-of-a-strong-employment-brand/