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Tag Archive: processes

Rick Wegley

Wagging the Dog: Don’t let a 5% problem ruin everything

Over the last several years, I’ve visited hundreds of dealerships. And, while performing operational assessments, I discovered that the majority of the headaches plaguing the culture and profitability of my clients were self-inflicted.

The problem with too much regulation

Intending to control unique and infrequent variables—and keep them from disrupting their daily routine—I found managers who kept adding steps and reducing employee empowerment. They chose this approach in lieu of defining the structure of the fundamental process, then documenting and training employees on it.

You can map out only so many scenarios. No matter what, unpredictable and uncontrollable variables will appear in nearly every customer service or sales environment.

Ultimately, managers created hurdles that made their jobs easier. But these limitations severely curtailed their employees’ ability to meet objectives and take care of customers. Most importantly, they completely changed their overall process in an attempt to manage the 5% of unique variables we call exceptions within their business model—and, in doing so, negatively impacted the 95% majority of the customers. Worse, they even created culture problems within the store!

Variables are unavoidable

So many processes changed. And, yet, these managers still were unable to avoid the unpredictable and uncontrollable variables that come with doing business.

By trying to control everything, most created new problems along the way. Now, they spend an inordinate amount of time and resources trying to manage a department with ineffective processes for handling the majority of their day to day operations.

Employee morale is low. Customer satisfaction suffers. And the department isn’t meeting its objectives. There’s pressure from above to “right the ship,” and these managers are unable to identify the root cause of a growing problem.

Manage by the RIGHT numbers

You should definitely manage by the numbers, but make sure you’re using the right ones.

Take a good look at your current structure and re-evaluate your current processes— simplify wherever possible. Involve your employees. And solicit feedback from both them and your customers on what is working well and what they feel needs improvement.

Once you have simplified and streamlined your processes, put them in writing. Hold meetings with all of your employees and make sure they all understand the revised processes. Provide the necessary training and resources for employee success. Definitely let them know what the empowerment guidelines are and the accountability aspect for each individual role. And clearly explain the minimum acceptable standards for performance.

Don’t forget the “why” part of this equation when discussing any changes with your employees. Discuss some contingency plans you have considered for the exceptions, and then review the empowerment tools that you have provided for them to use. Give examples of how and when they should be used.

The 5% goal

Manage 95% of your business by process, and then manage the 5% of exceptions. Once a clearly structured business model is in place, a manager should need no more than 5% of their time managing unpredictable and infrequent variables. This ideal state requires simple, defined processes (in writing) to manage the majority of predictable and measurable daily activities that contribute to profitability and customer satisfaction.

Is the tail wagging the dog at your store? If so, take a good look at your current structure and re-evaluate your processes. Chances are 95% of your problems are self-inflicted.

Tell us how you manage exceptions in your business? Is it a 95/5 mix or something different? Comment below with details. 

Permanent link to this article: http://blog.ncm20.com/2015/09/wagging-the-dog-dont-let-a-5-problem-ruin-everything/

Lee Michaelson

Process Disappearance

Lee Michaelson is an NCM Associates Retail Operations Consulting coach specializing in total dealership operations process and profit improvement and one-day departmental evaluations to identify and correct process evaporation. To reach Lee, email lmichaelson@ncm20.com or call 910.713.3623.


checklist

Now is the time for a process checkup in every department. Over a period of time many of the processes that we installed and we think are in place have somehow disappeared and are no longer utilized. We often times do not discover this until an out-of-line condition appears on the financial statement, a customer complaint is received, or general productivity declines and then we discover too late that many of the great processes we implemented are no longer in place or have been modified. The modifications or elimination of processes usually comes from a new manager or a feeling of, “we did it so well we do not have to do it any longer.”

This is a great time of year to review the processes you implemented and you think are being followed. It is possible a process has been modified over time, possibly for the better, but it may no longer be serving its original intent. Employees will sometimes just go through the motions of following the process, not accomplishing the intended goal. The beginning of the year is a great time to verify the established processes are being followed or modified as appropriate, and establish new processes where applicable. Here’s an example of classic “process evaporation”:

Have you ever called a dealership and the person answering the phone speaks so fast and has shortened the name of the dealership to “ABC,” that you don’t know if you are calling ABC Motors or ABC Lumber Yard? What happened to the professional first impression we thought was implemented? Instead of a polite, eloquent greeting that was the original intent of the process and the script we provided, the process was modified. In this case it is often because somebody decided the telephone receptionist wasn’t busy enough so it was decided to give her more responsibility while she is “just sitting there answering the phone.”

Many dealerships have direct dial phone numbers to each department or person in the dealership. Have we given each individual a process and training on answering the telephone? Try it – call your Parts department. If the phone is answered in any manner other than, the famous mumbled, “Parts Hold,” consider yourself lucky. Many dealerships have the sales staff provide their mobile phone number on their business card. What is the process for answering those phone calls and what does the voicemail message sound like on an employee’s personal phone that she is providing to the dealership customers?

Emails and instant messaging dominate communication today, but the phone in a car dealership must also be viewed as the face of the dealership and requires politeness and professionalism.

Below is a checklist of a few thought-starter processes from each department. Review it and determine if each process is still in place or if it has been modified. There are many processes in each department; add your own to the list and do a comprehensive, objective evaluation.

Still in Place               Modified

New Vehicle Department

  • 100% Management T.O.
  • Introduction of new customers to Service
  • Introduction of new customers to Body Shop
  • Consistent training of sales staff

Used Vehicle Department

  • Two managers appraise every trade
  • Appraisal forms fully completed
  • Usage of the OEM merchandising materials
  • Reconditioning completed in 3 days

F&I Department

  • Interview the customers
  • 100% menu presentation
  • Declined products acknowledged by customer
  • Chargebacks verified for accuracy

Business Development Center

  • Follow up incoming sales calls
  • Follow up internet leads
  • Follow up unsold prospects from the CRM
  • Follow up service customers

Service Department

  • History preprinted on every repair orders
  • Walk around every vehicle during write-up
  • Multi-point inspection on every vehicle
  • Menu presentation on every vehicle

Parts Department

  • Track lost sales
  • Good, Better, Best display of common maintenance items
  • Daily review of exception report
  • Price matrix utilization

Body Shop

  • Complete, accurate estimates
  • Supplements accounted for properly
  • Work paid to techs equals work completed
  • Appropriate approval or money prior to vehicle release

Administrative

  • Accounts receivable review
  • Bank statement reconciliation
  • Incoming mail process
  • Statements and supplements submitted to NCM timely

Add your own processes to the list in each department and review your dealership operation to determine what you absolutely have to fix immediately for improved profit performance in 2014.

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Permanent link to this article: http://blog.ncm20.com/2014/01/process-disappearance/