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Fighting Words... Pay Plan.


If there were ever two words in this business that ever provoke a more heated debate than these two I am not aware of them. With the UAW strike effecting the Big Three these words have once again hit the forefront of conversation. Does the upper management make too much and are the workers unfairly compensated.


This also trickles down to the dealerships. Do the Stakeholders get unfairly enriched when the people on the floor often have to sign for their supper.

This is a deep rooted problem and personally I do not think there is a easy solution. To understand it we need to delve deep into the operations of the dealership. How it makes money and who are responsible. What the mindset it and how its still in most case scenarios looked upon as a car lot and not a business.


"HE WHO HOLDS THE GOLD MAKES THE RULES" 


This comes from the ancient days where the Rulers held the gold and the peasants around them followed them to earn. If they wanted to earn they abided by the rules set by the Rulers. It's far from the Golden Rule of "Do unto others as you would have them do unto you." Understanding this is important, the former is an autocracy where as the latter is more collectivism. 


Dealership operate as Autocracies.


Understanding this, that individual, the main stakeholder typically is the one who put everything in the line for the dealership. Mortgaged everything so the lights could burn brightly, parts would be on the shelves and most importantly you'd be paid when Friday came around. You didn't care if they made money, you only cared if you could cash your check and pay your bills. It was not your problem or issues if they made money.


Now think of it another way.


You signed on to the position for an agreed amount of earnings be it; hourly, salary, commision, or any combination of them. You might add bonuses and incentives in there as well. This is YOUR compensation agreement. Times are bad you EXPECT that to be paid regardless of the reason. Why because you signed an agreement. If times are good, and the stakeholder is getting a little relief and STILL paying you... 


Do you think it's fair to want or ask for more? Is that just greed or is it justified? You are not cutting back in rough times but you want rewarded in good times as well. So there's something to think about as we move on.


As I said earlier we operate as the Car Lot not the Car Business. Why do I say this?

It's easy, we live in a churn and burn, transactional, instant gratification world. Dealers and OEMs look to twelve individual thirty day cycles, each not beginning until the last is over. Collectively they are our targets and we are measured by them specifically. We pass this down to our teams and they pass it along to our customers. It's not about what is best for the customer, dealer or team member, it's about how do we reach that damn target every month. 


To do this we take what we can get in the forms of personnel, onboarding is non-existent and pay plans favor the house. Yet, we expect them not only to flourish and earn, but to remain loyal and committed to the dealership. We don't see turnover as a cost but as a necessary evil. And as cyclical as the business is we accept all these ebbs and flows as part of doing business in retail automotive.


WHY???


Simply... The is no other business out there like ours. Where anyone can earn a six figure income with a little effort and tenacity. A business where there is no limit to how high you can climb the corporate ladder regardless of background or education. Get in a the right moment and brand, you can fast track easily, wrong and you'll be out the door faster than that customer who offered 10k under cost. 

So we look at incomes and positions...


Greeters make less than Sales, Sales less than Managers, Managers, less than GMs... You get the jist. If that is the case, the Stakeholder has to design a plan that is accomodating. Most choose straight performance until times like the last few years when gross profits were huge and costs were down. Nothing strikes fear into a Stakeholders eyes like writing big checks. I know it sounds stupid but think what happens when the ability to earn those big checks is gone... So is the staff. 

Boom - Turnover rears its ugly head and along with it come costs.


This means the intelligent Stakeholder needs to watch their plan and make sure its balanced. But how do you do it in times of high profits? You need to be progressive before it happens or change it as quickly as possible. 


Today, I was on #AutoHubShow and Podcast. Helping The Industry One Show At a Time and we were discussing this specifically. Sharing the screen with me were Doug ReevesJohn LatkaDon Graff and Gail Rubinstein along with our hosts 🚘 Ian Nethercott MBA, BSc and Jeff Polo. As the the debate got more vibrant, it became more visible we need to change. All of us agreed, a stable livable income should be a guarantee, that it should be customer centric, promote long term retention, be data and performance driven with set accountable standards. Efforts should be rewarded as well as results with transparency being a major factor when developing trust from both the consumer and salesperson.


Is this possible, we would like to think it is. We've seen it operate at dealerships with success. It both designable and amendable for markets and tenure. But first we need to change the mindset. To make this work, that is absolutely imperative. Once we have buy-in, we can move to the next levels and introduce the platform.


We have it and its easily white labeled to meet your needs. 


From the dealers out there that operate under these conditions, see higher CX, greater retention, lower turnover, better employee engagement and improved productivity. This is where are business is heading and we can help with the right Pay Plan for your individual dealership.

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