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Analysis: Understand your workforce

How much does it cost to replace a sales executive? £15,000. Think about it: advertisement costs, time to interview and train, lost revenue. And, on average, how many sales executives do dealers replace a year? Almost a third of the workforce (29%).

With figures like these, dealers need to start addressing the reasons why staff stay, or leave, a business – and that’s exactly what people consultant Rts has been investigating.

Backed by the Institute of the Motor Industry, Rts surveyed five dealers, including two AM100 top five businesses and another two top 25 groups. The research comprises 50 dealerships and 2,000 employees, 80% male, across 17 franchises. And it made some surprising discoveries.

For one thing, the survey appeared to contradict the common belief that staff retention and satisfaction is not about salaries – that while wage might be a trigger, it’s not the underlying reason why someone leaves a business. Not so, say staff.

More than half (51%) claim pay is the main reason why they would stay with a company, the principal cause of their job satisfaction. A distant second is job security, stated by 15%, followed by training and development (7%), team spirit (6%), and suitable job role (4%).

Is this finding a short-term blip caused by the current economic climate, or a reflection of a consumer culture that encourages profligacy and, therefore, higher earnings? “The survey was taken against a backdrop of high debt, falling housing market and more uncertainty, so that perhaps explains why pay has come out so high,” says Richard Wells, Rts managing director.

“However, you can’t always change pay so it’s important to focus on all the other elements which you can influence.”

Dig deeper and it’s apparent that dealer principals cannot afford to make sweeping judgments about their staff. The research shows that employees are different; they have unique needs, desires and fears depending on gender, age and job title.

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Pay is most important for 58% of 16-29-year-olds, but only 40% of people more than 50 years old. For them, job security becomes an issue, stated in 21% of cases. Other concerns become apparent for the first time for the over 50s, such as convenient location (4%), holidays (3%) and benefits (2%). The home/work life balance clearly becomes more important as people get older.

Priorities also change when staff become managers. Top motivational factor for managers is job security, rated by 31%, with 26% plumping for pay and 10% recognition. However, when asked their view about staff motivation, most managers reiterated their own opinions, showing a lack of understanding about their employees’ needs.

That’s hardly surprising. Many of the dealers surveyed by Rts didn’t know their staff attrition rates, and only one dealership set retention targets. Researchers were also shocked by the lack of exit interviews. “If you don’t know why staff have left, how can you address any issues,” says Wells.

The survey also reveals a lack of clarity over pay and recognition, which Diane Pocock, Lookers HR manager, believes explains why recognition barely registers as a factor. “Recognition in the motor industry is often given by bonuses, particularly for sales staff,” she says. “If they are lumping this in with pay, that might explain why recognition is so low down.”

The impact of high staff turnover goes far beyond the cost of recruiting a replacement. It also affects employee morale, customer service, brand knowledge, sales and profitability.

Alison Mitchell, Rts solutions specialist, believes retailers should focus on six key areas to improve their retention levels: communication, pay, training and development, work-life balance, working conditions and diversity of its staff.

“What managers thought is a priority is wrong – they need to understand their staff better,” she says. “Pay is becoming a dominant theme. It’s usually second or third on the list and I’ve never seen it as high as this. Managers should focus on fairness of pay but they should address the other key motivators.”

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Mitchell urges dealers to ensure their pay is in line with market rates, and that it is transparent. She also questions the focus on bonuses. “Perhaps the industry places too much emphasis on bonus as a form of recognition,” she adds.

And she adds a final thought: “Some attrition is healthy. It’s desirable to allow fresh blood into the organization and open up career opportunities for existing staff.”

How much losing your staff costs:

  • Sales executive £15,000
  • Manager £14,000
  • Administrator £11,000
  • Technician £10,000

    Seven golden rules for retention:

  • Measure staff turnover
  • Recruit the right people in the first place
  • Be realistic about the organization
  • Benchmark
  • Ask and listen to answers
  • Communicate all the time
  • Recognize that there are external factors that affect turnover

    Case study

    Reg Vardy gets results

    Reg Vardy Citroën in York was suffering from a 90% staff turnover rate across all departments over the 12-month period to September 2004.

    It needed addressing. Andy Aird, general manager, identified the key issues as blame culture, departmental rivalry, remuneration, ineffective leadership, lack of process and procedure, morale, communication and customer concerns.

    “We felt we needed to be honest with staff, so we confronted them in a constructive way,” says Aird. “We had to park all egos and deal with denial. Afterwards everyone breathed a sigh of relief that the issues were being tackled.”

    An action plan was implemented. Pay plans were standardized and an infrastructure for sustainability, involving training, succession planning, personal development, social activity, recognition and regular communication, was established.

    The result? Staff turnover has already fallen to 60%, and Aird predicts this will further halve this year.

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