When Chris Roberts first joined Thurlby he was aware that probably three quarters of the staff were against him from the off.
Sites: Three Vauxhall dealerships one Ford service centre
As a rule of thumb, Roberts looks to lose a third of the staff within 18 months. As he puts it: “People don’t like change and some just won’t come to the party even if you try to make things better.”
After joining in May 2006 as managing director, Roberts has completely restructured the business. The previous management team were passionate about sales, but didn’t have the right structures in place to look after a three site group situation.
Roberts said: “Owner drivers are great on one site because they can see and touch everything but once sites are added to it focus can be lost.
“Retailers can lose control because they haven’t got controls in place to take care of the satellite sites they’ve acquired.”
Previously, Thurlby’s core site in Alford was keeping the best stock for itself and blaming its two satellite sites in Boston and Louth for problems in the business.
Roberts said: “We’re a group and we act as a group – not in the sense like a PLC, but you have to have some sort of controls in place so you’re working as a team rather than against each other.”
Leading the business through crisis
Helping businesses in crisis is something Roberts had been doing since the early nineties, working as a self employed management consultant before becoming a business development manager for 80 Vauxhall dealerships and then network development manager for General Motors UK.
Roberts said: “I didn’t want to end up in Luton with GM because I enjoyed the diversity in getting involved with different areas of the business.
“It was a big decision for me, but it was a challenge I was looking forward to. The move was made easier because I had come from retail on the dealer development side anyway. I think if I had just come from the manufacturer side of things alone, it would quite simply fried my brain.”
Below the owner, there was only a sales director and senior sales manager across Thurlby’s three businesses and according to Roberts, the aftersales department was never seen as a profit centre.
Roberts brought in managers for every department including a group finance manager and group human resources director.
Staff levels were reduced from 106 across the three sites to 75 over the last three years.
He said: “We tried to sweat our assets in terms of resource, staff and buildings.
“We’re managing the business by the week, by the month and by the quarter, taking it a chunk at a time. We’re trying to keep cash under control, keep the stock profile right, measuring and tracking debtors.”
Management teams are targeted on margins, ratios as opposed to unit performance only.
Roberts said: “We’ve done 130% of target nine quarters out of the last 12. So we do a fairly good job for Vauxhall and market share wise we’re probably at about 15 to 16%. Vauxhall really do have an interest in making their dealers successful and I would say that’s more the case than with any other manufacturer I’ve worked with. They understand that without a dealer network that is profitable, you’re going nowhere. I think some manufacturers are a bit blind to that.”
Thurlby is expected to post a “small profit” this year and Roberts believes that in his bank’s view (Lloyds), anything better than break even is going to be a fair year for anybody.
Roberts said: “The three years here have been wearing on me at times. If you’ve got half the team on side and capable it can make you coming in and changing things a lot easier. But when I started not even a quarter of the team were willing get on board with what I wanted to do.
“We’re now at a stage where the whole team are highly skilled and working together to progress the business.”
Empower your managers
Roberts wanted a management team that was put in place to be all functioning, so not only would they have autonomy in their own departments, but also be able to step into other people’s shoes under one vision as a group.
He said: “Empower your managers to say, this is your business within our business.”
The previous management team didn’t have management meetings, but now the teams meet once a month.
Roberts said one of the key things about the meetings is transparency with the numbers.
He said: “You’re not going to fix the business yourself. If your staff can’t see the big jigsaw and can’t see how their piece fits in you won’t be able fix your business.”
It’s this transparency which Roberts thinks is so important to the smooth running of a group. All managers are clued up about the situation of the group’s overdraft and how much each department is making.
He said: “The managers had never been asked to look at a set of accounts before I turned up, so it was a case of educating them and highlighting six to eight KPIs that you want to measure every month with them.
“Rather than drown them in numbers, just focus on the key numbers that matter to the business that have the biggest influence on them.”
Roberts does one on one and group sessions to help all line managers get to grips with the figures. Each manager now has an understanding of their accounts and the fact that small changes can have a significant impact on the bottom line.
He said: “You must create a short set of action plans for the manager and the employee. I’ve been in many meetings where everyone’s had a good old chat but no one comes out with a piece of paper that you can work through in the month and then compare against the next month you meet up. Unless the actions you’ve set out are happening, you won’t make any progress.”
Roberts wants each of his managers to be mentors and coaches to each member of staff.
He said: “Management is many facets, it’s not just hitting people with a stick.”
Thurlby Pay structure
All pay structures were reviewed and changed so that each person within the business is paid from the bottom line. Previously, staff were paid from gross profit which meant staff took no vested interest in how much expense there was in their own department.
Bonus systems have been changed and the sales management team have a basic and a departmental base commission.
A pot of bonus is allocated for the year and then Thurlby will pay it on budget achievements each month. So if it budgeted for a loss making month, employees can still earn bonus if they hit the budget number. This takes away the “feast and famine” approach.
The sales team are on a stepped commission with a flat payment for new cars, but on used they can get 7% commission peaking at 15% if they sell 30 units in a month.
Roberts said: “We don’t carry people, we’ve got a lean staff number and we expect everyone within that number to fit the job and perform.”
When Roberts first joined there were 17 different salary grades on in the servicing department, with differences between wages of £10,000 for people trained at the same level.
All jobs were evaluated by a team of three service managers from each site and one nominated person from each team of technicians to come up with their own pay structure.
There are now four bands of pay from apprentice to workshop controller so there is consistency across the team. Employees have to train to move up the pay bands and it also encourages a career path to follow.
Roberts admits there was a big push back at first.
He said: “It was fairly unpalatable for some people because some gained and some lost, but they understood that unless they were at a skill level that warranted that pay, they didn’t deserve it, likewise for the people that were at the right skill levels and did deserve it.
“It’s been tough and it’s not over now. I think over the three years I’ve been here trust has been gained because I’ve followed through on what I said in the start. But it has been a long haul and there’s no shortcut to get to this point.”
Address the problems
The first thing Roberts advises to do when looking at a new business is approach the it as if you’d never seen it before.
He said: “Back when I was a consultant, I would go into the town the dealership was in, but not ask where they were based and just see how easy they were to find and what your first impressions are when you drive up and enter the site.”
Address the balance sheet. Where’s the cash sitting at the moment? Is there enough equity in the business to start with?
Roberts said: “Too often I’ve found that it’s the basics where businesses are failing.
“You have to be honest with yourself when you’re looking at your balance sheet and put yourself in the position of the bank. After looking at this balance sheet, would I lend to this business?”
Used stock controls
When Roberts first joined Thurlby, it probably had overage stock at about 40% and the buying cycle was to get 30 to 40 vehicles at a time, the salesmen would then go after those cars aggressively but would only sell 25 or 30 and then they’d buy another 40.
The problem was that the 10 left from the first batch of vehicles got older and older.
“Sit on a car for 180 days and you’re going to blow £2,000 to £3,000 and that’s a hard message to get across. If you haven’t retailed out of the car in 90 days what’s going to change?” said Roberts.
Roberts has reduced used car stock from 330 units down to 250 or below at anyone time across the business. Overage stock has now been brought down to 15% or less which includes courtesy cars.
Thurlby looks at stock turn by unit and only ever buys six units of the same type, two for each of its three dealerships.
Prospecting has been pushed across Thurlby’s three sites and since October last year all the sales teams have been prospecting religiously.
All deals are pre-stacked.
Roberts said: “The hardest lesson has been to teach the teams to look at the current vehicle a customer has, see when it was last in at the business using the DMS, see if it was serviced, check the mileage and how much are they paying on finance per month if they have it. It could be that we could get payments below what they’re paying at the moment and get them into a nearly new car.
“The key thing is that you’re going to them with something that can save the customer money and you’re only trying to get an appointment at that point, not a sale. Just get them in the door.”
In December 2007 Thurlby sold 42 used cars and because of the new prospecting measures across the business, used volumes almost doubled to 82 used car sales in December 2008 and his continued through into March.
Thurlby shifted 200 units new and used in January this year and Roberts puts this down to sheer ‘sweat and toil’.
He said: “We’re simply not letting the salesmen get away with not following up on leads, measuring test drives and appointments.”
The new management team on sales were all recruited from inside the business and Roberts is very keen on promoting young people and giving them the opportunity to prove their worth.
Roberts was a foreman at 19 and service manager by 20 and believes age is not an issue, just common sense.
He said: “I get involved with every interview at the business because I want to see if their personality fits and if they have a common sense approach to the business.
Each member of staff has two interviews, the first being a ‘getting to know you sessions’ and the second is what Roberts calls ‘road testing’ which allows potential staff to describe how they have handled themselves in past situations.
Roberts described the previous recruitment process as “if he’s a nice bloke, let’s take him on”.