The chief executive of the Institute of the Motor Industry talks about leadership skills, sector innovation and his organisation’s role in ensuring automotive retail is an aspirational career path.
What are the prospects for the retail car market in 2014?
The forecasters at the beginning of the year have said “good, with relatively flat growth”, but in truth, inflation’s down, growth predictions for the total economy are strong and getting stronger, so I don’t see any reason why the market shouldn’t be strong again. We saw one or two manufacturers growing registrations by 15% or so, and maybe that will flatten off a little bit, but in general, a positive year.
What are the main risk factors that could throw the market off course?
Everybody hones in on the fact that our sector is very finance-led, but actually, I don’t see that as an issue. It is a strength, not a weakness. It’s one of the reasons why the UK market recovered quicker than some of the other European markets: our dealers do that job better.
So, I don’t see any major inherent weaknesses. Concern has been voiced that down the line we’re going to have a lot of two and three-year-old used cars coming back.
But it’s not as if that hasn’t been planned for; we’ve been here before and we do understand that, so I think we have to give the manufacturers and their dealer groups credit for knowing that they’re going to have to deal it. And that pre-supposes that the demand won’t be there for those cars, and I think that can be created.
Are you seeing signs of any particular innovation within dealer groups, or the franchise model, or the relationship between manufacturers and dealers?
I think innovation is being sought. People believe the retail model can be improved, somewhat, particularly in terms of the way we interface with customers on the sales side.
We’ve seen some evidence of that with people looking at ‘product genius’-type models (see BMW).
I think you can look at individual dealers and individual businesses where they’ve got some very innovative approaches in terms of the way they use digital media, the way that they interface with customers. But in terms of somebody completely shaking the box, turning the model on its head, I think we’re yet to see that.
Are there examples anywhere in the world where they are doing things remarkably different to us, that we should be observing or aware of? Has anyone turned it on its head?
I don’t think that anybody’s completely turned the model on its head in our industry. What we’ve tended to do is look outside of it. The product genius model, I guess, is a direct lift from Apple, and so I think it’s creditable that people are at least making the effort to go and look at how other retail operations are working, and seeing what we can learn from that.
It’s funny, because for as long as I’ve been in the industry, people have been saying ‘the model’s ripe for change’. It’s a model that most of us think is not perfect, but it’s very robust because it’s still here, and it’s still largely working, isn’t it?
Is the way that we pay staff within dealerships, particularly the low basic, with rewards based on performance for sales staff, the best we can offer. Do you think that is the best that we can do for the industry?
There’s an inherent danger in pay models; if you rely on a pay model to do everything for you, you put people into a very tightly controlled box around which they kind of touch electric fences if they do all the wrong things. In sales and aftersales pay and reward and bonus schemes can only go so far. They can’t, ultimately, replace leadership and management. I think that the best-run businesses don’t rely on the pay model. The best-run businesses are the ones that are very well-led.
What defines a good leader in this business? So, whatever level, so particularly at, say, showroom level, what should dealer groups be looking for in their ideal team leaders?
A good team leader is somebody who engages their staff across the board in supporting each other for a common goal. The last thing you want in a sales team, is a bunch of guys who are working for themselves, because ultimately that’s not going to deliver a consistent result, or customer experience.
Some of the best businesses I’ve experienced over the years, have all parts supporting every other part. These are the kind of businesses where they’re not going to be having a sales meeting while the guys on service reception are absolutely snowed under; they’ll be out there helping because they understand that they’re going to be talking to customers who ultimately want to buy cars. And vice versa – the same thing would apply if the sales guys were pushed.
Can that behaviour or attitude be taught?
The most important thing a leader does is set the culture in a business, and that’s something that, hitherto, has been a bit hit or miss. As an industry we tend to promote people on their – and I use the term broadly – technical abilities.
Your best salesman becomes your sales manager. And it’s only really when we get people in a position of broad authority that we learn whether they have any leadership skills or not. And invariably, that’s too late.
It’s very difficult for people, in an industry like ours where you tend to be recognised for your technical and your specialist knowledge and abilities, and then you get to a general management role and actually, to a large extent, you need to let go of a lot of that and understand you’re managing experts, not being an expert. Your job is to actually to create the culture and make sure that you have a balanced business.
A number of AM Awards' entries refered to bringing in people from outside the industry for new talent, implying there isn’t the home-grown talent and that we have to go outside of the industry to get the best for the industry. How does it make you feel about the future of the networks?
One of the strengths of our industry is also one of its weaknesses, the strength being that it’s largely a meritocracy, so we tend to promote from within, and it’s quite possible for somebody to start their career as an apprentice and end up running the show.
This is a good thing, but you can’t be a one-trick pony; you need also to be bringing in fresh talent. I think a frustration, if you were a big dealer group who was externally recruiting for dealer principals or sales and service managers, is you’d tend to find that a lot of the same faces turn up for those interviews.
So, you find that we’re all fishing in the same pond and it’s a relatively stagnant pond, so inevitably, we need to draw people in from outside, and if we don’t, we don’t bring in new ideas.
If you look at somebody who’s worked for the majority of dealer groups out there, and you’re the next dealer group in line, that the individual has applied to, you’ve got to wonder what they’re going to bring to you that they haven’t already brought to those other people.
The motivation to bring in new talent is admirable, but beyond that, concerns have been voiced on the difficulty in getting young people to understand the benefits of working in this industry: they’re shocked at the prospect of working weekends, let alone Sundays for example. Is there a way of overcoming the reticence?
Traditionally, people have seen the motor industry as somewhere where you go if you aren’t going to do well academically. We have to accept that if you end up running a dealership today, you’re running a very complex, multifaceted business. You’ve got to be really hot at everything now.
So we need people of a high intellect, and we haven’t done a lot in the past to really prepare people for those roles; they’ve sort of evolved into them, and we try to fill in the gaps afterwards. One of the reasons we haven’t attracted people from the outside is, first of all, all of the many players in our industry have tried to go it alone.
Sometimes they have some really good offers and some really good materials, but they’re just not strong enough alone.
As an industry, because we’re so competitive, we’re so used to knocking lumps off of each other and we forget, when it makes sense, to work together. We really do need to bring new talent into the industry, and to do that we have to make it clear what a great career offer we have.
How is the IMI addressing this?
We’re working very closely with manufacturers and the big dealer groups to put together an industry-wide offering.
Our aim is to have the Monster Jobs (monster.co.uk) for the retail motor industry.
We’re working with 10 of the biggest retail groups in the industry who, between them, have a considerable number of vacancies. We’re aiming to provide them with the conduit to go to market on a significant scale.
Alongside vacancies it will offer a career information and guidance site, everything from educational resources that can be used by schools, to a resource called ‘world of work’ where you can actually go in and see people talking about what their job is and what they do. So, if you don’t know what a business manager does, there’s a business manager on there, talking about their job.
Management roles are as important as apprenticeships, which still get most of the spotlight.
It has to have a holistic approach.
We need apprentices and we need technicians, but we need salesmen, and we need business managers and we need IT people, and we need accountants. We need every type of person. If you’re an accountant and you’re bored with doing auditing, working for a city firm, you could come and be an accountant in a dealership, which is an exciting and dynamic environment.
When will we see the project live?
The resources already exist; it’s about populating it, and we’re having those discussions right now with the large dealer groups. Our aim is this year. We already have jobs on the site (http://www.theimi.org.uk/jobs), but our aim is to explode it into something much more significant.
Do you think dealerships, dealer groups are doing enough on the people element of their businesses, to support, grow, develop, reward and retain?
Yes and no. The big dealer groups do a lot of their own training and manufacturers offer a lot of training. The independents, working through organisations like the Independent Garage Association, are making investments. What we’ve never seen before is some kind of external accreditation for that. So, one of the biggest frustrations if you were running a multi-franchise group is that, you recruit somebody to work for one brand , and you go through the whole programme that brand wants you to go through.
When you want to move that person to one of your other brands, it starts all over again; that whole investment gets written off, which makes no sense. It’s kind of snakes and ladders, and that’s largely because it doesn’t say that the training that the first brand offered isn’t good, because a lot of it will be generic.
The management and leadership competencies that we’re all looking for are the same, and I think there’s a growing realisation of that, and that’s one of the ambitions we’ve had at the IMI, is to create a standard.
We have that to a large extent anyway, on the technical side, with ATA, a recognised industry standard that says, this is a measure of competence for somebody who is a technician and in a number of roles, actually.
But we’ve never actually had that external accreditation, so that when somebody moves from brand to brand, you can say we really only need to train to the gaps, we don’t need to start all over again. It becomes a transferable qualification.
In response to this the IMI has AMA (Automotive Management Accreditation). This is based on a bunch of core competencies, which have been very well-researched in the market. So we’ve been talking to all of those players about mapping their training towards those competencies so that we do have this kind of common standard.
Is there an undeniable return on investment in training?
There are two really vexing questions in our industry. One is, does customer satisfaction pay? And the other one is, is training a cost or an investment? A couple of years ago, the IMI used government funding to commission a very detailed study, on a scale that nobody’s ever done before, employing an academic to look at a wide variety of different roles in the industry, from apprentices, right the way through to people who are doing sector related MSCs and BSCs to analyse critically whether there is a direct payback on that investment.
The full detail of that is due to be published by the end of March. But we have seen some of the research already and it makes good reading. If you look at apprentices, for example, most of us have worked on the rule of thumb that you will employ an apprentice, and you will get 25%, 50%, 75%, and so on, payback over the first few years.
But actually, it looks different to that. I won’t give away all the detail yet, but there is generally a quicker payback than people think. But the detail will be made widely available to the sector. It puts a very strong argument for training, and can show that it’s definitely an investment, not a cost.