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Auto dealer employee turnover crisis: How to manage it effectively

Auto dealer employee turnover crisis: How to manage it effectively

Despite the impact caused by COVID-19, the economy is recovering. The pandemic disruption affected almost every facet of the auto industry, causing rampant auto dealer employee turnover. Today, many companies need help onboarding new talents and battling labour shortages. With a high-pressure environment and long working hours coupled with the demand for sales targets, the employee turnover rate in the auto industry is 46%. According to the NADA Dealership Workforce Study:

  • The employee turnover rate for salespeople within the auto industry dropped to 34% in 2021.
  • The average year-end headcount of employees only increased from 71 to 74 individuals after a 10% headcount of employee reduction during COVID-19.

Working in an auto dealership can be stressful, and employees can quit after a few months. Also, while dealerships have made great strides in connecting with an entirely new generation of consumers, some organisations still need help with employee retention. This can significantly impact dealerships, as recruiting new employees is time-consuming, expensive, and results in low productivity periods. But there are some ways to manage the auto dealer employee turnover crisis.

Employee turnover: Why it's hurting your dealership

In the business circle, getting a new customer is pricier than keeping an existing one. Finding new hires who will boost revenue and become true assets can take time and effort. Reports state that onboarding a new employee costs an auto dealer $10,000 per hire.

From crafting job details, reviewing resumes, and interviewing applicants to training new hires, there are many processes to go through. Auto dealers can use the time they would spend on such to drive revenue and boost productivity.

Also, losing an employee can be expensive. That's because you'll lose a trained staff and risk losing a client they've worked with to another dealership they choose to work for. According to reports, employee turnover costs dealers billions. Thus, an auto dealer should find ways to reduce employee turnover to increase profitability.

How to manage employee turnover crisis at your auto dealership

A whopping 9.5% of the Australian workforce changed their business or staff throughout the year. This is the highest annual rate since 2012. The level of turnover in the auto industry is unsustainable. According to the Center for American Progress, turnover can cost a business 16-213% of the former worker's salary. Here are a few tips on managing employee turnover at your auto dealership.

Prioritise staff training and development

If you want to solve a problem, the best strategy is to invest in your employee's education. Dealership staff training tends to receive little or no attention since dealers focus on meeting sales quotas and cycles. They forget training and aim to hit aggressive monthly sales figures. But salespeople need proper professional training under their belts to continue up the ladder.

You stand a chance of getting repeat business when you retain critical talent. Customers like working with people they know, thereby creating a memorable buying experience.

Start developing your employees instead of thinking that your sales teams are replaceable. Let your staff know you appreciate their dedication and celebrate their successes. Allow them to take professional courses so they can become valuable assets to your business.

Salespeople who lack proper training also need to learn how to optimise the sales experience. They think selling begins with the salesperson and don't personalise their follow-up or use the dealership CRM.
Compliance training should be mandatory. Consumers feel comfortable doing business with a dealership with a certificate of completion. If you want to reap the rewards of a more knowledgeable and skilled workforce, ensure you play a crucial role in your employee's training and development.

Focus on quality recruitment

Managing auto dealer employee turnover can reduce costs and boost profitability. But you need to hire the right individuals. A 2021 staffing study by Cox reports that 72% of dealerships say this is a top staffing issue. The study shows that interest in working for auto dealers is increasing, but it doesn't imply those interested individuals are the right fit for the job in question.

Common mistakes an auto dealer should avoid during the hiring process include:

  • Hiring out of desperation and after only one interview
  • Overselling the role's earning potential

How can you improve the quality of your recruitment?

Start by looking at where you advertise any open positions. Will the right people get access to those opportunities? Ensure your job details are accurate and depict your dealership culture.

A good strategy is to look out for applicants who:

  • Have excellent communication skills (both written and verbal)
  • Are willing to surpass their specific job responsibilities
  • Understand technology
  • Can adapt to a changing work environment

According to research, being transparent in pay when advertising positions significantly reduces or even eradicates the gender pay gap. With this, candidates can decide if their remuneration is right for them. The people you hire define your dealership. Thus, you should invest in recruiting quality employees.

Focus and develop dealership culture

Dealership culture is crucial in the auto market. According to Cox Auto, a supportive work environment is the top driver of employee satisfaction. A dealership with a robust and healthy culture can protect its market share against conquest. Creating a good company culture can take a toll on you, but it's worth it.
A sense of collaboration and support unites teams across diverse departments. It would help if you created better team cooperation in your car dealership for optimal success. Always remind your employees that everyone is working towards the same goal.

Working in silos causes miscommunication, can affect the staff, and creates friction with customers. A high employee turnover rate can be a huge turnoff to car buyers who would have loved to return in the future. So, ensure your dealership culture is top-notch.

Manage auto dealer employee turnover with the right strategies and tools

Auto dealers should learn to focus on talent training and development, prioritise quality recruitment, and develop dealership culture. This will help you manage auto dealer employee turnover crises and mitigate their effects.

To succeed in a tight labour market, you must optimise recruitment and build a talent standard that can quickly fill management and senior-level roles. Promoting dealership employee skill sets and facilitating internal promotions can be vital in the long run.

Do you need more ideas to manage turnover through better team cooperation? Check out our post on four ways to create better team cooperation in your car dealership.

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