Pub. 12 2013-2014 Issue 2

N e w J e r s e y C o a l i t i o n O f A u t o m o t i v e R e t a i l e r s 13 new jersey auto retailer w w w . n j c a r . o r g pay plans  continued on page 14 The Secrets To Successful Pay Plans By Rob Campbell Have you ever found yourself saying something like, “Our pay plans are not working anymore?” The usual response to that question is something along the lines of wanting em- ployees to strive for more business, more sales, and more gross. But typically it really boils down to the belief that, “We are paying too much for the results we are receiving.” It is not that the gross or sales are not to the level of what the plan intended, but for whatever reason our gut is telling us that the results are coming too easy. It seems that just opening the door every morning allows employees to max out their pay with little effort. While all of that might be true in your cir- cumstance, when you dig into the dynamics of pay plans as motivators and an individual dealership’s specific past history with plans, you often begin to see where troubles arise and why pay plans “stop working.” Before you start constructing the right plan for your dealership, you have to start with the basics of any compensation package. Study after study will tell owners and man- agers that there are more important things than the dollars on a pay check. But I’ve seen technicians jump to another dealership for one dollar more per flat rate hour, or an F&I manager leave for the promise of an extra percentage point on service contract sales. Yet, there are many non-monetary things about a workplace that will require dealerships to pay heavily for talent or struggle to maintain their staff. A hostile workplace, unpredictable management, abrasive relationships and generally poor working conditions will cause employees to leave faster than a pay plan. The power of management tomake co-workers a vital part of an organization, feel appreciated and able to grow is also a top contribu- tor for workplace happiness and perfor- mance, even more than money. Thankfully, the vast majority of dealer- ships in New Jersey are great places to be employed where many have the op- portunity to earn a substantial income, so let us move on to the four key pay plan strategies. 1. Keep It Simple. With pay plans it really helps to keep it as simple as pos- sible. A base pay, a bonus/commission and some kind of additional bonus should be as tough as it gets. For example for salespeople, $200/week base, 20% of commissionable gross, and $500 bonus for delivering over 10 vehicles. If a person cannot even explain how their pay plan works or what the numbers are based on, then you will likely never get the results you desire. In order to be simple, the pay plan needs to be based on something that is easily measureable. In the above pay plan what is the definition of commissionable gross?