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 s u m m e r 2 0 1 3 14 new jersey auto retailer pay plans  continued from page 13 Is that readily apparent to everyone, includ- ing the salesperson at the time the deal is being penciled? Employees need to know where they are at on a consistent basis, whether the dealership provides the data or the employee can look it up themself. Otherwise, every pay day is like a scratch off lottery ticket, with the employee hop- ing this is the week they get that fourth golden bell. Employers who compensate the majority of their employees with 100% base (hour- ly or salary), typically have a high-level expectation of results and performance in these stores actually becomes a condition of continued employment. 2. Don’t Use Pay Plans To Fire Employees By Proxy. Some manag- ers seek to put pay plans in place where low-level performers earn so little that they hope they will just quit. These plans are filled with all kinds of takeaways or unduly penalize an employee. There is a problem with that type of thinking. If the employee is horrible then document their deficiencies and fire them. The worst of times – a bad snow storm, a freak hurricane, or a sudden tsunami halfway across the planet – cuts available inventory in half. Targets are hard to hit when there is nothing on the lot to sell. If the reason for poor employee perfor- mance is truly due to a poor employee, do not pay them less – get them out of the store and replace them with someone who can perform. Remember the previous hint – perfor- mance is expected. That can only come with diligent management judging all aspects of performance. 3. Pay Plans Cannot Manage People. MANAGERS Have To Manage . This rule is probably the hardest thing for managers to get their arms around. You cannot manage every aspect of behav- ior or how a transaction is constructed through a pay plan. You can direct be- havior to a specific goal, but the reason that pay plans typically stop working is that the managers have stopped working. Take for example a pay plan for a service advisor. You could judge sales, gross profit, labor hours sold, CSI, effective labor rate, hours per repair order, lines per repair order, customer satisfaction scores, policy work, unapplied time and the list could go on. Imagine two advisors are working the same lane and Advisor Awrites up a towed in vehicle that needs major engine repairs and Advisor B writes up an oil change. On the major engine job, Advisor A touts that he “sold” an engine. Actually he presented an engine replacement to the customer who was faced with the simple choice of fixing the vehicle or towing it out of the shop. Advisor B informs his oil change client that the vehicle is already past due for a timing belt replacement and the brake linings are almost completely worn out and the customer agrees to the work. Who should be rewarded more? What if the work Advisor B sold is competi- tively priced with a lower effective rate and gross? The universal aim of almost every deal- ership compensation plan is that extra effort that results in extra revenue should be rewarded. Extraordinary effort de- serves extraordinary rewards, but there is little way to reconcile that desire to the situation between our two advisors. We would love to reward Advisor B over A, The universal aim of almost every dealership compensation plan is that extra effort that results in extra revenue should be rewarded.