"I don’t need another book on farmin’, when I ain’t farmin’ as good as I know how right now!" Dick Duncan, Jerome-Duncan Ford
"I remember that statement like it was yesterday," says Garry House. "That’s what the dealer told me over the phone back in 1987, in the the early days of my consulting career. It was right after I explained the services I could offer him. He made it very clear to me that he wasn’t interested in anything new and different. He knew that magic bullets and shiny objects wouldn’t provide the solutions he needed to overcome the challenges of becoming a better dealer. He recognized that he just needed to get better at the basics of automotive retail. That's what performance management is all about!"
We’ve recently discovered that numerous dealership owners and senior managers believe that “the primary key” to Performance Management is employing the right compensation plans for their people. As subject matter experts (SMEs) in dealership compensation planning, implementation, and management, we can unequivocally state that having the right pay plans should not be your first…or even your second, third, or fourth…priority when reviewing and enhancing your Performance Management methods.
So what comes before compensation? Here are our thoughts:
The first step is to develop a realistic sales and gross profit forecast, based on your market penetration expectations, together with an expense structure that is well-matched to the gross profit structure. The compensation budget is part of expense planning, and “best practice guidelines” are available to assist you.
Next, you should ensure that your organizational structure and staffing plan matches your sales plan, together with the activity management training and discipline necessary to accomplish the sales plan.
Thirdly, you must have a well-developed and documented set of operating processes for each department. This step also requires that these processes are consistently and effectively trained, habitually performed, and flawlessly executed.
The fourth step is to clearly define and communicate your expectations to each dealership employee by developing and documenting job descriptions and performance objectives for each position. You then must ensure that each employee has an unambiguous understanding of, and is committed to, the department objectives. Equally important is to ensure that each employee has an unambiguous understanding of, and commitment to, his/her individual performance expectations.
After these four steps have been completed, you’re probably ready to begin ensuring that your compensation plans fully support your job descriptions and performance objectives.
Are there more steps to Performance Management? Certainly, and at least three of them need mentioning:
You must have a disciplined system of measuring the activities that need to be managed, inspecting what you expect, and score-keeping and score-boarding. If activities are effectively managed, the results will take care of themselves.
You must establish, by position, the frequency and process for conducting One-on-One meetings. Each dealership employee deserves to have, and needs, a One-on-One meeting with his supervisor on a regularly scheduled basis (no less frequently than once each month).
You must have sound, consistent leadership in order to succeed with Performance Management. It’s not easy! As business development guru Chet Holmes said in his book, "The Ultimate Sales Machine," great leaders must have “pigheaded discipline and determination.”
Check out a few of the GH&A Performance Management Tools by clicking the FREE Stuff Tab under the "Browse Our Resources" Menu Button.
Our primary mission at Garry House & Associates is to inspire, challenge, and equip dealership senior executives. Sound performance management strategies are also part of that mission. Our approach is simple, however, it demands commitment and discipline from you. But that's why you've come to this site...to develop the leader within.
As long as you fulfill our expectations, we will accomplish our primary mission.