2016 is nearly half way over and business has been great, retail traffic is up, more new and used cars being sold and this is great news, right? Well of course it is, however lets avoid some of the common mistakes made during the last cycle when business was good only to come upon a time that followed with a not so great outlook. The last time the industry had a downturn we were all faced with a decision to make several reductions to protect the financial return. I remember sitting down and implementing a strategy of how to get more done with less manpower and at that time the goal was simple, get back in line with the industry standard taking in consideration the reduced sales of parts and labor. This was an extremely tough task and certainly not fun to do, but it was very necessary.

The point I want to make is over the next few years the service and parts business is going to be there for the taking and we all need to aggressively go after it, with one caveat; increase sales and performance intuitively instead of hiring someone to help with the added workload or volume coming in.

Recently I reviewed a dealers financial statement where their salaries/wages and benefits was more than ten percent higher than the industry guide; basically their human capital was costing them financial capital returns. After a short visit with some of the employees it became very evident most of the hourly employees that were hired on over the last year were brought on with a narrow vision of duties and responsibilities. In simple terms, the “easy” fix was to plug a person in place instead of defining a specific process and training to become more efficient at it.

To take it a step further this created a small silo effect within the workforce. They explained to me that one person does this task and then they pass it off to the next person that does the next task, and if “person A” does not do their job it at causes problems with “person B” completing their duties. As I analyzed the process I realized that every person has become “specialized” in their duties, instead of being aware of the final goal and what they could do to make the process flow smoother.

Making this transition is a tough battle, but necessary. Here are some tips to help this flow smoothly and help you not fall in the excessive manpower trap.

• Look for more efficient ways to get the job done – identify the bottlenecks, is it the process or the people?
• Improve communication – open book here, be transparent, explain what and why things are happening
• Explain and then re-explain the reason and the goal – Employees will have a lot of questions, meet them head on and allow plenty of time for questions.
• Determine if the task is a “necessary” or a “nice” benefit to the customer – Examine which ones are mission-critical and really matter, which ones are questionable or discretionary, and which ones were assigned years ago and are no longer necessary.

Keep a steady eye on the future, execute your game plan and be prepared for everything our industry can throw at you. Have a game plan, stick to it and allow your team to build and grow.