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Derrick Woolfson

Derrick Woolfson Business Development Manager

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The GM? Has the Role of the GM Evolved Enough to Meet the Needs On the Dealer Level?

No matter the business model, your dealership has evolved several of your roles over the years everything from dealers adding business development centers, exchange managers in service, product consultants, and marketing managers to name a few. However, the one position that has not often been discussed or evolved is the GM position -  a position that manages all departments on the dealer level;  a position that can enact on making changes happen. 

So we have to ask ourselves, how as the GM position evolved? Has the position evolved enough? Can a GM effectively manage the entire operation as each departments goals and tasks have increased to sustain your dealer's profitability? 

So What Exactly is the Role of the GM on the Dealer Level? 

According to autojobcareers.com, The automotive dealership General Manager ensures the profitability of the dealership by overseeing the various departments which include variable operations (sales & financing), fixed operations (service & parts), and the business office (accounting & administration).  Duties of the general manager include, but certainly not limited to, planning, motivating, and coordinating the dealership's management through leadership and solid business practices. 

That Said Can A GM Effectively Manage the Various Departments On A Dealer Level With the Challenges A Dealer Faces in Today's Market? 

This is not an easy question to approach nor is the purpose of this question - by any means - to denounce the efforts of a traditional GM role. Instead, the purpose of asking this bold question is to understand better how a GM can approach the various departments — ensuring that each department is successful and generating the revenue needed to sustain the bottom line. 

One of the concerns with having one role overseeing all of your dealers departments is their inability to manage the day-to-day operations effectively. In which case, their managers while able to make many of the decisions are unable to execute on many without the GM's approval. So as a result, that can in many cases, slow down their operations. For example, if the service manager wanted to execute a marketing plan spending $1,500 - in many instances, s/he would have to seek the approval of the GM. If the GM were otherwise unavailable and unable to make the final decision - or worse, it took two to three days to make a decision - the delay could have an impact on the success of the campaign. And while this is certainly one example, there are many other examples. 

Another key issue is the new car and used car sales. Each department has its own business model; a model that is managed by your sales managers. However, it is no secret that many of the decisions made by the sales managers have to be approved exclusively by the dealers GM. As a result, this can hinder productivity and performance. Namely, given that many of the sales managers - or GSM's - are otherwise unable to make final decisions when it comes to purchasing inventory or managing the dealer's department they are unable to perform at the level they need too necessarily. 

Imagine empowering your sales managers, GSM's, and fixed-ops managers by allowing them to make the necessary decisions on the dealer level. The idea that you are allowing them to run their respective departments effectively. Taking out a potential roadblock; one that can wind up costing the dealer thousands of dollars in lost revenue. 

So Without A GM, What Does Your Dealer Look Like? How Does this Even Work? 

Several dealers have executive vice presidents who are to oversee all of the GM's. All of which sounds great, no? The idea that the EVP can assist the GM's in making the decisions necessary to carry out the business plans. The problem, however, with this model is that the GM's are not involved in the day-to-day operations. In which case, when having meetings to discuss processes, procedures, and or the changing of a department, it is done without the managers in fixed-ops,  sales or with your controller (COO; the one who handles your dealerships finances).  This can have a negative impact on how they approach the decisions, as many decisions are often in alignment with the bottom line in mind. Moreover, while the bottom line is of the most importance; the way you approach the bottom line has to be in alignment with the way your managers approach their departments, respectively. It is challenging to do so without the managers being involved as they are the ones managing the day-to-day operations, which as a direct impact on the success of said proposed changes. 

One of the ways to approach this is by having directors. Each dealership would have a director for both sales, fixed-ops, and the Controler (a new title would be COO). The purpose of this position is to manage the sustainability and profitability of each of your dealer's departments. The directors also work closely with each of the sales and service managers. At which point, the directors report to the EVP. In which case, instead of one person,  the GM reporting to the EVP, multiple people are reporting to that role. People who can effectively enact changes on the dealer level. For those who do not have EVP's, you can have the directors report directly to the CEO. What this does is bridge the communication gaps between the CEO and the employes (your managers) who are directly responsible and accountable for maintaining the dealer's bottom line. 

The Dealer Can Effectively Save Money By Restructuring With Directors and Removing the GM Position. In-turn, Increasing Your Revenue Adding to the Bottom Line. 

The average GM salary (which of course depends on the market) makes roughly $217,000 a year between their salary and bonuses. If you were to restructure and pay a director position for fixed-ops, sales, and your controller (or better yet, a COO), with both the sales and fixed-ops' managers in the six-figure bracket (which they are already most likely making) - you now have three positions that can make executive decisions reporting to either the EVP or CEO. Directors who are then involved in not just a day to day operations, but are also able to make decisions empowering their departments to increase revenue for the dealerships bottom line. 

Namely, instead of paying one position a high six-figure salary, you now have three positions making six-figures — two of which who are already most likely in the six-figure bracket. As a result, this not only can save your dealership a six-figure salary, it can increase your dealer's performance, collectively. All of which adds to the already thinning bottom line. 

The Bottom Line: the purpose and intentions of this article are by no means to denounce the efforts of the GM's. However, we have to ask ourselves how the GM position has evolved and whether or not one person can effectively manage all of the departments collectively. Knowing that the profit margins are continuing to thin, and every decision made on the dealer level has a direct impact on your profitability. The idea that if you were to have three key directors on the dealer level who are closely involved in the day-to-day operations manage their departments exclusively - it would not just empower them, but it would have a positive impact on the bottom line. 

Has Your Executive Team Restructured the GM Position to Increase Profitability? Have You Considered A Director Role On the Dealer Level? 
 

R. J. James

Derrick... THANKS for a VERY Thought Provoking article!

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