Dealers often look for new technology solutions to help them solve a problem, and rightfully so. When a well-trained staff follows a well-documented process, technology saves time and money and makes it easy to analyze data so you can make smart business decisions.

However, if your staff isn’t well trained and your processes aren’t well documented, a computer is nothing but a rapid idiot. If the data entered into a device is incomplete or wrong, technology can’t do its job and can even make the problem worse.

I remember a time that I was working with a dealer during the installation of a new dealership management system (DMS). We were reviewing reports and the dealer told me he was having trouble finding some data. Specifically, he was looking for names of wholesalers from whom he had purchased used vehicles. The DMS had a field for it but in all the reports he pulled, that field was blank.

I did a little investigation, starting with the title clerk. What’s your process for when you put a car into the system? Stock number, check. Amount paid, check. VIN, check. Year, make and model, check. Purchased from? Oh, I didn’t know I had to do that.

Problem solved, and it had nothing to do with the DMS or reports.

Technology can’t replace process. In fact, I always recommend that before you set up a process in a new technology solution, do it analog-style first, using a good old-fashioned whiteboard and erasable marker. Once the process is perfected, write it down on a piece of paper and put it into a training booklet for new employees.

If a process isn’t documented, every employee will do it differently. When employees leave, new employees will learn the process from someone who doesn’t know the most efficient or correct method. New employees may also forget an important part of the process, which will result in a whole bunch of incorrect or incomplete data.

I realize that documenting processes takes time and will be viewed by whomever the task is assigned to as incredibly tedious. I doubt you’ll have many volunteers. But time spent on the front end will yield double or triple that time on the back end.

Having documented processes comes in handy with:

New employees. When a new employee starts, hand them a book of documented processes. It’s important for them to understand how everything they do is part of a bigger process, and how all parts of the process are connected.

One-on-one training is still very important, but is even more effective when the employee has a documented process to reinforce what they learn.

Existing employees. When employees aren’t held accountable to following a process, they can get lazy or make mistakes. This could result in weeks or months of data entered into the wrong fields, or not entered at all. How much time and resources must now be devoted to fixing the problem?

Managers. Your managers should be managing your employees, not doing their jobs for them. When processes aren’t documented, mistakes happen. When mistakes happen and especially if customers are unhappy, managers often feel compelled to jump in and take a hands-on approach to fix the mistake.

A better solution is to have your managers document every process in their department, with the help and input from employees. Then, when a mistake happens, the manager asks the employee to go back through the process until he or she discovers where the mistake occurred.

When an employee is held accountable for their own mistakes, and understands the consequences of not following a process, he or she will be more likely to follow the process next time. Remember that problems tend to be either a Process Problem or a People Problem. 

Before you expect a new technology solution to solve a problem, make sure you have an offline process to prevent and address the problem. Without a documented process, all technology will do is screw things up faster.

On the other hand, if you provide your technology vendor with a well-documented process, it can be set up correctly in the system from the get go, saving you countless hours, dollars and possibly your sanity.

It’s been over 20 years since I managed a large Chevy store, but some things never change. Many dealers still have issues with the recon process and getting pre-owned inventory out to the front line in a timely manner.

The crux of this problem starts with pay plans and the fact that used car departments typically get a discounted rate for repairs. Service managers and service advisors are paid off gross, so if I’m a service manager and I have a customer in front of me that needs a brake job, shocks and tires and I’m looking at a RO estimate of $1,000, and $500 of that is gross, of course I’m going to prioritize that over a recon RO with $100 gross.

When I was a GM here’s how I solved this problem. I made a new rule: All used car repairs were paid the exact same rate as customer pay, otherwise known as door rate. Now, initially your used car manager isn’t going to like this. He or she might even go ballistic, and insist that it’s impossible to make any gross because now the cars are too expensive.

But here’s what I always found to be true. The gross you’re going to get is the gross you’re going to get, whether you’re working from a cost-up basis or a price-down basis. If the vehicle is too expensive after paying door rate for repairs, then you’ve appraised it wrong.

Let’s say a 2017 Cadillac XT5 comes in for trade. With the help of software tools such as vAuto, you can get pretty accurate appraisal and pricing parameters, as well as local market intelligence that gives you a good idea of how quickly this vehicle is likely to sell.

This data makes it easy to estimate what your gross margins will be after you’ve paid door rate for service. If the gross is too low, then you can’t offer as much for the trade.

If you’re having trouble finding vehicles, try what CarMax is doing. Offer free appraisals and offer to purchase any used vehicle, with no obligation to purchase. This saves you money in auction fees and transportation fees, which are getting to be ridiculous.

A bonus to this rule is that your service department makes more money, because you’re not giving away gross to the used car department. Service managers will prioritize recons the same as customer pay, and advisors and techs won’t be reluctant to work on them, because they’ll be getting paid better rates.

Of course, there’s a second part of the equation, which is how fast your pre-owned vehicles get to the front line. We all know there’s been a billion studies that show the faster you get a car to the front line, the more gross you’ll make.

Dispatch and workflow systems can help with this process, but the problem with these methods is that it requires manual entry by the parties involved. If the service manager delays entering the data into the system, you have no idea how long it’s taking. A repair order might take three days to close but the work was done on day one, and someone just forgot to close the RO.

While technology is a wonderful thing, sometimes an analog process can’t be beat. Here’s what I recommend. Every time a used vehicle is brought to the service department, immediately open an RO. Then take a crayon pencil and write the date and the RO number on the windshield. If all your recons are parked in the same area, it’s very easy for the GM to visually identify how long the cars have been sitting there.

I used to go out and check almost daily. If a car had been sitting there for more than a couple days, I would ask what the holdup was. Does it have an estimate? Are they waiting on parts?

The nice thing about charging door rate for your pre-owned repairs is that if you’re short on resources it’s a lot easier to justify hiring new techs, adding new service bays, extending hours or hiring an outside detailing company to help out, based on your volume. If you’re discounting all your recon repairs, it’s a lot harder to justify spending that money.

Try this and see if it works. The end result should be higher gross in service and the same gross in pre-owned sales, because the gross you’re going to get is the gross you’re going to get. If you try my super-sophisticated crayon recon method, you might even see a lift in pre-owned gross due to vehicles turning faster. Sounds like a win-win to me.

Recently Auto/Mate won a “Special Award for Managers” from Energage as part of their annual Top Workplaces program. The award made me think about how important a management team is to a company’s overall success.

Sometimes managing your managers can be trickier than managing an entire department full of employees. That’s because managers tend to have strong skill sets, personalities, opinions and even different management styles that might conflict.

As a leader, it’s your job to coach and train your managers to be successful while keeping them true to the company’s stated vision and core values. I thought I’d share some of the methods that I have learned and developed over the years to help keep our management team working in unison while directly contributing to our company’s top priority, which is to keep our employees and customers happy.

Hold a monthly Lunch-and-Learn

All of your managers possess a special skill or area of expertise. Host a monthly lunch meeting so your managers can teach, learn from and be inspired by each other. Think of it as a 20 Group for managers.

Every month, ask a different manager to present on a topic of their choosing that’s management-related, but not on a topic that would be specific to their department. 

Example topics might be how to conduct job interviews, tips for motivating team members, team-building exercises or how to deal with difficult employees.

A presentation requires thought, research and preparation, so this is a great learning tool for the individual presenting, as well as their fellow managers in the audience.

Don’t promote star performers unless they have management qualities

Promoting from within is always a good idea, but be careful who you promote. If you’ve got a star performer who’s chomping at the bit to get to management, be sure to evaluate whether that person has the necessary skills and qualities to be a good manager.

Sometimes the very skills that make someone a great salesperson, such as confidence, resilience and productivity, can interfere with their abilities to be a good manager. Make sure that all your managers work well as part of a team and know how to train and coach less confident team members to success.

If your star performer doesn't have these skills, that doesn’t mean you shouldn’t promote them. Like other skills, management skills can be learned. Share your concerns, and if the person can acknowledge their shortcomings and commit to improving them, coach and motivate them to becoming a good manager. Then, by all means, promote them.

Prioritize your managers’ priorities

One of the most common assumptions managers make is that the employees in their department work for them. The philosophy behind this thinking is something like, “My employees work under me and their job is to help me be successful.”

Nothing could be further from the truth.

The primary job of a manager is to ensure that their employees have the tools and knowledge that they need to do their jobs successfully. Every day your managers should ask, “What do I need to do to make my employees’ job easier?” Your managers work for your employees, so hold them accountable.

Care about your employees

How well do you know the employees that directly report to you? Sure, you know their names, skills and personalities. But how much do you know about them personally?

According to Top Workplaces, the most important factor that contributes to employee happiness is their perception about whether management cares about them. It’s difficult to care about someone you don’t really know.

Get to know your employees and what their hobbies and goals are. What are their spouse and kids’ names; what schools do their kids go to? What is your employee’s biggest personal challenge at home? Is anything causing them stress?

One way to get to know your employees is to have a manager take out a group of two or three employees for a “manager’s lunch” every month. The goal of the lunch is not to address work concerns, but to get to know each other on a personal level. Department team-building exercises can accomplish the same thing.

Create an open-door policy

If you don’t already have an open-door policy, seriously think about creating one. With an open-door policy, any employee with a problem can go to any manager in your organization. It doesn’t have to be their direct manager because the problem might involve a conflict between them.

However, if you adopt this policy, make sure that the employee’s privacy is protected and ensure that there’s no backlash from the employee’s manager if — for some reason — they find out and aren’t happy about it.

An employee might elect to talk to a manager outside of their department for a number of reasons; perhaps they have a rapport with a certain manager, or they brought up an idea to their own manager that the manager dismissed and they want to run it by someone else.

View these occurrences as opportunities, not betrayals. If an employee doesn’t feel comfortable addressing their own manager about something, there’s either a problem or a personality conflict, and in either case, wouldn’t you want to know about it?

What are your tips for creating a star management team?

Did you know that texting has been around for 25 years? However, it didn’t become really popular until the early 2000s. According to the Cellular Telecommunications Industry Association (CTIA), more than 1.9 trillion text messages are sent in the United States every year.

If your dealership isn’t texting your customers, your messages may not be getting to them at all. Around 98 percent of text messages are opened, compared to just 20 percent of emails.

Texting is used in dealerships for two purposes: personal communications and marketing. If you have a texting platform, it’s important to know the best practices for each method before you begin using it.

Most people already know that marketing texts have to be in compliance with the Telephone Consumer Protection Act (TCPA) and Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) regulations, which require businesses to get prior written consent from customers before texting them. Specifically, the TCPA prohibits text messages sent to a mobile phone from an auto-dialer.

Calls and texts that are manually dialed are exempt from this rule, which means your employees are allowed to send personal communication texts to your customers.

But just because you can legally send a text, does that mean you should? 

Texting is highly personal. Most people text with friends, family, co-workers and acquaintances. Have you ever received a text from a stranger who introduces his or her self, and wants to connect? It may be considered intrusive.

However, if a customer reaches out to you first, or is physically at your dealership, that’s a different story.

For example, when a customer arrives in your service lane, have your service advisor ask them if it’s okay to text them when their car is ready. If the customer says yes, then it’s OK to send a personal message via text, but it’s not OK to send a marketing message via text. If you recall, to market via text requires written consent.

Logically, the very next question should be “Would you be interested in receiving special offers and coupons via text?” If the customer says yes, then you’re allowed to send them a welcome text that’s CAN-SPAM compliant. If the customer chooses to opt-in at that point, you’re allowed to market to them via text.

Building a texting opt-in list adds a powerful weapon to your marketing arsenal, especially for service. More than 80 percent of adults send text messages on a regular basis, so it’s a great way to convey important information and stay top of mind.

However, building your text list takes time because it’s a largely organic process. Also, you want to be really careful with your list so you don’t start driving your customers to opt-out.

When it comes to SMS marketing, there are three best practices that every dealership should follow:

Send relevant messages

Imagine that you just had an oil change done at your local dealership. A week later, you receive a text message with a coupon for 10 percent off an oil change. That message isn’t relevant to you at all! You’d be annoyed, wouldn’t you?

Similarly, if you just purchased a vehicle from a dealership a year ago and you receive a message for a Labor Day blowout sale, you may be tempted to opt out.

Segmenting your database and sending relevant, targeted messages is important to do with every marketing channel; however, I think it’s most important with texting, because it’s such a personal and instant connection.

Limit marketing messages to two or three a month

Many SMS marketing companies may tell you it’s okay to send a text message every week, but I’m not so sure. I think when it comes to text messaging, less is more. Besides, if your messages are relevant, you shouldn’t need to send out too many of them.

Marketing doesn’t always have to mean selling

Marketing is about relationship building. No relationship can survive when one partner is only interested in what the other can do for them. When it comes to customer loyalty, you have to give in order to get.

It’s OK to send out coupons and offers, but be sure to also send campaigns that give information and ask for nothing. Examples may include:

• Thank you for your business (after the customer leaves)
• A link to your customer newsletter (mobile-friendly of course)
• Service reminders
• Appointment reminders
• Recall notices
• Polls
• Net Promoter Score (NPS) survey
• Information about community events you’re sponsoring

Most of these campaigns can be automated based on a certain trigger in your DMS. For example, appointment reminders can be sent out three days before an appointment.

Over time, you’ll see which text campaigns get the most clicks and responses, so you can fine tune your marketing. Is your dealership using SMS marketing to connect with customers? If so, what are the campaigns that you have found to be most effective?

It seems that every year has a theme attached to it in terms of where dealerships’ focus will be. Which themes or buzzwords will dominate 2018?

We’ve heard about customer loyalty for a long time. More recently, improving the customer experience has been a hot topic. But the word “experience” is broad and covers the entire purchase process, from brand awareness to after sale.

As you make plans to deliver a better experience, where should your focus be on a granular level?

As a first step, consider this: For consumers, it’s all about convenience.

We live in a customer-centric world, where everything is on demand and people have 24/7 access to goods and services. The answer to any question is just a few clicks away. This is the new norm and expectation.

When you’re designing a better experience for your customer, always keep the convenience factor in mind. Areas in dealerships that may need to be addressed include the following:

Hours

Many dealerships have expanded their sales and service hours to accommodate professionals who find it difficult to visit dealerships during the work week.

You may want to consider ways to stay open later and offer service on Sundays. Add shifts and staff, if necessary. If you can keep your service bays filled, you’ll pull in more than enough revenue to make it worthwhile.

You may also want to look into artificial intelligence (AI) chat bots, online scheduling or an outsourced BDC, so customers can get their questions answered and make appointments when nobody is at the dealership.

Speed

A common complaint from customers is how long the car-buying process is. Many dealerships are getting better at this. Technologies that are helpful include desking tools and mobile tablets.

Although every DMS has a built-in desking tool, not all dealerships use them. Approximately 30 percent of sales managers still use the four-square method with handwritten figures to present pricing options to customers.

All the back and forth with the manager, as well as lack of transparency involved with four-squares, takes time, which is frustrating for the customer.

A desking tool enables the sales manager to offer multiple options in a professional format. It eliminates the running back and forth, and provides instant options that the customer can choose from.

Another part of the car-buying process to address is F&I. Ideally, customer wait time for your F&I manager should be 15 minutes or less. One way to achieve this goal is with mobile tablets.

When the F&I manager is alerted to a new deal, they go out and hand the customer a mobile tablet. While they are waiting, the customer answers questions about their driving habits, history and how they plan to use the car. As they answer, products are suggested to them. If the customer wants to know more about a product, they can click on a short video presentation that explains the product benefits.

Mobile tablets make the wait time more palatable for the customer because they are engaged. Then, when the customer is finally escorted into the F&I office, the manager has all the customer preferences and information at their fingertips. This not only reduces the time of the menu presentation, but it makes the presentation more relevant to what the consumer wants.

Transparency

Customers are in control of the buying process now. Withholding information gets you nowhere.

If the customer doesn’t get the information they want from you, they’ll get it somewhere else. When it’s time to buy, they’ll probably go to that “somewhere else” to do it.

Use available tools to determine price points that are competitive, yet don’t give away the farm.

Go Mobile

If you aren’t using tablets in service, sales and F&I yet, put this at the top of your list for 2018. Paper-based processes are out; mobile is in.

Mobile processes are more streamlined, save time and shift your employees’ focus away from paperwork and toward customer interaction.

Additionally, you may want to consider implementing mobile communications, such as a texting tool. Right now, your employees are texting your customers with their smartphones, because that’s the way many of them prefer to communicate.

A texting system needs to be integrated with your DMS to ensure compliance and so that all communications records can be stored and accessed.

If you plan to improve your customer experience in 2018, you don’t have to spend a large amount of time figuring out where your focus should be. Make it convenient for your customers to do business with you, and you’ll be ahead of the game.

What is a servant leader? Robert Greenleaf was the founder of the modern servant leadership movement, and he said it best: “It begins with the natural feeling that one wants to serve first. Then conscious choice brings one to aspire to lead. That person is vastly different than one who wants to lead first, perhaps because of the need to assuage a desire for power or acquire material possessions.”

Examples of companies that practice servant leadership include SAS, Southwest Airlines, Costco, Zappos, REI, Quiktrip, Aflac, Marriott, Nordstrom and Starbucks, just to name a few. Uncoincidentally, many of these organizations have also made the Fortune Magazine’s “100 Best Companies to Work For” list.

Wanting to serve others has long been considered a foundation of being a great leader. But how do you know if you are truly leading for others or for yourself? Being a servant leader doesn’t literally mean being a servant. We’re not talking about fetching coffee for your employees. If you aspire to be a servant leader, ask yourself the following list of questions to see if you are acting for others or for yourself.

When I make a decision, do I think about how it impacts others? Someone who thinks “How does this benefit me?” is disqualified as a servant leader. It truly requires caring about others.

Do I make my employees’ jobs easier? Let’s say you’re a sales manager and your lot guy comes to you and says he can’t move cars because the key machine is broken. You could tell him to go talk to the controller to see about getting someone in to fix it. But if you’re a servant leader, you will immediately call the controller and tell them you need someone to fix the machine right now because you can’t move the cars. Because of hierarchy, the controller is more likely to act quickly than if the lot guy asked. As a manager, being a servant leader means you remove obstacles so your employees can do their jobs.

Do I value diverse opinions? As a dealer you have absolute power. You can easily adopt the attitude: “It’s my way or the highway.” If you have a strong opinion about something that needs to be done, you can order it to be done. However, if you’re a servant leader, you will gather other opinions. You will ask managers and employees who may be impacted by your decision what they think, and you will consider their opinions.

Do I cultivate a culture of trust? If you’re a servant leader, your employees must be able to trust you to always make the right decision. For example, if one of your dealership’s core values is integrity and you find out that an employee has stolen from you, what would you do? Fire them, right? What if it’s your top salesperson who sells 30 cars per month? If you’re a servant leader, yes, you would still fire them. Otherwise, you are breaking trust with your other employees.

Am I developing other leaders? The worst leaders believe they’re the smartest person in the room. Servant leaders are aware of their shortcomings and always try to hire people who are smarter than them or who are skilled in an area where they may fall short. Additionally, the servant leader provides opportunities for growth and teaches others to lead. This means the leader is not always leading, but instead deputizing others to lead.

Am I helping my employees with life issues? A servant leader truly cares about their employees and helps them with life issues, not just work issues. Here at Auto/Mate we had an employee who was dealing with some health issues. His position required a lot of travel, but we re-worked his responsibilities so that he could travel less and focus on his health.

This is one example of helping with a life issue. It’s also important to offer employees opportunities for personal development beyond the job. As a leader, you can start company programs for weight loss or lowering personal debt. You could offer to pay for classes. This demonstrates that you care about your employees and you’re investing in their well-being.

Do I encourage others? Another hallmark of a servant leader is encouragement. A true servant leader says, “Let’s go do it,” not, “You go do it.”

Do I sell or tell? A servant leader is the opposite of a dictator. It’s about persuading, not commanding. It’s no coincidence that many great leaders have been salespeople. That’s because employees generally don’t want to be told what to do. A good leader can convince employees what needs to be done in a way so that the employees want to do it, and want to follow you.

Do I make decisions based on short-term goals or long-term goals? Are you always worried about the next quarter, or do you make decisions based on where you want to be five years from now? A servant leader thinks about the next generation, the next leader, the next opportunity. That means a tradeoff between what’s important today versus tomorrow and making choices to benefit the future.

An example of this is the recession that began in 2007. The CEOs of Southwest and Costco both stated that they wouldn’t lay off any employees, and they didn’t. They chose not to because they cared about them and knew in the long term they would need those employees. So those companies took a short-term hit but in the long run, they outperformed many of their competitors.

Am I humble? The servant leader doesn’t think he or she is better than everyone else. When your dealership has a great month, do you take credit or do you give it?

One of my favorite quotes about leadership is this: “A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they say: We did it ourselves.” –Lao Tzu.

What do you think the qualities of a servant leader are?

One of my favorite quotes from Yogi Berra is "If you don't know where you're going, you may wind up someplace else." If you're managing a dealership, you know this is true. You manage with a goal in mind, and the way you know you're on the right track is by looking at your key performance indicators (KPIs).

But how do you know which KPIs are the best indicators of the results you want? How do you know what your benchmarks should be?

Many dealers turn to 20 Groups or recommendations from NADA. The problem with 20 Groups is that often their benchmark recommendations don't take into consideration all the local and regional differences. For example, in Florida there is no cap on doc fees, so a dealer might get away with charging the consumer $750 in doc fees, which is pure profit. In New York doc fees are capped at $75. So it's difficult to break down profit per unit when you're comparing your KPI to a national average.

Additional regional differences may also include vehicle brand preferences, average consumer income or urban vs. rural locations.

When I managed a large, multi-line Chevy store the best solution I found for establishing benchmark KPIs was to hire a consultant. Consultants should be able to give you benchmarks that are an accurate reflection of what other dealers are doing in your area. You can hire them for this purpose only; just let them know what you're looking for. You may have to hire different consultants for fixed ops and sales.

Another potentially good source for benchmark KPIs is your OEM. Do they have recommended KPIs that take into account regional differences?

Once you have your benchmark KPIs it's helpful to review them on a daily basis. At the dealership I managed, I always had an issue with reporting. On the sales side, I would get the daily DOC and one of the first things I'd look at is gross. Where are we with gross? I'd get the report from the office manager at 10 a.m., and at 10:02 a.m., I'd be in her office asking, "What's in this number?" So now she's running more reports so I can see why we are where we are.

Fortunately today dealers today have the option of using an interactive dashboard to display key metrics, along with the ability to drill down into any number you want. Your DMS vendor may provide this, or you may decide to try a reporting solution from a third-party vendor.

With an interactive dashboard you can immediately click on the visual representation of that KPI when you see a number that's out of whack and find out what's happening. If gross is down, is it units sold or margins? If it's units sold, is it inventory or is the sales team behind goal? If it's the sales team, who specifically on the sales team is setting you back from the goal?

Once you've identified the problem it's easy to come up with a solution. When I was running a dealership I was always amazed—and not in a good way—that 70 percent of our sales business was done in the last two weeks of the month.

I had a theory as to why this was happening so I reviewed my pay plans. My theory was that since salespeople get paid after the deal and they do plenty of business at the end of the month, they were getting large checks at the beginning of the month. So they weren't all that motivated because they had money sitting in the bank.

As a result, I set up a sales forecast and sat down with each salesperson and asked them how many units they were going to sell this month. If someone told me 10, I said OK. That means you should sell five cars by the middle of the month. If we get to the middle of the month and you've sold five cars, you'll get a $200 spiff.

All of a sudden we were selling 50 percent of our goal by the middle of the month. You know what else happened? They still sold more cars at the end of the month, so our overall sales went up.

This is just one example of how you can use a KPI to get to where you want to end up. When you set a benchmark KPI it's best to involve team members from each department so they are all on the same page and know what numbers they are looking at. That way they all know if they're going in the right or wrong direction.

Another advantage of managing based on benchmark KPIs is that it can reveal process problems. Whenever a number is askew, ask yourself if it's a people problem or a process problem. The ability to drill down into the KPI through an interactive dashboard will reveal the answer to that question pretty quickly.

Get wherever you want to go by reviewing benchmark KPIs in your dashboard or daily DOC. The key to success is to first establish realistic KPIs for your region. Then, use an interactive dashboard so you can keep your eye on critical metrics at all times. It's difficult to get to a destination without knowing where you are along the way.

As business leaders, one of the ways we help our employees reach goals is to establish processes. There are dozens of processes in the dealership, from the meet and greet on the lot to service lane check-in, to payroll and reconciliation.

Every process you have is important because it helps to eliminate errors, ensure that your customers are being treated right and that the job is done correctly.

However, having processes in place doesn't always guarantee your employees will follow them. Incentives are often tied to a goal. Goals that are traditionally cherished include number of units sold, gross profit, per vehicle profit in F&I, RO volume, customer-pay RO revenue and so on.

The problem with this type of incentive program is that employees become focused on the goal instead of the process. Many employees discover that they can skip or ignore entire parts of the process and still achieve the goal.

Unfortunately, when this happens managers tend to congratulate the employee instead of pointing out the fact that the process wasn't followed. This reinforces to the employee that the goal is valued more than the process.

This is not a good message to send. More than likely the employee will stop following your process and come up with his or her own process that works. As long as they sell more cars, who cares if they lie to the customer? As long as they pull in more customer-pay revenue, who cares if they are selling unnecessary services?

Your dealership may achieve short-term gains from this attitude, but in the long run your reputation and brand will take a beating.

I would love to see a dealership change its incentive program to focus on processes instead of goals. Which processes deliver the best results in your dealership? You can use your DMS to establish benchmarks and track KPIs for employees. Then give rewards based on how well your employees follow the process, not for achieving a goal.

This may sound like a crazy idea, but focusing on the process will still deliver results. In fact, it may improve your results. Here's why:

1) Goals Reduce Employee Happiness

When employees focus on the goal they say to themselves: "I'm not good enough yet. When I reach my goal I'll be good enough." In effect, you're teaching them that success is tied to reaching a goal and not to doing their job well. To many employees, the idea that they have to reach an ambitious goal is stressful.

However, if you teach your employees that their goal is to follow your process, this takes some of that stress away. They come to work knowing what they have to do every day without the pressure of having to make a big sale. Employees are happier because they know that as long as they do their job well, they are valued.

In case you're worried that this change in mindset will reduce results, don't be. If they are being held accountable to following the process, you will sell more cars and bring in more service revenue, guaranteed.

2) Goals Limit Results

If a salesperson's goal is to sell 20 cars per month, and he reaches that goal two days before the end of the month, how hard do you think he's going to work to make sure he sells 21 cars? Sure, there are a few highly motivated individuals out there that would keep going. But after working hard to reach a goal, it's human nature to want to relax a little bit.

Focusing on the goal can actually limit your results. Focusing on the process ensures that you will always get results as long as the process is being followed. When a salesperson comes in every day and does what they're supposed to do, that person will consistently sell cars.

3) Goals Cause Setbacks

Every time you set a goal you are bound to have setbacks on the way to that goal. Obstacles arise, schedules change, emergencies happen. When this happens it can discourage your employees.

If they are not on track to meet their goals halfway through the month, there's a risk that the disappointment will cause demotivation instead of more motivation. We can't always be in control of everything.

When an outside force interferes with your plans it doesn't have to be a setback. If you're focused on the process, it will not be viewed as a setback. The employee simply goes back to following the process as usual.

Dealers that place a high value on reaching goals may want to rethink the importance of goals vs. processes. If your workplace values goals above all else, employees will find shortcuts in an attempt to reach them. If you create a workplace that values its employees for doing their jobs well, they will be motivated to keep doing their jobs well.

A goal can provide direction but committing to the process is what delivers results. Hold your employees accountable to the process, and they will make the system work.

Shared knowledge isn't exactly a buzzword or something that many managers think of on a daily basis, until the lack of it causes chaos in your dealership. Have you ever had an employee who is exceptionally valuable because they have so much knowledge on a certain subject, are the only person who knows how something works or how to do something?

Without a process for shared knowledge, this situation will inevitably develop in your dealership. You won't recognize it as a problem until suddenly it is; the employee becomes ill, leaves your dealership for another position or retires. Nobody else knows what that person knows, and everyone is scrambling to figure out how to do what that person did. In the meantime, mistakes are made and productivity drops. Deals can be lost, customers are unhappy and revenue is affected, all because of one employee who knew too much.

Fortunately, this situation can be averted with a little foresight and planning. If you have an employee (or two) that knows too much, your senior management team is probably aware of who they are. When these employees request vacation time it causes a stir of panic in the pit of your belly. You go to them personally to make sure they have all their ducks in a row and bases covered before they leave. You may even find yourself telling this person to check their emails or be available by phone while they're out, just in case.

If this has ever happened to you, it's time to set up a process for shared knowledge. Not just for this employee, but for every critical role in your dealership. As a manager, you never want to be in a position where a single employee can hold you hostage because of everything they know.

Establishing a process for shared knowledge is relatively straightforward.

Get Buy-In

Approach the employee who knows too much, let them know how valuable they are and that you'd like them to share some of that knowledge by documenting some processes. This has to be done carefully because you don't want this employee to think their position or responsibilities are in jeopardy. Honesty is the best policy here. You can't afford to operate without them. If something unexpected were to happen, you'd be in a bind.

If you don't believe this person will respond well to this approach, there's really only one other option: Set a mandate to document every process in every critical role in your dealership. That will take more time, but it may be a better solution in the long run because written documentation can also serve as a training guide for new employees.

Identify What You Don't Know

The employee who knows too much knows things that you're not even aware of. It's critical to figure out what it is that you don't know. The simplest way to do this is to ask the employee directly, and/or to interview team members.

Designate Recipients

Identify several team members with similar skill sets that you would like to designate as recipients of the shared knowledge. Give them their mission: "I want you to know everything that John knows." The team members and John need to be aware and supportive of this mission.

Hold Employees Accountable

Hold everyone accountable for this mission. Set a timeline; e.g. before John takes his vacation. Ask for feedback and updates along the way.

It may be worthwhile to set up a cross-functional team to establish the process of documenting processes and knowledge for critical roles. Choose a couple people from every department to help you with this important project. Include the employees who know too much on this team. Once they see that you're requiring this for all departments, it won't seem as if they are being singled out.

Setting up a process for shared knowledge may require some delicate managing because you're dealing with egos. But as a dealer, you have a right to establish processes that will keep your dealership running at maximum efficiency regardless of whether one employee is there or not.

Do you have a process for shared knowledge in your dealership? How do you avoid the potential chaos caused by the employee who knows too much?

Every manager and leader knows this conundrum. On one hand, you're supposed to motivate your employees. On the other hand, we all know the best employees are self-motivated. It's always a disappointment when you hire a promising job candidate who ends up doing the bare minimum of their job requirements.

Fortunately there are ways to identify self-motivated individuals during the job interview process. The first step is to be able to recognize the general characteristics and traits of self-motivated individuals. The second step is to craft interview questions designed to reveal these characteristics and traits.

How do you recognize a self-motivated individual? First and foremost, these people have a purpose in life and live it. The reason they work is to support this purpose, whether that's family, success, a hobby or wanting to give back to the community. Motivation is also closely related to initiative. If you tell a self-motivated person to do something and they don't know how to do it, that is not an obstacle to them. They have the initiative to figure it out, learn on their own time if necessary and get the job done.

Additionally, self-motivated people:

Ÿ Are not afraid to take risks to achieve a goal

Ÿ Are energized when given a new project, jumping in with both feet

Ÿ Are able to laugh at themselves, admit vulnerabilities and take criticism

Ÿ Learn new things because they like to learn and understand the value of learning

Ÿ Believe in themselves and others

Ÿ Are persistent and explore new options if something isn’t working

Ÿ Strive for health in all aspects of their life; physically, emotionally, spiritually, intellectually and socially

Ÿ Are able to rise above failures, adversity and loss

To identify these traits, it's important to have a formal interview process. First, form a hiring committee and require every job candidate to interview at least twice with each member of that committee, even if the candidate isn't going to work in that department. A unanimous consensus among all hiring committee members is necessary before any hiring decision is made.

Next, craft a series of questions designed to identify whether the person has the traits listed above. Examples of questions related to motivation include:

1) Tell us why you want this job, why you think you are qualified and why you believe you are a good fit for our culture. Also tell us your personal or professional "why," meaning what motivates you every day.

2) What does the word "successful" mean to you? Do you believe you have achieved success in your previous positions? What level of success would you like to achieve in this position? This question is important because most people decide early in life how successful they want to be.

3) Describe the job you liked the most and explain why you liked it.

Describe the job you liked the least and explain what you didn't like about it.

The reason to ask these questions is because people who are self-motivated can lose their motivation if they are in the wrong environment. Listen carefully to what the job candidate says about why they didn't like a position. Listen for similarities to your own company culture and workplace. If the environment they described that did not motivate them has similarities to yours, chances are they won't be motivated at your dealership either.

4) Tell me a time when you felt motivated and a time when you didn't feel motivated. Ask this separately because the candidate's favorite job may not have been the one they felt the most motivated in. Dive into the specifics of the environment and managerial styles in each environment that the candidate describes. Again, compare the environments they describe to your environment, looking for differences and similarities.

For example, if a candidate says they were motivated by a hands-on manager who set strong expectations and held them accountable, they may not work well under your hands-off manager. However if they say they don't like to be micro-managed, it may be a good fit.

5) What is your motivation for changing jobs? Sometimes its just money, but other times people are looking for exciting work, smart coworkers to learn from, opportunities to move into management, etc. The latter group will be more motivated to perform. If it's just about money, the first group might be motivated in sales, but not necessarily in other roles.

6) Describe a time when you went above and beyond to get a project finished. If a candidate has put in extra effort on nights and weekends to get the job done, ask them why. Was it fear of punishment for missing the deadline? Or were they just super excited about the new process or technology they were working with? Was it to ensure that a customer's expectation was met? The goal here is to find out if a candidate is motivated to please customers and are driven by a connection they feel to their work.

Admittedly these questions are not easy to answer, but it's important to not let your job candidates off the hook if they can't answer to your satisfaction. Keep digging and continue to be persistent. Self-motivated people know the value of their work ethic and are happy to promote that value.

If you find a self-motivated person to hire, take great care of them! Don't take advantage of them just because they're willing to go the extra mile. Foster a work environment where they can learn, advance and self-manage. Show your appreciation, and they will return it with loyalty.

What tips do you have for identifying candidates who are self-motivated?