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The high cost of a bad decision

By Glenice Wilder

GleniceWilderBlogCongratulations! The powersports market is finally growing — after slogging along for several recession-laden years. Your dealership is seeing the benefit of this market growth. In fact, you’re considering adding some team members. But you’ve been burned before with a bad hire and the financial plus cultural impact was clearly felt. So, how can you avoid the high cost of a bad hiring decision? First – let’s look at some real numbers that outline what a poor hiring decision really costs, outlined in the figure below:

Costs of a poor hiring decision

Type Description Total Costs
Hiring costs Includes advertising (online, classified ads); interviewing and selection (screening, contact and interview time); along with hours for new hire training and coaching, in addition to a 90-day guarantee.

 

$8,200
Lost Gross Margin Assumes 30 bikes sold by a successful salesperson (10/month for 3 months), and 15 bikes sold by a poor hire during first 90 days (5/month for 3 months), resulting in 15 total lost unit sales (front and back end gross per vehicle $43,575
Lost service income Assumes 23 service tickets lost due to lower sales (1.5 per lost sale), $350 average service ticket and 3 average years of service per customer $23,625
TOTAL LOST GROSS MARGIN $75,400

As you can see, not only does a bad hire impact the dealership’s bottom line, it can also impact the retention of your current team. The Harvard Business Review points out that as much as 80 percent of current employee turnover is due to bad hiring decisions. Team synergy is critical. Don’t risk losing the rest of your team over one bad apple!

Things just didn’t match up

A recent survey by Robert Half showed that one-third (36 percent) of 1,400 executives surveyed felt the top factor leading to a failed hire, aside from performance issues, is a poor skills match. The second most common reason (30 percent) was unclear performance objectives. “Wrong hiring” occurs when dealership owners confuse the job description with the job criteria. When writing the job description, make sure to involve people who have actually held that position at your dealership. If this is a brand new function, consult with people who have complimentary positions.

Another reason new hires don’t fit could be based on culture. Sometimes a new hire can have the perfect skills, but they clash with the “culture” of the dealership. When interviewing a candidate, make sure you ask specific questions to determine their personalities. It’s also important to have the candidate interview with several other people in the dealership – including peers, senior management and support staff. While it takes more time, this step will ensure the candidate fits the group – and the position.

Five tips for making the right hiring decision

Here are some suggestions to improve your chances of hiring the right candidate:

  1. Know what you want. Don’t recycle past job descriptions because chances are the role has changed. Take a fresh look at your needs and the skills you’d like to add to your team. A detailed job description will help reduce the number of resumes you receive from unqualified applicants.
  2. Look for the intangibles. A candidate’s skill set isn’t limited to functional abilities – it also includes how well they work in a collaborative environment. Employers that don’t take soft skills such as leadership and communication into account may set themselves up for a bad match.
  3. Make a personal connection. Hiring is more than just identifying a strong resume or profile – it involves having conversations with applicants to establish a rapport. Interviews, for example, allow you to delve deeper into an applicant’s qualifications while also assessing whether they are a fit for your dealership culture.
  4. Use all your resources. As a dealership owner, you may have the final say. But hiring should never be a solo effort. Take advantage of the tools available to you at your store, including referrals, employees and other business leaders you respect.
  5. Woo your top choices. In any economy, people in high-demand may have multiple job offers. You need to show them why they should choose your dealership over a competitor. Sell the benefits of working with your shop, and offer a compensation package in line with – or ideally, above – market rates.

Hiring the right candidate takes time

The most important asset of your dealership is your team – not your products. Taking shortcuts to build your team may ease immediate growing pains but create regrets in the long-term. The key is to understand that hiring the right candidate takes time, so be patient, develop a solid job description, communicate the job criteria, have a good sense of the candidate’s personality, and involve your other team members. Remember, no hire is better than a bad hire.

Glenice Wilder is the vice president of Powersports for EFG Companies. A 33-year industry veteran, Glenice is responsible for growing and developing EFG’s action and powersports market channel. She combines her passion for motorcycles and her dedication to serving EFG’s customers to develop solutions that consistently exceed their expectations. Glenice acts as a strategic partner to assess her clients’ areas for improvement and how EFG can fill that role. She provides insight in how to increase productivity by pairing the right products within the right markets for the greatest return on investment.

One comment

  1. Hi Glenice,
    I thought you might find our Cost of Failure Calculator of interest. Here is a link:
    https://salestestonline.com/the-cost-of-failure-calculator

      [Reply]

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