Aug. 10, 2009: Moving to a more structured business organization

These articles recap some of the opportunities uncovered by Gart Sutton & Associates’ powersports specialists during consulting visits.
These are followed by recommended actions that address the issues. Our goal is to provide ideas to help improve your dealership.

Dealership details
In 2008 the dealership was moved to a new, high-quality facility on freeway frontage near a small town. There are more than 200,000 people within a 30-mile radius and they are only 60 miles from a major city. Overall major unit sales are more than 900 units, plus they sell a significant volume of power equipment. The store is not making a profit and must implement significant changes to survive.
This was a true mom and pop dealership until the owner/operator died a few years ago. His sons have recently taken control and want to move the business away from the owner/manager entrepreneurial stage to a more typical-structured business organization.
They have already made significant compensation plan changes as they recognized that personnel expenses were too high in relation to revenue. We discussed developing manager compensation plans with a base salary and incentive based on a percentage of the department gross profit.
The most frequent issues in the employee surveys were based around the lack of communications, both from the top down and interdepartmentally. They will need to begin weekly manager meetings, daily huddles and monthly store meetings to get the business headed in the right direction.
They have had job descriptions in the past, but not currently. We discussed creating non-negotiable standards lists for the managers (with their involvement). The managers would then develop them for their staff. These would be incorporated into their Employee Handbook.
Several position changes were discussed. We discussed the layout of the organization chart and the fact that it needed to be provided to each employee. The chain of command must be followed and enforced.
The Counsel, Warn and Act method of employee management was discussed. Counsel for the first offense; warn for the second offense and provide a description of the consequences for the third offense. Also put a note in the employee’s file. The third offense has to result in action or the technique will be useless as a management tool.
John, one of the sons, is acting as the general manager. He has worked in all the departments, so he has a good working knowledge of the dealership. John is already starting to adopt the micromanagement style that is common to an entrepreneur. However, he is suffering symptoms of “burn out,” as he does not want to be involved in every day-to-day activity. To move the business forward, he will have to define his job functions, put the right people in the manager slots and empower them to manage their departments.
This is the first in a series of articles examining this dealership.

Action Items
Write out the specific goals you have for this business. What is it that you hope to accomplish out of this effort? Develop business vision and mission statements.
Determine who you are and what differentiates your business from the others. Utilize this common theme in all your marketing efforts going forward.
Select/create/hire an effective sales manager and P&A manager.
Develop an organization chart, provide a copy to each employee, require them to follow the chain-of-command except in exceptional circumstances.
Create written, “non-negotiable” standards lists for each manager. Work with them to refine the lists and gain commitment to maintain them. Hold managers accountable.
Have each manager develop written “non-negotiable” standards lists for department personnel. Managers must hold staff accountable.
Empower managers to manage. Example: They should be able to recruit, hire and fire staff after owner and/or GM review and approval.
Hold weekly manager meetings. Initially, these should focus on Action Plan status. Eventually, they should focus on performance numbers as defined by the dealer principal.
Daily manager and department huddles should be encouraged.
Ensure the sales department holds daily staff huddles and weekly staff sales meetings that include F&I.
Take appropriate steps to increase F&I PVS to $300-plus.
Put all procedures in writing. Require managers to do the same for their departments. Assemble all department procedures into a P&P manual for store operations.
Seek alternative flooring sources. Use your revenue as a lever to encourage banks to support you.