(Besides the cost)
Today, most modern powersports dealerships offer employees a wide range of benefits, including health care coverage, paid vacation, merchandise discounts, savings and bonus plans and other fringe benefits found in many medium-sized businesses across the country.
Dramatic increases in the costs associated with these benefits are of great concern to many dealers, although few seem to be cutting back on benefits offered. While some benefit plans such as health insurance and 401(k) plans are expanding, other, more traditional powersports perks like the use of demo bikes have been curtailed.
When we acquired the five stores we currently operate (the last one in 2001), only three of the five previous dealers offered health insurance coverage of any kind to their employees. When we introduced our coverage plan, it was the first time many of our new employees had participated in an employer-sponsored plan since they started in the industry. Now, available health coverage is pretty standard in the industry.
Nearly every dealer I spoke with across the country said his or her policy was to pick up at least part of the cost of an employee’s health care coverage. Most common was a 50/50 cost sharing for the employees’ premium. Generally, the cost for coverage of family members was borne entirely by the employee.
At Colorado Powersports, we pay 50% of the employee’s premium and 40% of the premium for additional family members. Some dealers cover a flat dollar amount and the employee picks up any difference. Another dealer I talked with ties the amount of employer-paid coverage for the employee to time on the job, all the way to 95% after three years of employment.
Recently, big increases in the cost of health insurance coverage have challenged dealers to keep benefit costs in line while keeping coverages adequate. According to reports I’ve seen, a 20%-30% increase would be considered normal in the last couple of years. These cost increases constitute the single greatest employee benefit concern among the dealers that I talked to. The increases seem inevitable, so the real question is, what are dealers doing about it?
“We were facing a 20% plus increase in costs,” said Ron Orr, President of Hinshaw’s Motorcycle Store in Auburn, Wash. “So, we modified the terms of coverage, raised the co-pay amount and changed the prescription drug plan to keep the increase down to around 5%.”
Several dealers said they and their employees absorbed the increases equally and kept their coverage plans intact. But, for many, modifying coverages and co-pays was the most common way to minimize cost increases. Many dealers spent valuable time researching options and alternatives at renewal time and said they would consider changing health insurance providers to keep costs in check and coverages reasonable.
Can we afford to keep offering 50% coverage if costs keep increasing?” wondered Robert Hintz, GM of Englehart, Inc. in Madison Wisc. It’s a good question and one that keeps more than a few dealers awake at night.
Curtis Moore, co-owner of Snake River Yamaha near Boise, said he asks employees to secure their own health care policy and then the company reimburses them for 25% of the cost. Consequently, the company is shielded from coverage and cost increase dilemmas and the employee manages of his or her own plan.
Most dealers I talked with had a waiting period before a new employee’s health plan would go into effect, most commonly 60-90 days. About half the dealers I spoke with said their health plans included dental and/or vision coverage.
Paid Days Off
All the dealers I spoke with offered paid vacation plans. Some were quite generous, offering three or more weeks of annual paid vacation after 5-10 years. Most common was one week after one year of employment. Paid holidays were common, but paid sick/personal days were not.
Employee Savings Plans
A surprising number of dealers I spoke with had instituted or were about to institute a 401(k) plan or other government-sponsored savings plan. And most said they matched employee contributions to their plan on a limited basis.
We don’t have a 401(k),” said Curtis Moore. “But we do have an individual IRA plan in place with a company matching contribution in place with a five year vesting time.”
Several dealers also said they offered key management employees an annual bonus based on profitability.
Virtually every dealer I spoke with offered employees a P&A discount of 10%-15% over cost. At our stores we had offered a cost plus 10% program to employees until our P&A managers realized that cost plus 10% didn’t even cover their direct costs. With that realization, our P&A managers insisted that the perk be changed to cost plus 15%!
Major unit discounts were also universally offered with terms ranging from very near dealer cost on commonly available new models to “market price” for the really hot stuff. Several dealers mentioned that they do not allow used units to be discounted to employees unless the unit has been for sale at the store for a specified period of time.
Sadly, demos seem to be a relic of the past, victims of rising insurance costs and the increased risks of liability exposure. I did not speak to any dealers who offered a traditional demo program in their stores. Several did allow managers to ride units in inventory and several offered employees rides for special events such as parades, group rides or marketing activities. A few dealers allow a variety of employees to ride used units with the proviso that they have to fix whatever they break. One dealer told me that employees who hit their monthly sales goals are allowed to ride the dealership’s bikes.
Trips, Contests and Spiffs
Dealers often use OEM trade shows as motivators for management level employees, with the trips doubling as education and fun. Most dealers keep the OEM-sponsored dealer trips for themselves, but not everyone.
“We put every employee’s name in a hat and draw a winner for the sales goals contests,” said Charlie Jansing, president of Alcoa Good Times in Louisville Tenn.
Almost all dealers said they make use of cash spiffs and contests, often in more than just the sales department where such benefits have long held sway. Many dealerships now keep the OEM spiffs in-house and use the money to fund their internal spiff incentive programs.
Chris McCarty, president of S&S Powersports in Clarksville Ind., says that they play a new game every Saturday to keep the sales team motivated. “Our best game so far has been a card draw with each delivery to multiply dollars earned on the commission,” he said.
Curtis Moore likes to reward the sale of a non-current with a roll of the dice so the salesperson can earn up to $120 ($10/point) in addition to the regular commission. Robert Hintz likes to pay commission boosts to sales, P&A and service employees who hit their sales and customer satisfaction (C.S.I.) goals each month. Charlie Jansing uses spiffs to encourage employees to master new skills and procedures such as keeping an accurate traffic log or handling telephone calls.
Many dealers reported that they commonly send their service technicians to schools and seminars with expenses being picked up by the dealership. Seminars and workshop trips were also common for the sales managers. I asked each dealer if they were willing to reimburse employees for college or trade school attendance and many indicated they were, but that few employees had expressed a desire to do so.
Robert Hintz, said he had a reimbursement policy, and some workers were taking college classes. “We pay 50% of the cost for college classes that relate to our business,” he said. “We also make use of Spader Training for the managers and use consultants to train the sales and F&I managers.”
At Colorado Powersports, we have enrolled several of our managers in the Lemco and Associates Dealer Candidate and Sales Manager Development Programs, covering the cost and travel expense for those employees.
Other Benefits and Perks
Other commonly offered perks mentioned by the dealers I talked to include all company outings, Christmas parties, dinners with spouses for contest winners and group rides. Several dealers mentioned the need to create a small company atmosphere with benefits targeted specifically to their workforce.
“We try to be very flexible for all employees’ needs, which everybody appreciates” said Mike Trulen, President of Power Pac, Inc. in Marshfield, Wisc. “For example, I have a manager that likes to coach the kid’s track team two afternoons a week. I let him go and he makes up the time somewhere else.”
Finding and keeping quality employees remains a priority for many powersports dealers. Despite pockets of high unemployment in some areas, good people continue to be in high demand across the country.
Many dealers have significantly upgraded their employee benefit packages in the last few years in order to stay competitive in the search for smart, hard-working employees who love the toys we sell.
High caliber folks will always have lots of employment options, so today’s dealer can’t afford to be too stingy with perks lest he find himself with only the dregs of the job market from which to choose.
Despite increasing costs, today’s powersports dealership must continue to develop a comprehensive line-up of quality benefits and perks in order to compete for the best employees in the market.