Nov. 14, 2005 – The fourth P in Profit: Performance

Over the past couple months, I’ve laid on you what I see as being the key building-blocks of dealership profitability. I call them “The 4 Ps in Profit.” Here’s what we’ve covered so far:

  • Number One: Your Purpose. Your company’s Purpose drives all its actions and provides the yardstick for measuring its success. If you don’t sit down and think about your Purpose, you’ll be at the helm of a rudderless ship.
  • Number Two: Your People. They’re ultimately the make-or-break element of any business. Top Guns choose their people carefully, then help them become the best they can be.
  • Number Three:, Your Processes. These are like road maps to help everyone stay on course and arrive at the same destination.
    Now comes the last one, “Performance.” It’s a management task, and it separates the winners from the losers faster than any of the others.
    Performance has three main sub-categories: Establishing performance expectations, measuring that performance, and offering rewards for good performance. Let’s look at them one at a time.
    Establishing Expectations
    You should establishing Performance expectations for every member of your team, including yourself.
    The word “expectations” carries a lot more weight than you may know. One of the immutable rules of managing people (or of raising kids, for that matter) is that you’ll almost always get from them exactly what you expect to get.
    If you expect people to be losers, they’ll gladly accommodate you. If you expect greatness, you’ll get that, too.
    However, you’d better expect it sincerely, right down to the soles of your shoes. If you’re just handing out fake “attaboys” to your employees, when you actually expect them to be screwups, a downright mysterious thing will happen. They’ll read your eyes and they’ll pick up the clues. They’ll know what you really expect, deep down inside. And that’s what they’ll deliver.
    But if you communicate your faith in their ability to be the best, you’ll suddenly have lots of top performers on your team. Sounds metaphysical, but it works.
    Set performance expectations, set ’em pretty high, make sure everyone understands what they are, and then cheer them on to victory.
    Measuring Performance
    The next step is to create and put in place systems to measure that performance.
    The problem with compiling measurement tools is knowing when to stop. If you’re not careful, you’ll catch yourself measuring things that don’t matter. It’s usually best to keep your measurement systems pretty simple and clear. That makes it easier for your team to remember what’s expected of them, and keeps the managers from nitpicking them to death. (That can kick all the “wanna do it” out of the people you’re paying to “do it”.)
    Your main questions might be things like:

  • “Does everyone know how good is good performance?” and
  • “Have I varied the performance indicators so they’re appropriate to the specific department?”
    Those indicators can range from profit creation to the perceived customer value of the services you provide, and it’s not necessarily a “one size fits all.”
    Performance measurement is tricky, so you may want to turn to professionals for help with that job. It could save you a lot of trial-and-error…and it’ll get the darn thing done in a hurry.
    Or join a 20-Group. Our 20-Group members send us their financials every month and we massage them into stats that form the basis for their performance measurements. Do it however you like, but do it. You can’t manage what you can’t measure.
    Offering rewards for Performance
    Obviously, your compensation plans should be set up to reward—and thus encourage— top performance. Here’s another place where you may want to turn to outside consultants where you can learn what works for other dealers and what doesn’t.
    But bear in mind that money isn’t the Number One motivator for most people. Sure, they expect to be paid a fair income. And commissions still inspire . But research tells us that what they want, even more than money, is to be recognized and appreciated.
    It doesn’t take a lot of hoopla, either. Often, a pat on the back is enough. Or an extra day off. Or a reserved parking space. Make sure rewards are linked to performance, so they serve as motivators. And make sure they’re given out evenhandedly — favoritism can wipe out all the benefits of a reward program.
    People want to feel good about themselves. When you help them do that, they’ll do good work. And when they do good work, they’ll feel good about themselves. It’s a beautiful cycle.
    We’ll talk, in future columns, about the distinction between being a Leader and being a Manager. Successful dealers do a lot of leading and relatively little managing, so if you find yourself too bogged down in daily trivia to make the leap from “Good” to “Great,” you may want to watch for those hints. psb
    To join a PHD 20-group and become a Top Gun dealership call PowerHouse Dealer Services toll free at 866.896.3759 or email Bill@phdservices.com

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