How High is Auto Dealership Employee Turnover?
All too often, we hear dealership managers lament the costs of turnover from bad hires that should have never made it through the hiring process. Hiring without an effective selection process in place can feel like buying a car without test-driving it first, and, unfortunately, there is no lemon law to protect against a bad hire.
Auto dealership employee turnover has long been an issue. According to the National Automobile Dealers Association’s (NADA) most recent Dealership Workforce Study, the annual turnover rate for all dealership positions is 39.4 percent. The automotive retailer position with the highest turnover rate is the sales consultant, with an annual turnover rate of 71.9 percent, and a three-year retention rate of only 32.8 percent.
NADA Chief Economist Steven Szakaly says the high turnover rate of sales consultants can be attributed to two factors: “First, this represents many entry-level workers who decided to try sales but then realized they did not like it. Second, automotive retailing is going through major industry changes, which is putting pressure on sales staff earnings.” Consumer expectations are evolving and new technologies are dramatically changing vehicles, creating different requirements from sales consultants.
As many dealership managers already know, the costs of employee turnover are high and broad-reaching. Workload piles up on steadfast employees, stress builds, quality of work falters, customer service suffers –diminishing the public image of the dealership, productivity decreases, and more employees start looking for other jobs. Not to mention the most visible costs of employee turnover, the recruitment costs: advertising for new positions, time spent interviewing candidates, money spent on background checks, drug screens, and any other due diligence.
Why is Dealership Hiring so Inefficient?
Based on our research of the top automotive groups in the United States, nearly 35 percent of them do not use an applicant tracking system. An even larger percentage of these dealerships are using an ATS that is not optimized for mobile, does not have the option for prescreen questions, and does not offer sales assessments for applicants. Either due to clunkiness of the software or the lack of alignment with dealership hiring goals, these dealerships are not able to fully realize the benefits of an ATS, which may be one of the reasons that dealerships across the industry continue to struggle to retain long-term sales, service, and F&I talent. Without the ability to identify the right candidates across departments, dealerships are more likely to hire an unqualified dealership workforce, and continue to waste time and money doing it.
What Can Dealerships Do to Address Auto Dealership Turnover?
An industry-leading, mobile optimized applicant tracking system, like CareerPlug, empowers auto dealerships to develop an efficient and effective hiring process to attract, identify, interview, and onboard quality candidates. We go the extra mile in helping our clients identify top sales talent with unlimited access to candidate assessments, and we distill our years of hiring expertise into hiring tools that virtually any owner, manager, or team member can use to hire effectively. At CareerPlug, we understand that effective hiring can drastically improve the most widespread, deep-seated dealership operations challenges.
What’s Next?
Start making better hires at your dealership. Check out more of our hiring advice and how-to guides on our Resources page.
Monica Escobedo is a Marketing Intern with CareerPlug.
Sources:
[1] National Automobile Dealers Association. New Report: Employee Salaries at New-Car Dealerships Rise. Oct. 27, 2015.
[2] Driving Sales News. NADA Study Reveals 71 Percent Turnover for Dealership Sales Positions. Oct. 27, 2015
[3] Nolinske, Terrie. National Business Research Institute. Survey Research Yields Data on Employee Turnover.
