This is a guest post from John Petrov, MBA, Technical Services Training Manager for Toyota's Cincinnati region. In this post, John outlines the unique challenges ahead as service and parts departments see incredible demand for talent as highly-skilled Gen X and Baby Boomer technicians begin retiring in record numbers.
Symphony of Profits
It’s not everyday that we see the General Managers of automotive dealerships walk through their service drives, repair shops, and parts departments. These enthusiastic jaunts in the messy and loud areas of the dealership are motivated by the “symphony of profits” that continue to crescendo year over year. In 2016, the 17+ million seasonally-adjusted annual rate has played a leading role in the Midwest Region of Toyota dealerships to generate a 55% share of operating profits (profits after expenses) combined from the Service and Parts departments, which increased from a 50% combined operating profits contribution in 2015.
An Increasing Need for Tech Talent
The Toyota Care complimentary maintenance service, covering all new Toyota vehicles for 2 years or 25,000 miles, is another supporting factor to the growth seen at Toyota dealerships. This will lead to exponential visits to Toyota dealerships in the years to come as Toyota plans to own the full customer experience from purchase through service.
The same GMs responsible for driving profitability for Toyota dealerships, however, are now also tasked with recruiting the next generation of technicians to support future growth and provide an excellent customer experience.
The Dual Portal Hiring Path
Bringing on a new technician to the lube rack and seeing if they survive long enough to advance to the next level is now a dead-end approach for automotive hiring. The idea of a “Dual Portal” strategy to hire and recruit new technicians as either Toyota Express Maintenance Technicians (entry level) or Advanced Technicians (experienced) is the path to success in creating a dynamic team to meet current volume needs and develop personnel for the future. The demand for Advanced Technicians is growing faster than the archaic practice only hiring the “Lube Rack Person” who survives their trial by fire.
Proactive Recruiting: The New Normal
General managers should partner with their service managers to create a sustainable process to hire and recruit qualified technicians in the Dual Portal strategy. The aging technician workforce is a real concern as a wave pending retirements present a substantial knowledge drain.
The combination of industry-leading Toyota Care and expanding Customer Pay Repair Order growth, averaging 4% annually, will require most dealerships to hire a new technician every 3 to 6 months.
Proactive recruiting is characterized by actions that build relationships with the staff of technical colleges, high schools, local career centers, and vocational schools – to the point where the service manager has the instructor’s name and phone number in their rolodex to call for any hiring needs.
This new normal requires service managers to attend military job fairs like Hire a Hero (sponsored in part by Toyota), consistently updating job postings on internet job boards, and detailed job listings on the dealership’s own web site. The career site is a particularly effective venue to take: wouldn’t we want to hire the same people we are selling to?
Creating a Culture of Attraction
Automotive dealerships are the best at presenting the reasons around “Why buy from my dealership” in their ads and during vehicle demonstrations. Service and parts departments need to create the same culture of attraction when it comes to recruiting and hiring.
The Dual Portal hiring process should have transparent pay plans, an outlined career path with a 3-5 year outlook, listings of incentives like achieving attendance goals, and financial support for education and certification. Dealerships need to actively present these benefits knowing that the competitive landscape has many paths to companies with excellent benefits.
The competition to recruit top talent has never been so fierce, even from industries that have not been prevalent in the marketplace. A recent advisory board meeting at a technical college in Canton, Ohio had both the Caterpillar forklift fleet manager and technical trainer in attendance to highlight their company’s benefits. The oil and gas exploration companies have already started to post new positions on the various internet job sites – especially with the new administration in the White House.
“Eat What You Catch” Diets Are Poisonous
We have a convergence of several powerful competitors directing us to re-evaluate the technician’s pay plans, specifically the flat rate system, or commission-based pay for technicians. The strong financial pull from these competing companies are making the flat rate-only pay plan obsolete and will quickly drain away top talent.
Creativity is required to supplement the technician pay plans with merit-based actions, like providing bonuses for mentoring new technicians, attending local technical school activities, facilitating skills competitions, and successful completion of the Automotive Service Excellence tests.
Investing in the Dual Portal Process
Recruiting and hiring the best personnel into a Dual Portal process will help support extraordinary returns for service and parts departments. Managing an active recruitment process with a culture of attraction will develop the path for future technicians to find their next career position at an automotive dealership. The investment in our personnel will be the foundation of our successful future in the automotive industry.
Technicians are a critical part of any team – in providing excellent customer success, servicing vehicles, and driving dealership profitability. Learn how to attract these in-demand professionals in our latest eBook.