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Decreasing Your Dealership Turnover with a Strong Employment Brand

Posted by Adam Robinson on July 25, 2016

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Recently, Hireology was fortunate to speak and present at the DrivingSales Presidents Club 2016 event as a finalist for the Most Valuable Insight Awards. As a way to present our “most valuable insight,” Hireology presented the findings from an in-house study on how effective employment branding drives quality hires and improved store performance at dealerships. After conducting our research, we found something to be true across all retail automotive dealerships: your employment brand matters.

The insight: Strong employment branding, when combined with a data-driven evaluation process, is one of the best investments a dealership can make. When dealerships build a strong employment brand and utilize process to manage the recruiting and hiring effort, the results are staggering.

 

Study Methodology:

 

While conducting our research, we studied two control groups (for easy reference, I’ll refer to these groups as “Group A” and “Group B”). Group A consisted of a six rooftop  dealer group from the Mid-Atlantic region and Group B was composed of a three-rooftop group located in the Midwest. Management teams were surveyed electronically, which covered their approach to employment branding and recruitment process, as well as their results from such efforts.

Before diving into the results, let’s take a look at some of the industry-wide data related to human capital:


  • Employee turnover in variable ops roles is 72% 1
  • The average cost of a bad hire is $16,000 2
  • In 2015 >50% of retail hires were Gen Y/millennials 
  • Over 60% of job searches start on a mobile device 4

Sources:

  1. 2015 NADA Workforce Study
  2. Hireology
  3. 2015 NADA Workforce Study
  4. Hireology

Therefore, we knew that there must be a correlation between the way dealerships present themselves as employers to today’s younger workforce online and the costly effects of their staff turnover.

What we found:

Our survey exposed numerous challenges facing the automotive industry when it comes to finding and hiring employees. We discovered that there was a clear difference between utilizing job boards and a company career site when it comes to recruiting talent. Here’s what we found:

 

Group A (Six rooftop control group - Mid-Atlantic)

MVI_1.png

 

Applicant conversion by source

We analyzed the rate at which inbound page traffic to this dealership group’s career page converted into candidate applications, and found that conversion rates from organic traffic delivered as a result of a branded career site substantially over-performed the conversion rates generated from paid job board traffic:

    • 0.2% conversion rate from job boards
    • 11.5% conversion rate from organic traffic

Candidates by source

In this analysis, “candidate” is defined as someone who has applied for an open position via the career site, and who has been deemed qualified first review such that a next step (like an interview) is warranted. What we found was that nearly 94% of candidates who applied for an open job were attributable to a paid job board, versus organic traffic attributable to a career site.

    • 6.1% career site
    • 93.8% job boards

Hires by source

Our analysis of the data showed that 77% of all hires made resulted from organic traffic generated by the dealer’s career site, versus job boards.  This insight, when combined with conversion rate and candidate source data, show that even though organic traffic attributable to a dealer career site generated just 6% of all candidate traffic, this cohort produced a whopping 77% of all hires made. In other words, 6% of traffic generated 77% of hires.

    • 22.7% job boards
    • 77.3% career site

MVI_2.png

 

Quality of Hires by source

Our analysis defined “quality hire” as “a hire who was able to meet or exceed 75% of their states production or performance target.” In sales roles, this might be a monthly vehicle unit sales quota, for example. When controlling for the candidate source, 75% of all “quality hires” made originated from the candidate pool generated via organic career site traffic. Just 25% of quality hire made originated from a paid job board.

    • 25% job boards
    • 75% career site

Turnover Percentage by Source

Most importantly, the results show that turnover rates diverge substantially based on cohort. The new variable ops hires that originated from an candidate attributable to a branded career site turned over at a rate that’s two-thirds less than than the industry average.

    • 25% from Group A
    • 72% industry average

 

Group B (Three rooftop control group - Midwest)

MVI_3.png

 

For this second control group, we similarly analyzed the rate at which inbound page traffic to this dealership group’s career page converted into candidate applications, and found that conversion rates from organic traffic delivered as a result of a branded career site substantially over-performed the conversion rates generated from paid job board traffic:

Applicant conversion by source

We examined the rate at which inbound page traffic to this dealership group’s career page converted into candidate applications, and found that conversion rates from organic traffic delivered as a result of a branded career site significantly over-performed the conversion rates that came from paid job board traffic:

    • 1% came from job boards
    • 13% came from the dealership’s career site

Candidates by source

In this analysis, we defined “candidate” as someone who has applied for an open position via the career site, and who has been considered qualified first review such that a next step (like an interview) is warranted. We found that nearly 82% of candidate who applied for an open position were attributable to a paid job board, compared with organic traffic attributable to a career site.

    • 82% job boards
    • 18% career site

Hires by source

Our analysis of the data showed that 71% of all hires made resulted from organic traffic generated by the dealer’s career site, versus job boards.  This insight, when combined with conversion rate and candidate source data, shows that even though organic traffic attributable to a dealer career site generated just 18% of all candidate traffic, this cohort produced a whopping 71% of all hires made. In other words, 18% of traffic generated 71% of hires.

    • 29% job boards
    • 71% career site

MVI_4.png

 

Quality of Hires by source

As previously mentioned, we defined “quality hire” as “a hire who was able to meet or exceed 75% of their states production or performance target.” For example, in sales roles, this might be a monthly vehicle unit sales quota. When controlling for the candidate source, 70% of all “quality hires” made came from the candidate pool generated via organic career site traffic. Only 30% of quality hires made came from a paid job board.

    • 30% job boards
    • 70% career site

Turnover Percentage by Source

What’s essential here is that the results show that turnover rates deviate significantly based on cohort. The new variable ops hires that came from a candidate attributable to a branded career site turned over at a rate that’s nearly 50 percent less than the industry average.

    • 21% from Group B
    • 70% industry average

So, what’s the value in having a branded career site for your dealership? Here are four things to consider:

  1. Organic applicant traffic and process is over 5x more cost-effective
    1. Organic cost per-hire: $245
    2. Third party sources cost per-hire: $1,700
  2. Organic applicant traffic and process yields the majority of hires
    1. 20% of the traffic yields 80% of the hires
  3. Hires sourced this way are 2.5x more likely to be an A or B player
  4. Hires sources this way have higher retention rates
    1. 27% versus 67% industry average

 

What Dealers Must Do:

 

Retail automotive dealers that want to build better teams and reduce turnover should invest in employment branding, and should integrate a data-driven hiring process.

The financial benefits of such an approach far surpass nearly all potential operational improvements through which dealers can generate a return on investment.

Assuming that a dealer has 55 employees (the average) and that their turnover is 67% per year, turnover is costing them nearly $600,000 per year, every year:

55 Employees

37 turns (67% x 55)

@ $16,000 cost-per-turnover ea.

= $592,000

Now let’s assume that this dealership gets its act together, implements a branded career site and a structured hiring process, and produces a turnover rate similar to the cases studies discussed previously (25%). That same dealership turnover calculation now looks like the following:

55 Employees

14 turns (25% x 55)

@ $16,000 cost-per-turnover ea.

= $224,000

 

That’s a profit add-back of $368,000 per store per year.  

 

Dealers are hard-pressed to figure out a more straightforward way to generate a higher return in this amount of time.

The bottom line is that dealers must take charge of the hiring challenge by taking control of the hiring process. Strong employment branding, when combined with a data-driven evaluation process, is one of the best investments a dealership can make.

If you’re not already taking this approach, it might be time to reconsider the way your dealership hires employees, because your employment brand most definitely matters. 

 

Start strengthening your dealership's employment brand with a better career site by clicking on the link below.

Hireology Career Site Checklist Hiring

Fresh Perspectives New Ideas, Automotive Industry, Turnover, automotive hiring, Retail Automotive, Dealership Hiring, employment brand


Adam Robinson

About the Author

Adam co-founded Hireology with the mission to help growing companies make better hiring decisions through data and better technology. Adam is passionate about entrepreneurship, donating time to a number of organizations that support the entrepreneurial cause. Adam completed his undergraduate study at the University of Illinois at Urbana-Champaign, and received his MBA from DePaul University in Chicago, IL.