Each year, retail auto dealers spend more than $512 million to hire new people. But is that money being invested wisely? A new Hireology and DrivingSales HR Practices survey reveals that the hiring process is broken. According to the survey, dealers are wrestling with major challenges in their hiring practices, including the quality of their hires. No wonder: the survey also shows that dealers are not giving hiring managers any consistent tools and processes to work with. As a result, auto dealers are wasting money (on average, thousands of dollars for each hire) and suffering from turnover in crucial functions, such as sales.
The solution to the broken hiring process is to replace gut decisions with tools and processes that make hiring more predictable and accountable. Given the enormous cost of hiring and developing talent, hiring better people is the biggest challenge retail automotive dealers are not addressing -- and need to do so now.
Who Was Surveyed
To uncover the hiring practices of retail automotive dealers, Hireology partnered with DrivingSales, a leading resource for automotive dealership professionals, to sponsor an industry survey. DrivingSales surveyed 80 retail automotive dealer groups, ranging in size from small to large, and representing more than 200 rooftops. 80 percent of survey respondents were owners or general managers of their store.
Ultimately, Hireology and DrivingSales wanted to understand the current state of hiring in the retail automotive industry: how it’s being done, who makes the decisions, and whether or not dealers are succeeding in building high-performance teams.
What Was Found
The survey uncovered a number of challenges:
- The hiring process is broken. All dealers, regardless of size, report major challenges with their hiring. Most everyone surveyed said that every aspect of hiring is either a challenge or a major challenge, with the most acute problem being quality of candidates
- Employee turnover is hurting dealers. Dealers also report an employee turnover problem. A large majority of dealers see turnover in all customer-facing roles as having a major impact on their operations, with the impact highest in sales, service management, and service advisor positions.
- Too many dealers lack consistent tools and procedure to hire better people. The study reveals that hiring is characterized by an inconsistent use of tools and procedures such as background checks that should be used to vet the right hires. Applicant tracking is the most widely adopted technology but used by only one in five dealers. Less than one in 10 use more advanced HR planning solutions.
- Hiring managers lack oversight and support. Dealers told DrivingSales that executives are not providing adequate oversight and support for hiring managers. Only 20 percent of respondents said that they provide hiring managers guides and templates for candidate evaluation.
Retail dealers that lack a systematic approach to hiring pay a price. Dealers that leave hiring up to a manager's discretion suffer from higher turnover rates than dealers that require managers to follow a consistent, structured hiring process:
These findings come at a time when it has never been more important for retail automotive dealers to hire better people. Historically low unemployment rates, changing skill requirements and a changing workforce are all factors converging to make it more difficult for dealers to find the right talent. And the mistakes for choosing the wrong candidate are costly: hiring the wrong manager can put a dealer behind by six months, and the cost of replacing a bad hire is between 3x and 10x compensation.
The hiring challenge is not going to go away, either. According to a recent Kelly Global Workforce study, the auto industry as a whole will grapple with a skills shortage that will worsen over the next 10-to-15 years.
What Dealers Need to Do
The mandate for retail automotive dealers is clear: take hiring seriously by adopting the right tools and processes.
Bottom line: dealers must take charge of the hiring challenge by taking control of the hiring process. Dealers that hire better people will beat their competitors and create happy customers.
To read the survey in full, download it below.