Dave Baiocchi Behaviors create results
In my August 2021 column, I discussed the importance of deconstructing departmental silos in our dealerships. Silos, as we discussed, are a naturally occurring phenomenon, born out of a desire by our employees to post successful results. Sometimes however the commitment to departmental performance can overshadow our combined effort to serve the customer in the way he wants to be served. When departmental objectives start to drive behaviors that affect our ability to meet customer expectations, we have to implement strategies and tools that allow us to refocus our efforts back on the customer.
In the September issue, I suggested different tools to do just that. Strategies included communication and awareness initiatives that result in better understanding and more efficient communications. I also suggested a dealership-wide commitment to “getting it right the first time”, by introducing the “critical eye” mentality.
Deconstructing silos is not an easy task, but we must continue to remember that the customer is not hiring the rental department or the service department. They are hiring the DEALERSHIP. How can we ensure that our CX is governed by a cross-departmental, unified effort and that silo-based activity is muted, or even invisible to the customer?
Rewards based on Results
Most dealership silo building starts as a response to departmental objectives and the reward systems attached to them. Resources needed to meet objectives are not without their limits and are seldom if ever renewable. Manpower, budgets, tools, and supplies are many times competed for in the quest to get things done, and produce the results that the management is looking for. Time is the most precious resource. Every department is trying to meet its objectives with the same 480 business minutes that each day provides.
In view of the challenges that silos pose to our dealerships, I think it would be relevant to consider if there is a way that we can affect the problem at its nexus. What drives your staff to erect these walls?
The most obvious answer is the reward system that most dealers attach to departmental performance. Dealers routinely compensate salespeople, managers, and staff alike for meeting certain predetermined goals. Most of these goals are based on financial objectives. On the surface, this would seem to be a normal “cause and effect” construct. Motivate the team by setting a profitability target. If the results of the department meet or exceed the target…rewards will follow.
Although issuing rewards for meeting monetary targets seems intuitive and motivating, it carries with it an inherent risk in a multi-departmental environment. Although we want to keep our leaders aware, connected, and engaged, the profit-oriented goals we set for them are based on a “zero-sum game”. As I mentioned earlier, resources are finite, and the clock is ticking. If I am rewarded only if I achieve my departmental objective, then I will resist all attempts at deploying my limited resources toward anything except MY objective.
Long ago I had a division manager that was fond of telling his departmental managers: “It’s not important to me HOW you make your numbers…. just MAKE YOUR NUMBERS!” This is the prime example of results-based thinking (punctuated with the stick instead of the carrot). The inference was not so much that rewards would follow success, but rather that unemployment would follow failure! This guy was teaching the class in short-term thinking, and unsustainable results. The way that his managers ultimately “made their numbers” was by reinforcing their silos, many times at the expense of both the dealership and the customer.
How can we get our people to view the dealership’s resources in light of the customer’s needs, rather than their own? In order to reverse this trend, I believe that we have to realign the reward system.
The right behaviors
The value of my next suggestion will be predicated on your belief in the maxim that “the right BEHAVIORS, generally create the right results”. Wrapping your reward systems around behaviors rather than bottom-line profitability is more difficult, but it comes with decided advantages.
If my reward system is connected to behaviors, it’s infinitely easier for leaders to embrace the CX standard. Customer satisfaction becomes the FOCUS of your interaction. No longer is customer interaction a burden to be avoided, but rather an objective to be achieved. Managers are more willing to embrace the entirety of their responsibility because their rewards are based on specific behaviors that foster natural success.
The dealership loses nothing in the process. Reward amounts can still be BASED on results. The difference lies in the fact that the criteria for accessing the reward are not found in a singular metric (make your numbers). It is instead earned by properly performing duties in a customer-centric environment. Managers can actually be developed with this type of system. The behavior-reward matrix can evolve as the manager gains experience and skills, and the whole system can be continuously calibrated toward your CX objectives.
Example: Service Manager
Results based compensation: Quarterly Objective
- Grow service profits by 10% YoY Earn 2% of service NOP
- Grow service profits by 15% YoY, Earn 3% of service NOP
- Grow service profits by 20%+ YoY, Earn 4% of service NOP
This is a standard cause-and-effect motivation platform. If profit growth is the only objective, how can the manager ensure that they will earn the top reward? What is the most likely course they will follow to create profitability growth of 20%?
If results matter, but behaviors don’t, the answer is likely to be – by the easiest means possible.
- Avoid maintenance to the rental fleet
- Avoid expenditures on the LTRFM Fleet
- Avoid internal work altogether
- Use aftermarket parts to lower pricing and sell more labor
- Increase fees
- Avoid training
- Avoid investments in tools
This is not the way to build sustainable results. Short-term, silo-based thinking creates an unhealthy “every man for himself” culture, driven from the top-down.
When the focus is on behaviors, development and efficiency are rewarded. We are likely to adhere to best practice SOP’s. This results in organic growth, created from the bottom-up.
Examples of behaviors to reward:
- Regular staff meetings with standing agendas, assignments, and review
- Management oversight of warranty recovery
- Gratis reduction through training and counseling
- Cleanliness standards in both shop and van environments
- Customer satisfaction and follow-up practices
- Collaborative van stocking strategies
- Rental / LTRFM efficiency rewards (like performing maintenance when already onsite)
- Service quote efficiency (hours from request to the proposal)
- Service work order efficiency (days to invoice)
Yes, this takes more work. There are more metrics to track. There are more initiatives to watch and more tasks to monitor. It’s worth it. These behaviors become “the new normal” and the ease with which the right behaviors create the right results creates even more motivation on the part of the staff to get to the next level.
If leadership efforts are focused on behaviors, and these behaviors are aligned with your VALUES, the results will not only be prolific, they will be SUSTAINABLE. RDS can help you establish and maintain these types of incentive and compensation programs in your dealership. Give me a call and let’s chat about it.
About the Author:
Dave Baiocchi is the president of Resonant Dealer Services LLC. He has spent 39 years in the equipment business as a sales manager, aftermarket director, and dealer principal. Dave now consults with dealerships nationwide to establish and enhance best practices, especially in the area of aftermarket development and performance. E-mail [email protected] to contact Dave.
