The average annual employee turnover at U.S. car dealerships fell to 34% in 2021, the lowest recorded level since NADA began publishing its Annual Dealership Workforce Study. This record retention is due to unprecedented dealership earnings resulting from ongoing inventory shortages and limited retail incentives.
According to NADA research, record earnings and inventory constraints led to the average dealership payroll increasing $900k + in 2021, all while dealerships have been operating with fewer employees on staff. As external factors such as inventory, interest rates, and customer demand begin to normalize or decline, the industry faces the challenge of holding on to top performers who will begin having to work harder to retain their income.
Given how fluid the automotive industry continues to be, it’s clear that the only constant is change. Employee expectations have evolved, and with the automotive industry’s branding challenges, it’s time for dealerships to rethink their talent strategy.
The traditional dealership talent strategy is lengthy and puts more emphasis on the hiring party (what you can do for the dealership). To compete and win in this new “Employee-Focused” era, dealerships must adopt modern talent strategies that provide modern touchpoints, flexibility, and are two-sided (how we can create win-win relationships that benefit both the dealership and employee). Here are three modern talent strategies to drive dealership brand and employee experience:
Treat recruiting like sales
Relying on a job posting to grab an applicant’s attention is no longer enough for your talent acquisition strategy. Employee recruitment should be viewed in the same way as vehicle sales marketing. By creating a talent funnel and treating the applicant journey like the customer journey, dealers can create a top-notch hiring experience that inspires applicants to choose them over the competition.
If you want your job listing to be seen, utilize multiple channels. Applicants will start their research online, so you should be tracking and measuring those activities like a marketing initiative. Leading hiring and HR platforms, such as Hireology, are well positioned to support and automate these core recruiting dealership functions.
Your culture matters to today’s employees. Identify and highlight your employer brand as a key selling point for working with you.
Build your own talent
It is estimated that the cost to recruit a new employee increased to $15,000 in 2022 compared to just $5,000 in 2019. And that doesn’t account for the lost revenue and internal resources that are redirected to reviewing resumes and interviewing during the 30+ days it takes on average to fill that open position. All told, it can cost upwards of $56,000 per hire.
In contrast, building your talent pipeline from within can cost as little as $4,000 per year, taking into account an annual budget of $3,800 per person in training and a few hundred dollars for software licenses. Plus, when you promote from within, you can fill vacancies faster, increase employee loyalty and ensure they’ll be able to jump right in since they’re already familiar with your teams and processes.
Leverage data and technology
There are many ways data and technology can play a role in improving hiring outcomes. The key is figuring out what specific outcomes you’d like to improve and focusing on tracking the right data and optimizing your approach over time.
For example, if you’re looking to make better fit hires to ultimately curb turnover, platforms like Predictive Index allow you to identify and track behavior characteristics in your top performers and then test for those characteristics in any future candidates.
Or, if you’re hoping to increase the ROI of your recruiting efforts you might consider tools like Hireology’s Insights platform that tracks applicants, candidates, and hires per recruitment channel and identifies where you’re getting the highest return for your spend. Hireology Insights also tracks bottlenecks in your hiring process, helping you identify opportunities to cut down on your time-to-hire.To learn more about ways your dealership can build – and maintain – a strong team, plus plenty of other insights into achieving growth in the automotive industry, check out JM&A Group’s new Ultimate Guide to Dealership Growth.
Kevin Hull is the Director of Sales & Training at JM&A Group