blog post
4 min read operations | blog post

The Real Cost of Hiring at Your Dealership

By Ryan Leschel  | Jul 7, 2021

Every year a dealership will spend an average of $15,000 (according to our own research) to hire, train, and manage each one of their associates, not including associated payroll costs.

On average, a single roof dealership employs 68 people. They hire, onboard, and train an average of 30 of those people per year due to turnover.

$15,000 X 30 employees = $450,000.00 spent on hiring & training costs

If you have multiple stores, well, you can do the math...

So, the obvious question here is “How do I cut the cost to hire and train?”

The most practical answer would be to reduce the amount of people you train and hire, right? Well, with retention becoming a bigger issue for dealers, it’s hard to cut that corner by yourself as the more seats you must fill, the more people you must find, train, and manage.

So, the cycle of diminishing return continues for many dealers who still hold on to this outdated practice. But dealers across the country are starting to figure out that it’s more cost-effective to invest in your current staff and build talent from within, rather than finding new talent.

Why? Because it not only keeps seats filled in the store but provides protection of employee ROI. Upskilling your team in general increases your ROI and having a plan in place to execute on that is becoming a huge priority for automotive sellers.

Dealers are finding that spending even 3x the amount of money on training is still more cost and time-effective than traditional recruitment.

The added time you get back to your leadership teams, by building vs. buying, not to mention the additional cost savings benefit that longer retention cycles provide, allows you to focus on revenue generation while still retaining high performers.

Eliminating time and costs associated with the factors of hiring is the name of the game here.

Learn how to optimize and retain your dealership team. →

Let's look at the breakdown of what it currently costs dealers to maintain a traditional hiring and recruitment process:

People Investment

Average Salary

Average Salary
$73,261

Average Cost to Recruit and Onboard

Average Cost to Recruit and Onboard
$5,000

 Average Annual Training Spend

Average Annual
Training Spend
$1,200

Average Additional Benefits

Average Additional
Benefits
$21,978.30

iconAverage PVR Increase

Total AnnualCost
Per Employee
$101,439

 

*Health benefits, vacation/personal time, retirement, other employee perks
Based on NADA Workforce Study Data

That’s a lot of money! So, what can you do today to start rethinking the traditional recruitment and hiring process in order to cut expenses?

Here are few things to consider:

Generate Talent

Building an onboarding & training program so you can “create talent” is highly recommended and supports long-term growth and loyalty. The value in the long run is higher retention and a proven process that makes your brand and company more marketable. When you foster this internal growth, it is proven to increase employee engagement & loyalty.

Leveraging your community outreach to help identify an untapped pool of applicants can be very effective as well. Understand barriers for entry and build around them – example: Tools for technicians can be expensive and detour potential new hires. Create a partnership for technicians to lease to buy them.

Hire from Within

The top talent you are looking for may already exist in your dealership. It’s in your best interest to uncover that talent and tap into it.

Define Job Target, Reward Managers for their employees being promoted or moved around the store, Develop Career Paths and give your HR recruiters the ability to recruit from within. The next high performer may already be in your store! Just make sure to have a policy and a process in place to properly qualify, train and develop talent from within. It’s a crucial part of the process to ensure this successful shift in strategy.

Get Creative

Be open, and optimistic. Is it time to think about building a bench of strategic part-time, gig work, contract, and outsourced workers to fill certain dealership needs? A large portion of Millennials already have side-hustles, so there are lots of great people out there who may want to work part-time.

Embrace automation and redesign and consider switching up some aspects of how your company operates.

When workers are plentiful, employers can get become complacent and just “hire more people” to grow. Now, as the labor market gets more and more competitive and wages go up, you must rethink how things operate and apply technology wherever you can. Don’t just let managers “hire more people” but help them rethink how their teams operate. Capitalize on your digital retailing footprint, tools, & strategies.

Leverage a Dealership Talent Service

Another great option that is a go-to strategy for dealers is employing the outside help of a Dealership Talent Service.

For the cost to hire, train, and manage one associate (usually $15,000), you could experience a 2.5X lift on current employee performance, retention, and ROI by choosing to work with a Dealership Talent Service. The added support they provide helps to eliminate the time and costs associated with the factors of hiring. Allowing you to reallocate energy, time, and money where it belongs.

It comes down to protecting the investment in your people.

In most cases, starting at just $60 per person (depending on dealership headcount), you can add the best tools possible to your team's toolbox by partnering with experts.

How Are You Protecting Your Investment?

For additional $60

10%
Decrease new hire
turnover by 10%
2.5x
Increase employee productivity and team effectiveness by 2.5x
3hrs
Give managers back
3 hours a week


JM&A’s Dealer Talent Services handles two of the biggest factors in the hiring equation:

Retention and Development.

This way you can seriously cut costs and focus on growing revenue. Implementing a talent strategy that focuses on building vs. buying talent is quickly proving to be the go-to plan for highly successful dealerships no matter organization size.

It’s like an insurance plan combined with a treasure map to hiring success.

Not convinced it makes sense to jump in right now? Here are a few more benefits that JM&A Group’s Dealer Talent Services brings to the table for automotive sellers:

  • 24/7 access to behavioral data allowing managers to move the chess pieces as they see fit.
  • 3 hours per week per manager.
  • Hands-on consultative approach including personal coaching, 1-1 sessions on-demand, and development sessions on a regular basis.
  • Longer retention of high performers (3+ years).
  • Tools to evaluate your talent pool and pick the best candidates.
  • Continued annual cost savings through decreasing turnover.

Start increasing employee performance, exceeding customer expectations, and grow your profitability by having the conversation with us today. Let’s create the best team possible at your organization.

Get the Best Out of Your Dealership Team - Get Started

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