The pandemic labor phenomenon known as the ‘Great Resignation’ is predicted to continue into 2022 – almost half of employees are looking for a new job or plan to soon. This means, keeping your best talent is critical to your success. But how do you do that? And why does it matter?
Here are four ways employee retention benefits your dealership.
What is employee retention? Why it is important?
At its simplest, employee retention is how long an employee stays at your dealership. The time someone stays at a given job has been dropping steadily for years, and most recently a study revealed that most people stay just over four years at a single employer.
A recent survey of the up-and-coming Gen-Z workers shows they want to stay on the job only 3.72 years on average, and 25% of those surveyed said they would only spend 1-2 years on a job before moving on. But time spent finding new employees and training them is money lost, and there are other disadvantages to high turnover as well.
These costs and benefits have driven many dealerships to laser focus on employee retention.
1. Reduced Costs
The first and most common benefit of employee retention is reduced costs. Think about the many steps to recruiting that cost time and money:
- Posting an ad online and vetting potential candidates.
- Interviewing and onboarding, including paying for items like uniforms, nametags, and office equipment/setup.
- Recruiting and referral incentives.
- Training (It can take six months to one year to truly learn a role and the organization.)
- Repeating the recruiting cycle if a bad hire is made.
According to a 2017 CareerBuilder Survey, 74% of employers say they have hired the wrong person for a position and companies lost an average of $14,900 on every bad hire. These are all costs that can be eliminated or reduced significantly by retaining your current employees. But retention is about more than just your bottom line.
2. Improved Customer Experience
You save money and time by keeping your best talent. The other beneficiary of employee retention is your customer. If a customer knows and likes your employees, he or she will likely be a repeat customer, from parts and service to purchasing vehicles.
But another part of this is customer expectations and the kind of experience they want to have at your dealership. The more consistent the process and the people they deal with, the better it is for them. And satisfied customers make for a more profitable dealership.
Experienced employees provide those consistent experiences. In addition, they understand the business and how your team works together. The better the teamwork, the smoother your operations will be. A new employee will take time to become part of your team.
3. Increased Productivity
Losing employees hurts your bottom line and your dealership’s performance. The more often employees leave, the more productivity will be disrupted. While the trainer and trainee are working together, everyone around them has to pick up the slack or certain things may take longer or simply not get done.
Even if a new hire is an excellent fit, it will take the individual several months to reach his or her maximum productivity after training. This means it will take even longer for your team to return to full strength – impacting staff and customer service.
The simple solution is prevention through employee retention programs. A high performing team runs smoothly and efficiently, maintaining a dealership’s sales and reputation.
4. Improved Employee Morale
Studies show that happier employees are more productive and more likely to stay. Keeping employees happy has many facets, including a strong employer brand (what prospective employees see that attracts them to work for you in the first place).
Creating a positive employee brand or culture goes far beyond sales commissions. Happy employees are recognized, listened to, work in a positive environment, and maintain a healthy work-life balance.
In the wake of COVID, many businesses are understaffed. A 2021 study by CareerPlug suggests that 50% of employees have considered leaving their current job in the last 12 months. Feeling overworked due to exiting staff is a valid reason why employees may look elsewhere for employment right now.
Retaining an experienced team that works well together supports a strong work environment and employer brand. It’s vital to a dealership’s business success.
How to Increase Employee Retention
Positive culture, competitive compensation and benefits, ongoing training, and career development are all methods to retaining the best talent for your dealership. It’s also important to offer recognition where it is due.
In addition, when you must hire, you can attract good candidates by offering an employee referral program, screening potential job candidates well, and hiring the right people in the first place. The wrong hire can be extremely damaging to company culture, and the right one can propel you to the next level.
Remember, employee turnover not only hurts you, but it also benefits your competition.
Retention as a Culture
Employee retention is a part of your culture – part of your employer brand. It is unique to you. The more you show that you care for employees and their advancement, the more they will care about you as an employer. Investing in them means they also invest in you.
To support those goals, NIADA has supported the independent used auto dealer community for more than 75 years. They offer ongoing sales and other dealership training that can help you find, and keep, the best in the business.
And there’s never a downside to that.
