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As the person at the top of the dealership’s organization chart, the GM has a responsibility to the equity ownership to make the most of the business assets provided.
As a General Manager, you are commissioned to make the best use of 3 primary categories of company assets.
Three Primary Asset Categories:
1. Inventory of Human Capital
2. Parts Inventories
3. Vehicle Inventories
It is the Asset of Human Capital that we will address today.
Here is how John D Rockefeller put it:
"Good management consists in showing average people how to do the work of superior people."
Another quote that applies (source unknown):
“Exceptional managers have mastered the skill and art of achieving organizational goals through the efforts of others.”
An auto dealership is generally categorized as a “small to medium size business.” However, its organization chart is more often seen in much larger organizations. This is due mostly to the various and often disparate profit centers that all operate under the same umbrella. It is the responsibility of the General Manager to employ these Human Capital Assets to bring about the best results for the company and its ownership.
So let’s dig a little deeper into your management of “Human Capital.”
Human Capital… Employee Time Inventory –
Your Inventories of “Employee Time”- It’s your responsibility to maximize the organization’s benefits from its investment in having skilled people to carry out the business plan.
The organization pays to have team members in place and operating effectively to help build and maintain a suitable Return on Investment (ROI). Payroll is a huge expense item and the one category where wasted investment and effort can remain somewhat hidden.
It is the inventory of time from your “Line Employees” that is most important to monitor closely.
In almost all organizations, team members can be divided into “Staff” and “Line” categories.
A staff position is typically a role that provides support, advice, and expertise to the line positions that are responsible for the primary activities of the business.
Examples of staff (or support) positions may include human resources, finance, legal, IT, and marketing departments (sometimes), which provide support to the line positions by performing functions such as hiring, budgeting, legal compliance, and technology management.
A line position in the dealership is a role that directly contributes to the core activities of the business and is responsible for achieving the business’s objectives. Line positions have direct responsibility for the sale and delivery of your many products and services.
You have a somewhat complex list of positions in the dealership; each requiring your oversight and direction.
Line Positions Include:
Vehicle Sales Consultants- There are a number of methods for compensating a salesperson, but the common denominator is that they all occupy space in the organization. A highly productive salesperson does well for themselves, but also contributes more to the financial health of the organization. Having ineffective salespeople occupying space in your showroom has to be avoided.
F&I- For many, if not most, dealerships the F&I process is key to producing a healthy gross profit on the sale of new and used vehicles. It is also a sticking point where customers become frustrated and dissatisfied with the entire buying process. Some experts in the field have indicated that GMs should focus on the quality of their F&I personnel as major and important contributors to the bottom line for the whole organization.
Service Advisors- Often underappreciated; the Service Advisor has more opportunity to either delight or repel future customers than anyone else in the dealership. Even more so than in the showroom, as visits to the Service Advisor’s counter are often filled with angst for the customer. Earning the customer’s trust is key to success in this position. But, of course, they are also key to helping to build a healthy gross profit from the sales they generate.
Technicians- Like everyone else, technicians take up space and time and need to be productive… for themselves as well as for the organization. Whether you pay them a constant salary; and hourly rate by time spent; or employ the flat rate system… in each case the technician uses valuable space within the service department which needs to be utilized to maximum efficiency.
Parts Consultants- For the most part, the Parts Counterperson is functioning at high efficiency when they are supplying the parts needed by technicians to complete the repair orders in process. Service (nor parts) can produce gross profit until the repair order is completed.
The Successful General Manager knows how to build, nurture and then manage his/her Human Capital to maximize performance for the whole enterprise as well as the department each works in.
Future posts will focus on the art and science of one-on-one coaching and how you can use this technique to get the very best from each team member while also improving the overall results from effective Management of your Human Capital.
The above was adapted from just a small portion of Chapter 1 - General Manager's Role Defined in the DealersEdge Guide - "The General Manager's Desk Reference and Dealership Operating Guide."
To learn more about this DealersEdge Guide, please see below...
This new DealersEdge Resource will provide the most useful and comprehensive collection of dealership management wisdom available…
Organized and Tabbed style that allows for Quick Reference for dealing with specific daily challenges… or as the GM’s Guidebook, it can be read and studied from start to finish.
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