Increasing Production in Your Dealership1 Dec, 2015 By: Jim Kahrs, Prosperity Plus
So here’s the scene: you’re preparing for the annual review with one of your key staff. You know the first thought in her mind is “How much of a raise am I going to get this year?” While you’re thinking, “I know she’s been with me for yet another year, but I can’t afford giving an annual raise just because it’s another anniversary. My payroll costs keep climbing higher and higher each year.”
Naturally, you first review the year in your mind. What did she do well and where did she fall short of your expectations? As her main role in the company is dispatch, you start there. “Well, she tends to come in late fairly often, the technicians complain about her a lot, and she had that ‘run in’ with the service manager. On the other hand, she does a great job following up on parts calls and really did bail us out with our biggest account when their machine went down.”
You’ve now spent an hour thinking this through and the answer isn’t any clearer than before. Does this sound familiar? Do you wish you used a better way to evaluate company employees?
Well there is, and you don’t have to have an MBA from Harvard to put a plan together. The Hubbard Management System offers a solution. The solution involves measuring and managing production in all areas of the business. Production is what spells the difference between success and failure in any business, no matter how large or small. Many employees believe they are trading hours for a paycheck. “If I come in to the office for eight hours a day I am entitled to my salary.” Very often the employee totally misses the fact that production is what makes a business operate. In fact they truly believe that they are entitled to an annual raise even if their individual production has decreased.
The key to increasing production throughout your business is to measure it via production statistics and then work to improve those statistics. For example production statistics for a sales rep would be things like the number of prospecting calls made, number of appointments completed or total dollars sold. Production statistics for a technician would be things like the number of service calls completed, first call efficiency, parts used and customer time. The use of statistics is a vital tool of good management. They are completely objective and offer a fair assessment of an employee’s actual performance. So how does this tie in to the example above? One of the key concepts outlined in the Hubbard Management System states:
“WHEN YOU REWARD DOWN STATISTICS AND PENALIZE UP STATISTCS YOU GET DOWN STATISTICS.”
This offers a wholly workable viewpoint. It means that giving a raise to someone who’s production (measured via statistics) has gone down will lead to further non-production. The perfect example of this is the sales rep that was given a large guaranteed salary when hired. This guarantee almost always represents a raise over their previous earnings. If this large reward continues even when production is low or non-existent the result will inevitably be continued low production and a rep that goes off to find the next guarantee from your competitor. It is equally dangerous to penalize someone who is producing. Anyone who has been “punished” after increasing production can attest to that!
So let’s go back to the example of the dispatch manager and review a plan. There are a series of steps that can be taken to make next year’s review much easier. The steps below will outline an action plan for dispatch but it can be easily modified for any position in the dealership.
- Determine Measurements of Production That Lead to Success - For this step you need to determine how success is measured. For starters you could measure response time. The lower the response time the better the dispatcher is doing with routing of technicians and handling the calls. You could also measure the time technicians spend servicing machines. If the dispatcher is routing technicians improperly the time spent servicing machines drops, leading to lost production. Another measure of production could be as simple as the volume of calls handled per day. The key here is to make sure that an increase or decrease in production in each area can be linked to the performance of the individual.
- Convert Production Measures to Statistics - Now take the actions that lead to success and convert them into measurements that can be counted and reported. In the example above you would take items like: average response time in hours, percentage of technician’s time spent servicing machines and number of calls handled per day. The key is to have a measurement that is easily counted. If the measurement can’t be translated to a quantifiable number then it won’t work. For example, a dispatcher is expected to create happy customers, but this would be very difficult if not impossible to measure since you don’t hear from the happy customers on a weekly basis and would have no way to accurately count them. In this case we measure the actions that lead to happy customers.
- Capture and Report the Statistics Weekly - You must now determine how the statistics will be counted and reported. In the case of the dispatcher this is fairly easy if you’re using a software system like e-Automate. The information can be taken from system-generated reports. Based on these reports the dispatcher can see, for example, that the average response time for the week was 5.3 hours, technicians spent 63% of their time working on machines and that there were 200 calls received for the week.
- Graph the Statistics Weekly - Now the numbers need to be graphed using a simple line graph. This shows the relationship of this week’s performance to that of previous weeks. Graphing the statistics makes it very easy to see if production is up or down. Imagine your response if the graph represented the percentage of time technicians spent servicing machines. [*Graph available to view in Dec. digital edition / flipbook ]
The graph must be scaled properly to show the rises and falls of the statistics each week. Once the statistics are graphed the graphs should be posted at the employees work area and reviewed weekly with their supervisor.
- Review the Statistics Weekly - The final step in the process is to review the statistics weekly with each person. Each week a battle plan should be devised that lays out the actions for the coming week. The battle plan addresses the things that need to be done to increase production for the coming week. By doing this weekly you have 52 opportunities each year to increase production. Monthly and quarterly measures limit your opportunities to react to changing conditions. In our dispatch example the battle plan might include a review meeting each morning with the service manager to pre-plan some of the technician routing.
Once you implement a management by statistics program the annual review process with an employee becomes much easier. Once again we’ll go back to our example with the dispatcher. Imagine having a full year of production statistics to go over during the review. Over the year the average response time went from 5.3 hours to 4.1 hours, the technician’s time spent on machines went from 63% to 70% and the number of calls handled per week went from 200 to 230. Now you can give the dispatcher a raise and feel good about it knowing that the production (and most likely profitability) of the service department has increased. Further, by rewarding the increased production you set the stage for additional increases in the coming weeks and years.
If you follow the steps outlined above and implement them with each member of your staff, the results will speak for themselves. It is not uncommon for clients, including ours, to more than double their profitability in less than a year. The best place to start is with the next employee that is up for a review. Make this process part of their review and planning for the coming year. Work out the production statistics for their area and start tracking and improving each one. If you do this, one by one, with each employee as their review comes up, you’ll have the entire company driving production as a team within a year and will reap the rewards for years to come.
Jim Kahrs is Founder and President of Prosperity Plus Management Consulting, Inc. PPMC works with companies in the office systems industry building revenue and profitability and improving organization structure using the Hubbard Management System. Prosperity Plus works with dealers to develop programs and strategies that help these dealers achieve their business goals. Jim can be reached at 631-382-7762 or email@example.com