Recruiting Top Candidates – Rule #2

I spoke to a friend today who was interviewing a candidate for a job. The candidate was a AAA, top-notch, everything you want in a candidate and then some kind of guy. My buddy had found his guy! Everything was great. The candidate had all the skills, education, they agreed on the money and wanted the job. The candidate accepted the offer and only had to offer his resignation to his soon to be former employer and the deal was done.

Guess what the “soon to be former employer” had to say about all this? He joined in on the bidding war and all the time and effort my buddy put into hiring Mr. perfect was out the window. So, what happened? 

Somebody did not begin recruiting until it was too late into the interview process. The first rule of recruiting is to never make an offer until you know it will be accepted. The second rule that my buddy did not honor is to make sure to paint a beautiful visual picture of the new job for the new candidate in a way that no previous employer can ever compete with money.

When Mr. perfect candidate returned to his old place of employment, he should have gone in there excited about his new career and making plans to begin all the new projects. Instead, Mr. perfect went back and discussed other potential opportunities with the same company that he disliked so much so that he searched for another job. This reminds me of the unfaithful spouse being accepted back “because this time he will change syndrome.” 

If you are an employer and you have spent all the time, effort and money on hiring someone, make sure you close the deal by having Mr. perfect take delivery of their new position and they are excited beyond belief at beginning their new career. Early in your interview process find out why Mr. perfect is looking for a new job and remind Mr. perfect of all these reasons just before you send him back to offer his resignation to his old employer.

Do you want the facts or the truth?

Every time I speak with anyone about the current economy, I am constantly reminded of a statement made by my personal coach, Bob Proctor. Bob was speaking in front of a group of people and someone asked about how to help people deal with being subjected to a negative environment. Bob said as only Bob can say, “ask them if they want to live with the facts or the truth.” Really what Bob was saying was we can live our life in yesterday or today and tomorrow.

I live my life every day trying to always do the right things and I think everyone else does too. One important thing that Bob Proctor taught me is that we become what we think about (a quote from the late  Earl Nightingale). When Bob asked the question about fact or truth, he was really telling the group to focus on what you want to happen and not the negative outcomes of recent history.

Let’s use an example of my recruiting business. As many of you may have noticed, there are not too many automotive dealers hiring people due to a slow market. I understand and respect this decision but actually right now is the time to actually recruit and hire the best people. It was not that long ago that every dealer I know was complaining that they could not find “good” people. And, it won’t be too long from now (when the economy turns for the good) that these same dealers will be complaining about one of their managers and how they would like to make a change. Good people are plentiful right now and there is not better time to make a change should you not have the “right” person in place. As one dealer stated recently, “I can lose money on my own and I don’t need any more help losing money.”

The facts or truth question is also a way for Bob to question our self image, paradigms or comfort zone. Often is the case, I catch my self believing a situation is exactly what the facts lead me to believe. If you are a dealer in a bad part of town, business is probably tougher than it has been ever before. I guarantee you can support the difficulties with financial statements, traffic logs and declining banks balances. All of these instruments would be factual but there remains one truth. YOU OWN AN AUTOMOTIVE DEALERSHIP; YOU NEED TO SELL AND SERVICE CARS FOR PROFIT! If clients are not coming into your store, go make a presentation to a club outside of your primary market. Hold a contest to see who can sell the most cars outside your PMA. Begin a drip marketing program on the Internet; get rid of the same tired manufacture website that every dealer on the planet uses.

The truth is the economy and the auto industry are changing. Dealers are going to have to do things differently or they are going to go out of business. The fear and frustration is our inability to deal with change and nothing more. Dealers have invested millions of dollars in facilities, historically spent way too much in print advertising over the years and sat back and waited for customers to walk in like sheep heading for a slaughter. This model is broke and is definitely not generating the profits necessary to sustain many dealerships. 

The sooner dealers can adjust their thinking from facts to the beautiful and profitable truth, the sooner they can get back to their offices on the golf course where every problem can be fixed with an eraser.

Meet Mr. Kiosk!

As I sit and type this bog, I think about the difficulties in the auto industry and how everything is perfectly alligned for change. The economy is difficult, the domestic manufactures are going broke and so are many dealers. I, Jim Durkin, have the solution of solutions for the world’s economy. 

Now, I’m going to tell each of you my solution but you have to promise to give me credit for my worthy ideal. Should you experience severe memory loss as you sit around the coffee shop with your car buddies and not give me credit, I will come looking for you. 

The solution for the auto industry and the worlds economy is nothing more than sales associate commission per sale. Ever since the manufactures have reduced margin in their vehicles and dealers have increased “packs” good sales people have left the industry. And, if good sales people leave the industry, they are not going to become the managers of tomorrow. If you have spent any time around the industry, you will recall all the people who left for the real estate industry.

The other day, I purchased a cell phone for my daughter. The young man who helped us was sharp. Since I am a recruiter and always looking for “the next superstar” I tried to recruit him. I told him that I was in sales and how impressed with his abilities and sales techniques. I asked him if he had ever given any thought to selling cars? I will always remember his response. “I use to give it a lot of thought – about 60 hours a week, and I earned minimum wage doing it by trying to sell Fords.” My cell phone sales person left the auto industry because he hated the hours and could not make much more that $2,500 a month. He was making $4,000 per month selling cell phones and working 40 hours per week inside an air conditioned office.

Basically, the auto industry has trained most every decent sales person selling loans, phones and homes! As I write this blog, several members of Congress are discussing a bail-out package for the Big 3. Let them go bankrupt; sell the private jets and cut the fat out of your bloated companies! The Big 3 have not even began to see competition abroad. Wait until China really begins building vehicles and selling them in the international markets. Every dollar of profit GM is making in Russia and China will disappear.

The other day, I was in a meeting with a group of automotive sales managers. They openly admitted that something must change with profitability  or their businesses will go under. You can’t have a dealership filled with products with $1,200 front-end profit. How many dealers have built huge stores after having their arms twisted by the manufactures, only to discover the math just does not work? As my dealer buddy John Harris said the other day, “we are over-dealer-ed.” Amen! 

If the above average sales person can’t earn $4-$5,000 per month, you can look forward to more of the same. At this rate, you might as well start installing kiosk on showroom floors! Bring back the good old days of selling cars for fun and profit and then and only then, will you see the world’s economy turn around.

Who has the answer?

The economy has not slowed; it has nearly stopped. Our government does not have the answers to stimulate the auto industry. Low interest loans and lease deals that have created traffic on showroom floors no longer work. Times are tough for the Big 3 who basically build vehicles that do not get the best fuel economy when we all know oil could easily return to $147 a barrel.  Dealers have cut expenses, laid-off unneeded personnel and some have closed down all together. So, what are we going to do in a time when every consumer is scared out of their minds?

The manufactures should refuse any attempt to bail out by the government. If the airline industry has taught anything, it is this. The last guy to file bankruptcy is usually has the lowest operating expense and a competitive advantage in an international market. The auto industry is no longer the Big 3 and a few Japanese auto makers. China and India are producing cars and the industry is going to become more difficult on an international basis. I’m not going to go out on a limb by stating the world has too many auto manufactures.

Retail auto dealers have had all the fun they are going to have for a while. The old days of “if I could would ya” are simply not going to work. The manufactures have played a big role in this problem by not punishing the poorer dealers and looking the other way as long as the numbers were good. Just like the beginning of the housing crisis, there will be more dealers and even a couple manufactures who go out of business. This is not your parents recession. There are too many dealerships and those stores that trained and retained the best performers will be the only survivors. The answer to the industry’s problems will always be resolved by the intelligent and creative folks who have always taken care of their customers. Stay tuned if you want to see who has the answers!

It’s no longer “money for nothing”

The price of oil is down and the biggest concern on the retail front is financing those clients who previously were able to obtain a car loan but can’t seem to get financing today. I think credit really got out of hand for a good number years and while I think today’s tight credit market is a complete over reaction, it’s gonna take a little time for financial institutions to get the bad taste out of their mouths. 

Dealers and their F&I managers are going to hear about the five C’s. Back in the day, before complex financial products creating mass amounts of liquidity in the credit markets, banks paid more attention to who was buying or leasing the collateral. They even verified references and the buyer’s job!

When I learned the five C’s cash was king. Maybe the client had “a little bad luck” but a steady job and good down payment, a slightly higher interest rate and they were driving that beautiful new car. This all changed with securitized loans and for a while the banks simply did not charge enough interest charges to compensate for the risk they were taking. It use to drive me crazy when a client would come in with challenged credit and pay a 1/4 point higher than the client who never missed a payment in his life.

The first C is Credit before all the various computers and scoring systems, we reviewed the credit file and gave points for comparable credit and deducted for late payments. We never approved a loan when a client was currently late on a payment.

Next, Cash. We wanted to see at least 10% cash investment and we would verify that the down payment was good should the loan go bad. If the client did not make the down payment in full since we did not have an enforceable contract. I miss the good old days!

Collateral was important. If a client had good credit we might offer 115% of invoice. When things were out of control, banks were doing higher percentages of MSRP – ouch!

Capacity was important. The car payment could not exceed 15% of the clients gross income and we did not like the total debt ratio over 40%. 

And finally, the overall conditions of the deal. This really did not come into play unless something was out of line. 

Back in the day, the financial institution I worked for, had a Return on Equity of 35%! We were a captive finance company and we did not face near the competition that exist even today and certainly was nothing like the “good old days.”

When it is all said and done, financial institutions are going to be a little more conservative than they have been but as time goes on, memories fade and expectations rise, the good old days will be back before you can say bail out!

I Am Your _____________

I am your companion.

I am your greatest helper or your heaviest burden.

I will push you onward or drag you down to failure.

I am completely at your command.

Half the things you do, you might just as well turn over to me, and I’ll be able to do them quickly and correctly if you just give me guidance.

I am easily managed, but you must be firm with me.

Show me exactly what you want done, what you want created, and I will work on it automatically.

I am the servant of the greatest men and women, but, alas, I am also that which brings failure to them.

Those who are great, I have made great.

Those who are failures, I have made failures.

I am not a machine, but I work with the precision of a fine machine, plus the intelligence of the smartest person you know.

You may run me for profit or run me for ruin. It makes no difference to me.

Take me, train, be firm with me, and I will place the world at your feet.

Be easy with me, casual with me, convenient with me, and I will destroy every dream you have.

Who am I?

Why do we do what we do?

I will always remember my first day in the retail auto industry. I left my previous position as a District Manager for the manufacture, Toyota. I was responsible for the northern Nevada dealers, the Sacramento area dealers and a few dealers in central California. My primary responsibilities were to promote Toyota’s insurance products, vehicle service agreements, maintenance agreements, guaranteed auto protection and train dealership personnel on how to sell and administer each product. After ten years in and around dealerships, I felt like I had a pretty good understanding of how the inside of a dealership functioned. I am here to tell anyone who is willing to listen (or read this blog), nothing could be farther from the truth!

After long and careful thought, I left my job with the manufacture and joined a local Toyota dealership to begin my quest in retail. I had always admired those who rolled-up their sleeves and fought the good fight each day in the trenches with every customer who presented him or herself to buy a car or “was just looking.” As a twelve year old paper boy, I delivered The Sacramento Bee to a house behind a Mike Salta Pontiac dealership on Fulton Avenue in Sacramento. Each day (the paper was an afternoon paper back then) I would ride my bike past the dealership and notice the sales staff standing out front of the dealership.  I don’t recall a time where they weren’t laughing and joking and looking like they were having fun. This is where my interest in retail auto was created. Thank you Mike Salta!

So here I am. It’s my first day in my new career and I am ready to apply all my education, training, theory and street smarts to become the best Toyota sales person in the world. I had a goal at that time to eventually buy my own Toyota dealership some day. I only mentioned my goal once and was laughed at by everyone within earshot of my proclamation.  I never made that mistake again. So I was placed on a “crew” and began my quest. I recall thinking, “when will I be trained on how to sell cars?” I asked my friend who I used to rep my products to if there was any training and he told me that most of that will occur each Friday in the sales meeting. He also told me that the car business is very simple and he would tell give me all the training I would need in 30 seconds. I was all ears! He said, “Kid, if you want to be successful in this business, you are going to remember three things. You are either with a customer, talking to a customer on the phone telling them to get down here or on the point waiting for a customer to arrive at the dealership. Do not visit with your co-workers in the office; when you come to work, work.”

This sound advice helped me nearly triple the income I was earning as a manufacture representative in one short year. I was on my path to achieving my goal that everyone found so humorous just a year earlier. I was eventually promoted to the Finance Department of the dealership. My days in F&I were filled with plenty of challenges and learning experiences. Prior to representing Toyota’s insurance products, I was also a Credit Analyst for Toyota Financial Services; I use to be the loan officer who loaned car buyers money so they could drive their new cars. I felt like I was on familiar ground in F&I. Once again, I could not have been farther from the truth. I lasted about six months in Finance. I nearly became claustrophobic in that little office and grew more and more uncomfortable each day. I no longer felt like I was helping customers but rather taking advantage of them. My time in F&I ended my retail career. I took the knowledge and experience and I would help others in the industry become better at what they do.

Today, I own Autobullpen.com; we help dealers recruit, screen, hire, train and retain the best retail automotive people in the world. Our primary focus answers the question of questions: why? Why do you do what you do for a living? Why we do what we do for a living, is really the most important question anyone can ever ask, and answer for themselves with regards to their career. Today’s economy and automotive market is struggling to say the least. Good people are leaving the retail automotive industry because they can’t earn a decent living and really do not know what to do in a dysfunctional market. The people who make the decision to leave will probably earn a living in a similar industry and be fine, as long as that market is profitable. I believe with every fiber of my being that the biggest problem facing the retail auto industry is not the economy, tight lending standards or too few customers. The biggest problem facing the industry is purpose. If people in the industry do not have a clear understanding of the reason they work the long hours fighting for every skinny deal, they will not last. Dealers must also have a crystal clear purpose other than making a lot of money. Every person in the industry has to enjoy being the expert always looking new and creative ways to solve their customers’ transportation problems and doing so profitably – especially in a down market.

A Lesson in Perceptual Contrast

I recently cam across another classic book that will remain in my library for years to come. This little jewel has everything a guy like me would ever want. If you are looking for new ideas and substantiated research, you must read Influence Science and Practice by Robert B. Cialdini.

Since I am a person who admittedly never had an original thought of his own, I tend to appreciate good books more than the average person. I openly admit and even tell people, “I’m gonna copy that one” or a simple “thank you” as I furiously scribble their statement or thought. I have a standing rule with those I share a joke. They agree to a 24 hour moratorium on sharing “my” joke with any of our network of friends. Few honor my rule but it does not stop me from doing what I can to slow spread of information. 

Cialdini’s book offers every sales person a treasure chest of research, examples and great ideas so we can actually influence those we meet. I knew when I read the classic letter from a college student to her parents on page 14, I had to share this book with all of you. The letter is a great example of Perceptual Contrast. 

Dear Mother and Dad,

Since I left for college, I have been remiss in writing and I am sorry  my thoughtlessness in not having written before. I will bring you up to date now, but  before you read on, please sit down. You are not to read any further unless you are sitting down, okay?

Well, then, I am getting along pretty well now, The skull fracture and the concussion I got when I jumped out of the window of my dormitory when it caught on fire shortly after i arrived here is pretty well healed now. I only spent two weeks in the hospital and now I can see almost normally and only get those sick headaches once a day. Fortunately, the fire in the dormitory, and my jump, was witnessed by an attendant at the gas station near the dorm, and he was the one who called the Fire Department and the ambulance. He also visited me in the hospital and since I had nowhere to live because of the burnt-out dormitory, he was kind enough to invite me to share his apartment with him. It’s really a basement room, but it’s kind of cute. He is a very nice boy, and we have fallen deeply in love and are planing to get married. We haven’t set the exact date yet, but it will be before my pregnancy  begins to show.

Yes, Mother and Dad, I am pregnant. I know how much you are looking forward to be grandparents and I know you will welcome the baby and give it the same love and devotion and tender care you gave me when I was a child. The reason for the delay in our marriage is that my boyfriend has a minor infection which prevents us from passing our premarital blood test and I carelessly caught it from him. I know that you will welcome him in our family with open arms. He is kind and, although not well educated, he is ambitious.

Now that I have brought you up to date, I want to tell you that there was no dormitory fire, I did not have a concussion or skull fracture, I was not in the hospital, I am not pregnant, I am not engaged, I am not infected, and there is no boyfriend. However, I am getting a “D” in American History and an “F” in Chemistry, and want you to see those marks in their proper perspective.

You loving daughter,

Sharon

I think everyone can see that instead of simply explaining an additional option or repair bill will cost our client $500, we can frame the discussion with a little humor and exaggeration prior to delivering the “small” $500 increase. Do yourself the favor and get this book. I recently purchased the fifth edition and notice there are over one million copies sold. 

It’s Time For Change!

Every time I speak with a owner or General Manager of a dealership, I am amazed at how easy it is for people to get a job in the retail auto business. The average interview consists of two questions. Can the candidate pass the drug test? And, how little will the candidate agree to earn in this position?

McKinsey Quarterly did a great study on Talent Management in the retail auto industry. The study was conducted June 2007 by Carlos F. Caicedo, Mark D. Mitchke and Jon Vander Ark.   Here is a small part of what they had to say about the way candidates were selected, trained and retained at auto dealers.

High employee turnover plagues many car dealerships, yet our survey’s top performers had turnover rates that were 17 percentage points lower than those of dealers in the bottom quartile (54 percent versus 71 percent, respectively). When we looked further we found that top dealerships were more likely to indicate that they used formal, consistent talent-management practices, such as structured recruiting processes with a number of interviews for each candidate. Likewise, top dealerships were more likely to provide formal training to their employees (57 percent versus 40 percent of the poor performers) and to use long-term incentives to retain top talent. By contrast, high-ranking managers at average- and poorly performing dealers focused less attention on recruitment and frequently weren’t even directly involved in hiring decisions.

When I read this article, I ran to my copier so I could share this information with all my clients who often think I am “over the top” with my recruiting, screening, hiring, training and retaining suggestions. I wish I had a nickel for every blank stare when I suggest that dealers implement multiple stages of interviews, verifying references or to have candidates complete a take-home test. It’s funny to hear a dealer say he “can tell” a good from poor candidate in a single conversation as an excuse to not conduct additional interviews. The excuse use to be that he had to hire the guy or his competition would hire the desirable person before he could.  If you trust the industry statistics, that “good person” will be working somewhere else within a year.

I hope I live long enough to see dealers implement some of the same techniques and strategies that Xerox, IBM, Apple, Microsoft use to put the best person to work and see that they are successful. 

Retail Automotive’s Blog

This blog is specifically for people working in the retail automotive industry. Retail automotive professionals have long been a unique blend of people who for the most part have relied on word of mouth for industry employment information.

This blog is an attempt to share job opportunities and pass along the hiring needs specific to the retail auto industry. We will also look for ways to improve your skill set so you can become better at what you do. I definitely subscribe to the mantra, if you want more, you must become more. Whether you sell cars, work in a business office, repair vehicles or call any of the other departments in a dealership your second home, I am going to offer helpful hints to make your job a little easier.

Like most every “expert” in the auto industry, I plan to take the best ideas and share them with you here. Much of our focus will be related to the people side of the business. This monthly newsletter will offer a monthly article focusing on Sales, Service, Parts or the Business Office focusing on opportunities in the industry.

I certainly  won’t have all the answers but like any good car person, I will at hopefully offer you a little ammo to fight your fight. If you or someone you know has an idea or message worth sharing with our subscribers, please contact us and I will steal your idea too! Just kidding, I will give credit where credit is due and really want to hear from all of you.

The retail auto industry offers as much opportunity today as it ever has even in this difficult economic time. I will point out job opportunities, insights, humor with a genuine empathy and understanding for those working retail.

Jim Durkin is the founder and owner of Autobullpen.com a talent management firm exclusively for retail auto dealers. You can contact Jim by email: info@autobullpen.com