The Hiring Test

After a difficult recession, dealers are hiring once again. It’s been a quiet rebound: It started in 2010, when same-store headcounts increased by approximately 6 percent. That trend continued in 2011, primarily in sales departments as customers began returning to showrooms in greater numbers. But even as consumer confidence improves, employers are likely to remain cautious in the near term, especially when it comes to non-sales positions.

Why the caution? Well, management teams across the industry have been working hard over the last three to four years to get their houses in order. Dealerships have been examining manual and legacy workflows, identifying inefficient and poorly integrated processes, and making strategic investments in tools and technology with an eye toward doing more with less. The focus now is on protecting and growing their margins. The overriding concern at this delicate stage in the economic recovery is “cost creep,” so dealers should conduct any hiring with due deliberation.

Test and Reassess
While there may be opportunities in 2012 to bump up staffing levels, it’s probably best to start by performing a basic assessment. Here are a few questions you need to answer:

• Are you experiencing administrative process backlogs? If so, try to pinpoint the reasons you’re falling behind. Perhaps you’re understaffed, or maybe your processes are obsolete and ineffective. It’s also possible that your current staff is poorly matched to the tasks they’re being asked to perform. The key is to determine the problem before you hire.

• Are the backlogs a short-term problem? Paperwork can pile up to the point where the backlog exposes the business to unnecessary risk. If you are consistently struggling to comply with industry regulations, or if you don’t have a clear picture of your compliance levels, you need to address those issues right away. The solution might require more personnel, better processes, better tools or a combination of all three.

• How is existing staff holding up? Talk to your employees. They’ve probably survived layoffs, and they may have had to take on extra work. If frank conversations with staff indicate high stress levels or burnout, consider adding positions before some employees reach their breaking point.
[PAGEBREAK]Create a Hiring Plan
If you decide to add staff, apply the same rigor to hiring as you would to any other business process. So, to avoid hiring a liability, do your homework by carefully evaluating credentials and experience. Don’t use urgency as an excuse to skimp on background checks and drug-and-alcohol screenings.  

Fortunately, it’s a buyer’s market in most regions. Many of you have watched same-store staffing levels drop by more than 20 percent from mid-2008 to the beginning of 2010. Even with the modest hiring we have seen over the past year and a half, there are plenty of unemployed and underemployed individuals looking for work.

As a result, the number of applications dealerships receive for each opening has soared. This represents an opportunity to be ultra-selective and hire highly qualified personnel. But it also means you run the risk of being overwhelmed with applications, particularly if you don’t have the right tools to automate your pre-hire processes.

As you narrow the list of prospects, do you go for the “good enough” candidate who already has the basic skill set and experience to do the job? Or do you opt to train the young “athlete” who you think could turn out to be something special? If your organization has solid training in place, and management has made a commitment to building top-tier talent, go for the athlete. If not, hire the candidate who has the experience to hit the ground running.

Hiring to Retain Talent
Depending on the position, adding a would-be peer to the interview team may be helpful to get input in cases where chemistry among employees is crucial to the department functioning efficiently. But remember: The management team has ultimate responsibility for the hire and should make the final selection.

Finally, keep in mind that achieving optimal staffing is not just about hiring. It’s also about keeping your most effective employees. Historically, the industry has experienced turnover of about 52 percent annually, so retention is a significant issue, especially when you consider the cost of employee churn can exceed $10,000 per position. You can avoid churn by establishing good processes throughout the employment lifecycle.

Recruit and screen carefully, hire the right person, make sure orientation is thorough and consistent, and maintain good communication going forward. The result is everyone will feel they have a place in the organization and their contributions are appreciated and recognized. It’s a strategy often overlooked, but it can pay big dividends.

Lon Leneve is president and CEO of Compli, a provider of workforce and compliance management software for auto dealerships. E-mail him at [email protected].