Business Management

Empire Building

It never ceases to amaze me that we still have dealership staff clinging to old behaviors in a time where economic uncertainties run rampant, sales are down, and the business’ survival is either on, or close to, life support.

Let me be a bit more specific:

I will not identify a dealer specifically in this example; it is far better that I describe the behavior as fictional amalgam of dealers I have seen over the past couple of years, and call it “Happytown Motors”.

Happytown Motors is anything but happy right now. The economic downturn has caused a slump in new and pre-owned sales because customers are not buying in spite of a massive advertising campaign via mail. Service and Parts sales are also down, although customers are keeping their cars longer.

The Pre-Owned Manager has fresh inventory from the auctions which he runs through the shop for an initial check-over; after he finds out what the vehicle needs, he either fixes it after a client has closed on the sale, or he farms the vehicle out to an independent shop to get the work done less expensively than in the dealer’s facility.

The Parts Manager stocks a small inventory, and uses daily or overnight ordering rarely, if ever. His two largest motivators are obtaining as much return credit as possible, and doing as little paperwork as possible. He would rather lose a sale than lose his buyback credit.

The Service Manager has been fighting with lower-than-usual daily car counts. In an attempt to improve this condition, he has asked the Office Manager to run an 18 month “no transaction” report, and the Office Manager has told him she will get to it…after closing month end…reconciling payables…and filing quarterly taxes.

The Technicians have been squabbling amongst each other regarding the type, kind, and ease of work they have been getting. One Tech has been a “buddy” of the dispatcher, and it seems he gets most of the gravy work.

Does any of this sound familiar to you? I could go on…

The term describing cause and effect of this behavior is called “Empire Building”; namely, a person holding responsibility or control of others seeks to reinforce their power by granting use of their role under circumstances which are of most benefit to securing or expanding their power base.

Um…excuse me…how about some common sense, here:

Aren’t we in business to make a profit and grow the business?
Haven’t you figured out that the rules have changed?
How is this toxic behavior going to keep the doors open?

It would be too easy and too simple to boil this down to a lack of leadership. Managers are paid to lead, whether the Dealer Principal explicitly states it (or not). The focus must shift from “My department first” to “What will secure the business and grow our GP”?

Common sense says no customers = no revenue.
Common sense says no parts = no service sales.
Common sense says broken cars for sale = no cars sold.

Fix it:

Pre-owned: Fix what’s broken. Use your dealership’s shop. Going outside = stealing from the Dealer Principal. You know better…stop doing it.

Parts: Stock what sells. Use daily orders. Sacrifice a few “virtual” dollars for some real sales and GP. Listen to your best customer (the Service Department) and stock what they need.

Service: Eliminate the favoritism. Treat all Techs equally (be it good, fair or bad…just be consistent). Work it out with the Pre-Owned and Parts Managers. Press your Office Manager to either provide the call list, or tell you another way to get it.

Collectively:

Get a dose of reality…being “king of your castle” with no concern for the kingdom will result in your downfall. Drop the artificial barriers and work together for the common goal of keeping the business alive. As managers, you are responsible for the income security of at least two non-employees (dependants) for each person working either with or for you.

What can you do right now…today…to ensure your business’ continued financial success?

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