Change is constant, right change is a
challenge.....
Because we prepare our management accounts
department by department, it is only natural that we measure the performance of
a departmental manager by the results achieved by his or her department. How
does this affect the well being of a company?
The key lies with the owner of the company. Unless
he learns to manage change himself, he cannot expect his team to do so. To be
able to change the culture in working practices requires courage and
conviction. It also requires excellent communications, upwards and downwards,
and an open style of management.
Let’s start with the line managers or team leaders.
In most dealerships I go into, the service manager has his inter-firm
comparisons just for service; likewise the sales manager for sales, and the
parts manager for parts. When they have their monthly performance review, each
is questioned only on his own department and if he has had a good month, he
sits back and lets the others get their blocking.
The first thing we could do is to ensure that all
team leaders get to see each other’s inter-firm comparisons. The company
Finance/Accounts Manager should operate a briefing on finance for the
non-financial managers, so that each understands how to improve his own
performance while ensuring that his actions do not affect adversely the
wellbeing of the company overall.
For example, if sales cut back on reconditioning,
how does this affect labour and parts sales? If sales changes its policy on
retained profit per vehicle, i.e. sells less but makes more profit per vehicle,
how does this affect the volume of customer retention in the next three years -
and F&I commission? If the service department reduces its productivity, how
quickly can we turn used vehicle round so that cash flow is not affected? If
the parts department cuts its stock holding, how does this affect urgent orders
or V.O.R.? All these "what if" questions require team leaders to
think laterally, and focus on the results for the company, not just their
department.
The next thing we can do is turn all employees into salespeople; that is, train
all employees in product knowledge, and educate them in our sales strategy.
The next stage is to ensure that daily operating control data are placed on all
department notice boards, so that salespeople can see labour sales through the
workshop against budget, and technicians can see vehicle sold and parts sales
(internal, retail and workshop) every day.
We can then create an innovation team, comprising members from each department,
who will be challenged to look at the performance gaps to be closed from all
departments, and to discuss possible solutions. Once these have been found, the
team can move on to other areas, such as benchmarking local competition, and
operating customer focus groups.
Rewarding with co-operation
we can then start to look at how we can pay people to think of the company, not just departments.
Without doubt, line manager’s mind-sets will be the hardest to change, as inter-departmental rivalries have been with us a long time. It has become natural for the service department to "stuff sales" on hours taken, likewise for the sales department to moan about jobs not done right first time, on time every time; and for the poor old parts department get it in the neck from everyone - they never have it in stock, it’s on back order, or they have sold it to someone else when it was specially ordered.
The key to sorting this out is again to go back to basics. Once we have produced departmental budgets, we can then join all the departments together - their expenses, salaries, sales and gross profits, from which we then can prepare a team direct profit target.
Action you can take:
- ·
Review job descriptions: are they
results-driven?
- ·
Review retention of customers for
service over four years.
- ·
Check retained profit in New Vehicle
Sales
- · Consider paying managers on profits.
