As published in PowerSports Business, November 4, 2019
by Mark J. Sheffield
Did you know that the Department of Labor provides an official description defining the role of a manager? Dealers have used the title Manager in many different ways, but guidelines for the title do exist.
A true manager:
- Has at least two (and preferably three or more) direct reports.
- Can hire and fire personnel who report to him/her.
- Has P&L and budgeting authority (including access to current financial statements for the area that he/she oversees).
- Spends at least 80% of his/her time doing managerial-type tasks. An employee who spends more than 20% of working hours taking care of clients and customers is not a manager.
While the ratio varies based on several factors, if more than 20% of your staff have the title of manager, then there is a good likelihood that you have too many bosses, and not enough workers. In our role as a 20 Group facilitators, we have the opportunity to visit and evaluate dealerships across North America. We frequently see dealerships with too many managers, and in many cases the people filling these positions are not those best suited for their roles.
So, how did we get into this situation? Lots of reasons:
- The dealership didn’t have a defined growth strategy, and expanded in a haphazard manner. We got busy and started throwing titles at problems.
- A manager left and the next most-tenured employee in that department was promoted into management (without considering whether they really were qualified for that role).
- The dealership didn’t have solid job descriptions defining the expectations for each role, resulting in a lack of clear accountability. (It’s also important that job descriptions evolve with the dealership.)
- The dealership didn’t have a strong hiring process and failed to cast a wide enough net when looking for new staff. (Hiring is both an art and a science, if you’ve never taken a class or course to help you develop your hiring skills then you are missing out.)
- The dealership was in the middle of the busy season and had to make a rushed promotion.
We are all for promoting from within, but there are times where the best employee in a department might not be the best manager for that department. The skills that define a top salesperson don’t always translate into the skills that make a good sales manager. Promote the wrong person, or promote too soon, and in the best-case scenario you lose a little money. In the worst-case scenario you lose a good employee. Once an employee has been promoted, if they don’t work out it’s tough (almost impossible) to take that title back without doing serious damage to that person’s pride.
There are many ways to avoid some of these problems.
Growth Strategy – As your dealership grows and expands, create management positions only when the four management criteria have been met. If the role doesn’t quite require a manager, then look at intermediate positions such as team leaders, foremen, and supervisors.
Performance Reviews – Sit down with each employee at least twice a year and review his/her performance. Instead of just stating that the employee is doing a good job, compare their alignment with the company values and also review each component of their job description to see if the dealership standards are being met. During the review, ask employees where they see themselves in the future, and then provide feedback on skills they will need to develop in order to grow into those positions.
Filling Positions – When new positions open up, advertise the job to all of your staff, but don’t be limited by them. Develop a list of questions that you will pose to all candidates (internal and external) and track the responses as you complete the interviews. Include other leaders in your organization in the interview process and rank each candidate as impartially as you can. If an internal employee doesn’t make the cut, then sit down with that employee to let them know specific reasons why, and outline areas that they can work on to increase their odds in the future.
When dealerships retain Spader to help them in identifying the right candidates for key positions, we conduct in-depth assessments of those individuals that help identify the fit in these areas. In most cases, fewer than one in three candidates are strong fits in the positions for which they are interviewing.
While there are pros and cons to this method, we are also fans of allowing a candidate to temporarily fill a position. He or she takes on the tasks and responsibilities of the new role for a pre-determined interim period, but there is no change in title or pay. During this trial period, it’s important for leadership to provide continual feedback on how he/she is doing in the new role; be sure to provide detailed observations of the things they are doing right, and tasks and skills that can be improved. A candid conversation about this person’s enjoyment of the role is also critical. There must be a strong motivational fit! (This is actually more important, and a better long-term predictor of success, than their capabilities.) At the end of the trial period, review performance with the employee, and assuming they meet the defined benchmarks, offer him or her the position.
It’s critical to understand that titles can change people. Sometimes this change is positive, but the possibility also exists that the change can be negative. It’s easy for power to corrupt. In many cases, it can be tough transitioning from the position as a regular employee on the team to suddenly managing your friends. The leadership team can assist new mangers in this transition, but ultimately, respect is not just given, it’s earned. This can be a tough lesson that many new managers never fully grasp.
Just to toss it out there, it’s also possible to go too far in the opposite direction and not have enough managers. Research has shown that once a manager has seven or more direct reports, his/her effectiveness begins to decrease. Management is not just about telling people what to do, it’s also about training and coaching the staff on how to do things. Under-managed dealerships can be slow to react and often suffer from higher turnover as ambitious employees don’t always see a future with the company. A lack of talent on the bench is also a risky proposition, as the loss of a key person can negatively impact the entire dealership.
Managing people and dealerships isn’t easy! (This coming from a guy who made a lot of mistakes and learned a lot of hard lessons.) If you are interested in improving the managerial effectiveness of your business, then consider attending Spader’s Next Level Leadership workshop. We’ll work with you to identify the values that are important to your dealership, and then we’ll show you how to grow, motivate, and manage your team. If you want to reduce turnover and increase productivity, this workshop is the key ingredient in that recipe.