How to Reduce Your High Employee Turnover Rate

As always, the employee turnover rate at automobile dealerships is extremely high. According to a recent JMA Group study, turnover for service advisors came in at 49%, while yearly turnover for sales consultants was at 80%. In support of these telling statistics, a Zippia study showed that the average tenure of an automobile sales consultant is less than two years. That’s astonishing!

Why is this? When searching for the answer, a good place to start is examining past history and comparing it to today’s automotive dealership climate.

A couple decades ago, dealers just accepted that a high employee turnover rate was part of doing business – especially in the sales department. At that time, a big part of the problem was the commission structures, meaning if a new salesperson wasn’t instantly successful, they wouldn’t be able to pay their bills. In addition, the salesperson of that era worked 60-plus hours, which gave them less time to spend away from the dealership.

It almost boggles the mind that these were once accepted practices when you remember that employee retention has a direct correlation with customer retention – and that it costs a great deal of time and money to train a new employee. Are you ready for a stunning stat? According to this study, dealerships lose an average of $500,000 to the revolving door of employees. So that begs the questions: What can be done to combat the employee turnover rate issue?

Employee Turnover Rate Solutions
∙ Based on the aforementioned studies, it appears that today’s automotive sales business professional prefers time off over money. Though the ones still working 50-60 hours per week earn more than their counterparts working 40-45 hours, there is a larger turnover rate among those enduring the longer work weeks. So be careful not to overwork your best people.

∙ A dealer would be wise to really get to know candidates during the interview process. Don’t just settle for any old “warm body”. Look for the people who understand what it takes to give your customers what they need and want.

∙ It’s important to show paths of career opportunities for your employees. No one wants to feel stuck in a dead-end job.

∙ Train sales staff well so they’re ready and qualified to be on your sales floor! Invest in them and pay special attention to those with the most potential. Think about it: the longer an employee sticks around, the more they will learn about their jobs – and the jobs of others at your store. That’s a win for you and your customers!

∙ Eliminate the “good-old-boy” network and you will go a long way toward keeping a larger percentage of female employees. People want to work where they are respected and treated as equals. Right now, 21.4% of dealership employees are female according to the US Bureau of Labor, and that number is expected to continue growing. When you foster a comfortable work environment for women, it will help you immeasurably.

You likely can’t account for those who “just want to give it a try” and discover they don’t like working at car dealerships; or those who aren’t cut out for the business – but you can greatly reduce your employee turnover rate if you make a concerted effort to put your people in positions to succeed.

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