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Welcome to NCM's Up to Speed Blog

General Managers Are Neglecting Over 65% of Their Business!

Brandiss Drummer
Written By: Brandiss Drummer
Posted on September 05, 2017

In August of last year, I was promoted to Director of Education at NCM. For the most part, I felt I was ready for the challenge. Over the previous six years, I had proven myself in almost every facet of the Institute, working in areas such as client services, sales and marketing, content development, and operations management. Because of these experiences, I felt confident to lead my team to success, as I had walked a mile (at least!) in their shoes and knew the opportunities and challenges of their respective areas of the business intimately. Despite this confidence, however, there was still something weighing on me. Regardless of my level of expertise in the business and administrative aspects of the Institute, there was still a fundamental group of people whose function I had minimal experience with – the instructors. While versed in educational principles, I have never actually stood up and taught a class a day in my life – how was I to effectively manage and lead a group of people on something that I had never done?

This is not uncommon in the business world. As people begin to climb the corporate ladder, there comes a point in which they will lead a team or area of which they have limited knowledge. Think about the COO of a company – he or she is ultimately responsible for all aspects of the business, including things like IT, marketing, accounting – and yet, we know that many of them do not have a background in these various departments. It is no different in the automotive world – many general managers have been promoted through the sales side of the business and must now learn to oversee all other departments in the dealership.

Fixed operations departments often cause the most discomfort for the sales-experienced general manager. Conversely, fixed ops are some of the most critical areas of the dealership, generating over 65% of departmental profit for our Benchmark dealers. (In fact, many dealerships rely on fixed operations departments to generate enough gross profit to cover their fixed expenses, minimizing their dependency on selling cars to open their doors each day.) What’s more, according to NCM Benchmark data, while each salesperson will generate $32,000 in gross profit in an average month, your service advisor will generate closer to $42,000. Couple that with the fact that, on average, fixed ops departments will interact with five times the number of customers than your sales department, you’ve got yourself a solid case for a general manager’s involvement in a fixed operations strategy. Based on these numbers, wouldn’t you dedicate a substantial amount of time, training, and resources to these departments?

Despite the business case, it can be easier said than done to take charge of these areas of the business. It is human nature to avoid things we know little about, for fear of looking incompetent, being challenged by someone who has greater experience than we do, or not having the respect of the people we need to lead. However, this dilemma is no different in the automotive industry than it was for me in my new role or the many leaders in other industries who face similar challenges in leading new teams. Here are a few simple tips:

  • Focus on commonalities – Often, we get too caught up in focusing on the differences in departments. Instead, highlight the areas that are similar to where your experience lies. This will help ease the “fear of the unknown” department. For instance, my sales experience in working with the clients was very similar to what the instructors did every day: it’s all about selling ideas and establishing credibility and rapport. Similarly, the sales and fixed ops departments have many things in common:
    • Both departments are dependent upon measuring and managing the different opportunities to do business.
    • A disciplined “Road to the Sale” is a requirement in each department.
    • Employee productivity, total department gross, and total department net profit are key performance indicators.
    • Accountability management is paramount to success.
  • Ask questions – Being a good leader is not about knowing all the answers; it’s about asking the right questions. Your employees know that you may not be an expert in their department, but you will earn their respect if you take the time to better understand them and their roles. In my role, I set up one-on-ones with each NCMi instructor to ask them questions about their challenges. Here is a sample of some questions you may wish to ask your fixed operations department managers:
    • How are we managing productivity?
    • What are the total shop hours flagged for the week?
    • What is the shop proficiency? (flagged hours divided by available hours)
    • What is the unapplied labor time?
    • How are we managing assets?
    • What are the outstanding receivables?
    • What is the parts obsolescence?
    • What are the gross and true turns of our parts inventory?
    • What is our parts reconciliation variance?
    • How are we managing sales and margin?
    • What is our effective labor rate?
    • What is our gross and net profit against forecast?
    • How are we managing customer satisfaction? (CSI score)

Not sure what the numbers should be? Utilize the NCM Profit Trend Analysis or composite report.

  • Spend time in the department – Nothing can replace immersing yourself in a department. For me, this was spending more time in the classroom with the instructors so I could see their experience first-hand. For our general managers in the General Management Executive Program (GMEP), we recommend that they spend at least 30 minutes per day in their fixed operations departments. The more exposure you have, the more comfortable you will become, and the more comfortable your team will be to bring up ideas and/or critical concerns.
  • Rely on your leaders to bridge the gap – It is not your job to know the ins and outs of every department; that’s why you have a department manager or lead. However, if you hire and retain a strong person in this position, you can lean on them to bridge the gap between your business goals and the expertise of how the department operates. Develop a mutually beneficial relationship with this key person. He or she can educate you on things you need to know within the department, and you can educate him or her on the overall vision and goals for the dealership. Again, the better the relationship, the more comfortable you will both feel to ask questions and give feedback, and the better understanding you can gain of the department. This could be through daily, informal conversations with key personnel on the team, as it was for my situation.
  • Educate yourself – Take advantage of publications and seminars that help get you up to speed. In my case, this was utilizing the resources at the Association for Talent Development on best training techniques. For general managers, NCM has specifically developed a course to address this topic, “A General Manager’s Guide to Service and Parts.” There are also many other resources available to you, including AskNCMNCM 20 GroupsNCM’s Up to Speed Blog, and various other industry blogs and newspapers.

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