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Critiquing your management team: Take a thoughtful look back before looking ahead

March 24, 2016


For many auto dealers, now is a good time to assess their stores’ performance over the previous year and set new goals for the year ahead. This analysis usually zeros in on the dealership’s financial performance by measuring such key performance indicators as net income as a percentage of sales, employee expenses as a percentage of sales, and total gross profit per employee per month.

However, it can also be useful to conduct a review of the performance of your management team. This should include managers in the main areas of your dealership: new and used vehicle sales, finance and insurance (F&I), parts and service, and body shop, if applicable.

Go full circle

Don’t depend on just your own opinions when reviewing management performance. Solicit feedback from your managers’ coworkers and direct reports. Also ask managers to perform their own self-evaluation. And solicit input from sources outside of your dealership, such as customers and suppliers. This multifaceted approach is commonly referred to as a “360-degree review.”

Gathering in-depth feedback directly from those who interact with your managers every day will enable you to review them from multiple perspectives. This, in turn, will give you the insight you need to structure effective coaching and development programs for your managers, and write more accurate and helpful performance reviews.

Create a feedback survey

The first step in the 360-degree review process is to create a formal feedback questionnaire that will be used by others to evaluate your managers’ performance. The survey should focus narrowly on the aspects of performance that are most critical to managers’ success. For most dealership managers, these typically include:

  • Leadership ability
  • Communication skills
  • Job proficiency
  • Organizational skills
  • Mentoring and coaching proficiency

Of course, the specific job skills of managers will differ depending on the dealership area in which they work. For example, in new and used vehicle sales, you could ask subordinates to rate managers’ sales team leadership skills. And in fixed operations, you could ask them to rate managers’ customer service abilities when dealing with difficult customers.

Keep it manageable and confidential

Make sure your 360-degree feedback survey isn’t too long and detailed or else recipients might fail to complete it. Ideally, it should take no longer than 15 to 20 minutes to thoughtfully fill out the survey. Consider creating separate surveys for insiders (coworkers and subordinates) and outsiders (customers and suppliers) — they’ll likely share different kinds of feedback. And ask open-ended questions instead of providing only a simple checklist.

Ensuring confidentiality is essential to implementing a successful 360-degree review program. Subordinates, coworkers, vendors and even customers should be able to provide feedback anonymously and be assured that their opinions will remain anonymous. Otherwise, they probably won’t be totally forthright in sharing feedback, which defeats the exercise’s purpose.

Once you’ve received the completed 360-degree surveys and managers’ self-evaluations, use them (along with your own personal observations) as the basis for drafting a formal performance review. Your review should provide managers with detailed feedback on how they’ve done over the past year in the areas most important to their job success — and, ultimately, the success of your dealership.

The full-circle feedback you receive may include some criticism of managers and suggestions for ways they can improve their job performance. Don’t feel as if you need to share this with them verbatim, especially if it’s harsh. Instead, use it to provide constructive criticism and create goals designed to help managers improve their performance in weak areas.

Worth the time

Conducting 360-degree reviews will probably be more time-consuming than performing a traditional review based solely on your observations. However, it may be well worth it, given the potential of these reviews to provide a more complete picture of your managers’ performance. With this ammunition, you should be able to offer more constructive and helpful feedback moving forward.

Tying managers’ goals to financial performance

As you set new annual performance goals for your managers, try to link them directly to your dealership’s financial performance. For example:

New and used vehicle sales managers. You could set goals of combined monthly retail sales per salesperson of 10 units, a used-to-new vehicle sales ratio of 0.7 or higher, and a new vehicle inventory unit days supply of 60 days or less.

F&I managers. You could set goals, such as gross F&I income of $850 or more per retail unit. Or set penetration levels to reach industry standards, such as 75% finance penetration, 25% insurance penetration and 45% extended service contract penetration.

Parts and service managers. You might set goals of a 40% or higher parts department gross profit as a percentage of sales, a 70% or higher service department gross profit as a percentage of sales, and 30-45 days’ supply of parts inventory on hand.

Your CPA can assist you in forming the ratios that would be most helpful for your dealership. He or she also can help you in setting goals for the coming year, based on the outcomes of the previous year or industry standards.

© 2016


All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.


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