Every year, the National Automobile Dealers Association surveys thousands of dealers around the country to create their NADA Workforce Study. ESiTrends is a big help to this effort, while at NADA 100, the 100th anniversary of the NADA Convention,  I sat down with Ted Kraybill, CEO and Founder of ESiTrends, to discuss the people side of the retail automotive business.

            

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transcripts:

Adam:	Hello, Best Team listeners. We’re at NADA 100, the 100 year anniversary of the National Automobile Dealers Association annual conference. We’re taking this week to take a deep-dive into the people’s side of the retail automotive industry. For this episode we have Ted Kraybill with us. Owner of ESI trends, the company that surveys thousands of dealership employees each year to put out the NADA Workforce study which is an extensive and detailed report on the workforce of the retail automotive industry.
	First, a right foot. So, Ted. Let’s start off. It’s been a crazy week. What’s the best thing, business or personal that’s happened to you in the last 7 days.
Ted:	Probably the best thing, from a business perspective is just connecting with people that all of a sudden, this whole people side of things is just blowing up, and it just creates a lot of opportunity for our company. So that’s probably the best thing from a business perspective. From a personal perspective, it’s just getting a clean bill of health just recently.
Adam:	There you go.
Ted:	So, anyway. That’s about it.
Adam:	Good, yeah. So for me, starting off on the right foot. I’d echo the sentiment, I mean, we’re here at the largest event of the year in the automotive industry and, you know, professionally speaking, here we are a couple of years after deciding to get into this space and seeing it really get some traction both through the kind of content that you publish and produce at ESiTrends trends and the kind of things we talk about in Hireology. It’s in the conversation, which is great.
Ted:	People are finally caring about this stuff.
Adam:	I know, it’s pretty awesome. Well Ted, thrilled to have you on the show. Let’s jump right in. Give me the 30 second pitch on ESiTrends. What do you guys do?
Ted:	We are primarily focused on employee retention. So, all the different drivers that drive retention, engagement, you know, hiring the right people, pay plans, recognition programs, career paths. I mean, we work with our clients on trying to get all those things in sync so they are able to attract and retain the best people. We’re pretty much focused on the metric side of things and we’ve been doing it for 21 years.
Adam:	That’s great. So, if people want to find out more about ESi, where do they go?
Ted:	We have our website, esitrends.com. It’s the primary place.
Adam:	Fantastic. Well, thanks for being here. So, you have the honor of helping to publish the NADA Workforce study, which for retail automotive space, it is the report that really moves the conversation on the people side of the business. Talk about the workforce study, the importance of it and how it has evolved over the years and were you think it’s going.
Ted:	Okay, well, first of all, in 2009, which is kind of at the valley.
Adam:	Tough year.
Ted:	Yeah, tough year. A bunch of the large cap companies came to me and said, you know, we want to do a compensation study just to get a baseline of where we are as we come out of this recession and everything. So we put together a syndicated workforce study, basically that they helped pay for and two of the OEMs participated. And we, at that time, I think we had around 1100 rooftops that participated. So the plan was to do it, you know, every two years. NADA had always put out a compensation study but they just polled and surveyed dealers to find out, well, what on average are you paying your sales people.
	It was averages of averages, it wasn’t good data. So I went to them and said, hey, we did this study, this is how we did it. And it got great reviews from the people that participated. What about doing this? And it took me, you know, probably a year and a half to convince them to do it. But then we started, first year was with 2011 data. And so we just completed our 6th year.
Adam:	That’s great. And so what are two or three highlights from the report from last year that are indicative of where we are on the people side of the car business?
Ted:	Probably, you know, one of the things is when it comes to the gender mix and those types of things. We’re not able to really track ethnic diversity because we can’t get that from the payroll data. But on the gender side, nothing’s changing.
Adam:	All right, a lot of good things happening here in the Hireology booth. Looks like we have a brand new customer here getting gong-ed in. All right Ted, continue.
Ted:	Okay.
Adam:	It’s a circus in here.
Ted:	All right, so the other thing is that the median tenure of the work force just keeps going down. And with that, that pulls down the median compensation, because you know, there’s a learning curve in all the jobs and now the median tenure is below where that learning curve ends.
Adam:	Right. So median tenure now, two years? Two and a half years?
Ted:	Well, 2.4 years.
Adam:	2.4 years.
Ted:	It’s only about 1.3 or 4 for sales consultants.
Adam:	Pretty amazing. You know, some other stats that jumped out of the report this year. Something like 90% of female hires in this space, you mentioned gender diversity, 90% of hires who are female turn over in their first year? In the business, is that accurate?
Ted:	I’m not sure that that’s the exact way we looked at it but the turn over in sales consultant positions was about double what it was for the males.
Adam:	Wow.
Ted:	So it’s just not a female friendly environment yet. It’s still a male dominated industry.
Adam:	Well, as you see it, you know, from the data, what are the biggest issues dealers face today in regards to the people side of their business, from pay plans to the way they’re engaged in the stores, talk us through your insights?
Ted:	I would say that the biggest challenge is, well. First of all, we have a culture issue, okay, so culture change is something that is very difficult, takes time, and it’s gotta come from the top. There are dealers and general managers who are trying to shift their culture. Where the biggest problem is is in that second level of managers because the sales managers, service managers, parts managers, they are not given the leadership training they need to properly manage the people.
Adam:	Why do you think that is?
Ted:	Well, first of all, because they’re promoting the people who are their best sales person.
Adam:	Okay, best sales person becomes the manager.
Ted:	Yeah, or, you know, they promote a technician into a shop foreman who may become service manager. Or maybe the service manager comes up through the service advisor side. But, you know, they learn technical skills, and they learn process skills, but they’re not really trained on how to engage and motivate people. And that’s a big area of opportunity in the industry from a training perspective and so forth, cause they don’t know.
Adam:	Right. So, true or false statement. You don’t need to know how to sell cars to be able to manage people.
Ted:	I totally agree with that.
Adam:	I do too, and what’s so interesting. The research shows prediction of success in the business, job experience is the least correlated of all the factors that predict success in this industry, yet I don’t know a general manager, general sales manager in automotive who hasn’t been on the floor selling cars and we’re really the one industry, in my observation, that’s so resistant to hiring anybody with any management expertise from outside the industry. And so we don’t get any of these people management skills that quote unquote corporate America trains and invests in. You know, we have a skill gap there. It’s a management skill gap.
Ted:	Absolutely.
Adam:	You’re saying the data says that hurts culture.
Ted:	No, absolutely. If you look at why people leave their jobs, most, you know, there’s so much data that shows they leave their managers. Okay, and now with what we do from a leadership assessment standpoint and what you guys are doing from a, you know, looking at a hiring manager efficiency and effectiveness, they’re just not doing that part of the job well. I mean, one of the things that we do with the workforce study is we’re trying to benchmark outside of the industry. So when we look at the job title sales manager and we look at the definition of it as it’s done by the Bureau of Labor Statistics or by SHRM or whoever and you look at what are the key tasks of a sales manager … I mean, very few of the sales managers on the show room floor are doing, you know, even three quarters of them.
	Like, training and development is a key part. You know, putting together a sales plan, setting goals, how are you going to meet those goals? I mean, it’s not done the way a professional sales management organization does it. It’s done more with fear and intimidation.
Adam:	Right.
Ted:	And those types of things that command and control culture.
Adam:	Not what everybody wants to be dealing with on a daily basis.
Ted:	Exactly.
Adam:	Well, so while here at NADA you’re talking about the customer experience of the future. Some pretty cool stuff going on over there. How does the people side of the business play into customer experiences this industry tries to transform itself to match where consumer tastes are going?
Ted:	So the biggest challenge that we’re talking about is as the road to the sale converts from a linear process where there’s steps that you go through, as it converts to something that’s somewhat circular or people can come in to the show room at any stage of the process, how do you train and manage your sales people to recognize where that person is in the process? You know, in the little talk that we’re giving, I talk about the traditional road to the sale being like the main street in a town where you’ve got stop lights along the way and you’re trying to get from point A to point B and you might hit all green lights but you might also hit a bunch of red lights.
	The new web enabled selling process is more like a rotary, or a roundabout, where people can come in at various points around the roundabout and they can exit at various points and managing … the roundabout exists because it keeps traffic flowing, okay? But that’s going to be a different challenge for sales people to be able to recognize where people are and where the next step needs to be, because they don’t typically even do a great job of figuring out customer needs, which is part of the traditional road to the sale.
Adam:	Interesting. Okay. So what major trends have you seen in dealership work forces over the last couple of years. If you were to pick a couple of changes you’ve seen or shifts that we’re experiencing right now, what would those be?
Ted:	Well, there’s really four shifts that we’re talking about. One is, there is definitely a shift away from that command and control management philosophy. You know, trying to then empower people. And with that, it’s more flexibility management, because with command and control, if you think of the military, there’s definite rules, there’s definite behavior, norms and all that. And if you don’t follow it, you get literally kicked in the butt.
Adam:	Right, right.
Ted:	You know, and a lot of that still goes on in some dealerships. But that doesn’t work with the younger generation. So, giving them more flexibility is uncomfortable for the current management staff because they don’t know how to manage that flexibility. You know, like, well how am I gonna … if I let them work from home, if I let them work leads from home, how am I gonna know that they’re working?
	Well, you know, you look at the results.
Adam:	Right.
Ted:	You look at the outcome. So that’s a trend that’s happening. Moving more towards flexibility. But again, we’re back to then, how do you develop those managers to handle and manage that flexibility. Second trend is in how they communicate with their employees. There’s a lot more informal communication. There’s less of the, you know, sit down meetings and stuff like that. More and more dealers are starting to use social media to get news and events out to their employees. But there’s still a lot who don’t understand that this younger generation doesn’t check their email every hour like Gen X does or the Boomers do.
	So you can get through to them better with a text or if you set up an internal Twitter account where you just Tweet things out.
Adam:	Sure.
Ted:	Like our President is doing (laughs). Hopefully, in a different way maybe. So that communication, and how they’re approaching it is changing. More brown bag lunches, more town hall type things. Millennials want contact with the top. They want to be part of something and feel like they have a purpose, and they’ve taught to question authority. Ask why. It’s called the Y Generation because their parents told them it’s okay to ask why. And so that’s coming along as trend.
	And then pay. There’s a definite movement away from 100% pay for commission. And it has to happen because of what’s happening to the gross on cars and other areas of the dealership. So that has to change, and it is, okay. But everyone is experimenting with new pay plans in a different way. And the downside of it is there’s a tendency to change those pay plans too often. Then you really get people all confused.
Adam:	So you think about the retail industry here in automotive. The workforce of the future. Talking about career paths, talking about base pay plans, talking about flexible hours, talking about product demonstrations, non high pressure sales tactics. That sounds like a pretty different industry than the one people picture … the average American pictures.
Ted:	Yes. And it also, it’s a different person that you’re hiring. Some of the key skills, traditional skills of being that aggressive go-getter, fire in the belly, type of sales person, they’re still out there. I mean, the problem is everyone kind of puts millennials all in the same box and there’s a lot of different types within that box. But all that is just getting them to rethink what are the traits of a successful sales person in this new customer experience.
Adam:	Okay, Ted, thanks for that. All right, we’re going to jump into some lightning round questions.
Ted:	Uh-oh.
Adam:	Give me your opinion. Do you think the US economy is getting better or worse over the next 12 months?
Ted:	I’ll wait for Trump’s next Tweet.
Adam:	Okay, I’m gonna … is that a pass?
Ted:	That’s a pass. Right now, I think, I mean, I’m hoping that it’s going to get better or at least stay the same but I think there’s so much uncertainty there.
Adam:	Well, so, auto industry. Do you think the number of vehicles, new vehicles, sold in the US is going to go up or down this year?
Ted:	I think it’s probably going to stay about the same. I mean, I’m kind of where most of the forecasters are.
Adam:	Okay. Do you think, in terms of finding people over the next 12 months, do you think it’s getting easier or harder?
Ted:	I think it’s going to continue to get harder. But that’s all going to depend on what happens with the economy. I mean, if unemployment continues to be low and we continue to graduate more and more people from colleges and so on, it’s going to be … there might be more people available but finding people that are going to fit the industry, I think that’s going to keep getting harder unless there’s a lot of change in attitude towards human capital management.
Adam:	Okay. Now for the what book’s on your nightstand question, what book are you reading right now and would you recommend it to our audience?
Ted:	I have to say, I haven’t been reading any books lately. I’m just waiting for your book to come out.
Adam:	(laughs)
Ted:	(laughs)
Adam:	Thank you for your shameless plug, I appreciate that. Thank you. What’s the … a favorite you would recommend to somebody?
Ted:	A favorite.
Adam:	Yeah.
Ted:	Oh, you mean books?
Adam:	Yeah.
Ted:	You know, I went through years and years of reading management books and reading Harvard Business Review and all that and it just seems like everything was just getting regurgitated. Right now, I’m just into reading, you know, any new Clancy book that comes out, any new John … who’s the lawyer?
Adam:	John Grisham.
Ted:	John Grisham. I mean, I’m into reading that kind of stuff, so.
Adam:	Okay. You’re into reading for fun.
Ted:	I’m … yeah, I’m at the age where I just want to read for fun now.
Adam:	Okay, there you go. All right. Closing question here Ted. If you were to come back on the show a year from now and report back to the audience on whether or not you accomplished the most important thing on your plate this year, business-wise, what would that be?
Ted:	I mean, the most important thing to me is with my clients, anyway, those that I can impact, trying to have a positive impact on their retention and have a positive impact on the image of working in their dealerships. You know, we’re trying to change … our mission is to make automotive retail a better place to work and I can’t do that across the industry, although I’m trying.
Adam:	There you go. All right, that’s the final word. You’ve been learning from Ted Kraybill, CEO of ESiTrends. Ted, thanks for being with us on the program.
Ted:	Thank you, Adam.
Adam:	Okay.
Ted:	Appreciate it.
Adam:	Okay, that’s a wrap. Guys, join us next week on the best team wins.