8. How can I effectively manage my recruitment ROI?
Sourcing Insight
9. Employment Market is Challenging
Unemployment Rates
Already Near Historic
Lows
Every Day 10,000
Baby Boomers Retire
Job Creation Growing 2x
Faster than the Labor
Pool
18. Adam Robinson
Founder & CEO
Hireology
Author
The Best Team Wins
E. arobinson@hireology.com
T. @adrobins
Editor's Notes
Hi,
I’m Adam Robinson – CEO and Founder of Hireology.
We are at the tail end of a incredible time in the Automotive industry. We experienced 10+ years of meteoric growth and incredibly profitable times for our industry.
And while there is still plenty of money to be made in the automotive industry it is increasingly difficult.
Hi,
I’m Adam Robinson – CEO and Founder of Hireology.
We are at the tail end of a incredible time in the Automotive industry. We experienced 10+ years of meteoric growth and incredibly profitable times for our industry.
And while there is still plenty of money to be made in the automotive industry it is increasingly difficult.
Hi,
I’m Adam Robinson – CEO and Founder of Hireology. We are a hiring and talent management platform. The team here in labcoasts supports 1 in 10 automotive dealership’s human capital needs across the country.
It’s been an amazing time to be in automotive. We are at the tail end of a incredible time in the Automotive industry. We experienced 10+ years of meteoric growth and incredibly profitable times for our industry.
And while there is still plenty of money to be made in the automotive industry it is becoming increasingly difficult.
We are no longer making as much as we did on each car sold.
This chart isn’t news to any of you but let’s review:
In 2017 gross profit of a % of sales fell to 5.9 down over half a percentage point since 2015. And while we knew the new car market was going to eventually slow we’re also experiencing profit-margin cuts on the used vehicle side. Profitability as a % of sales fell from 13.2 to 12 from 2015 to 2017. More than a percentage point in just two years.
Who is sick of hearing about vending machines? New subscription models? The constant focus on disruption can be fatiguing.
The important thing to note with these is that they are all based in one core principal – who can find ways to be more efficient through a better buyer/customer experience or a different way to manage costs. While I am confident that we are a successful transactional business there is something to be learned about where these disruptors see opportunity.
In 2017, auto dealers spent nearly $66Billion on wages and personnel costs. This is nearly double that of all marketing dollars spent in our industry.
Part of this is because we’re adding more employees to our dealerships and to remain competitive in our market we’re changing the salaries of our automotive employees. Average Salary for a dealership employee has steadily increased and is totaling about $69,784. This is a good thing as your people can have the biggest impact on the success of your store.
We did a study study with Cox Automotive that showed your staff has the biggest impact on customer satisfaction. Highlighting customer satisfaction and building programs around improving that is where we have all spent a great deal of time. Investing in the people that impact this is not where we should draw the line but does put a drag on your operating cost. It can feel like a burden rather than a competitive advantage at times.
So where can we look to cut costs and how can make improvements to drive profitability:
{CLICK} Inventory: As a lot of you may have read in Automotive News in April, a lot of dealers are looking at what kind of inventory they are carrying on the lot as a way to manage costs. Can I change that equation? Can I look to change up the mix of used vehicles I have? What kind of competitive service offerings can I provide? Etc. These are tactics you have all tried and done successfully in the past. This is an important part of your strategy to add profits back to your store and where focus will and should be.
{CLICK} Advertising: This is the never ending conversation in our industry. As we have completely shifted to a heavy digital mix in advertising how can we make those dollars work smarter and harder for us. You will meet with your 3rd party vendors, website teams, digital agencies, etc. to figure out how you can get more ROI on what you’re spending. Do you change the offers? Do you focus on service instead of vehicles? Etc.? Understanding where your dollars are going and what the return is from an AD spend is one of your largest opportunities to cut costs.
{CLICK} People: While Inventory and Advertising may seem like a no-brainer in managing costs as a business owner, one area that we historically have not paid attention to is our people. Now managing this part of your operations to improve profitability does not mean ”where do we cut”. This means can we find ways to be more efficient? Are we looking at the right indicators for improvement? Do we have processes and measurement capabilities in place to add back to our bottom-line?
Looking at your people does not mean that you cut all costs associated with payroll or abandon efforts to recruit high-quality people. It means that you put the same level of scrutiny on your hiring processes as you do the other parts of your business.
We face a few challenges as an industry related to the employment market:
Unemployment is at an all time low. It is an employee driven market. We all see this first-hand in the shortage we see in finding technicians.
We are competing with so many other industries. Job Creation is increasing and the opportunities are meet the needs of a shifting workforce.
we’re facing generational shifts in who we’re hiring similar to how we’re seeing our buyer population change. Over 50% of all hires made in 2017 were Millennials.
In this uber-competitive employment market we’re looking to job boards to help us find or source talent.
You may be familiar with these names but do you know how much you’re spending today to post jobs? Are you looking at the quality of the people that you are brining in? Are you managing the amount of time it takes to get someone into productive, profit-driving roles? How much does it cost you to source high-quality candidates?
Have you ever looked at what you spend on job boards? Have you ever thought about looking at it like you do your advertisement investment?
What are the metrics you started to look at to better understand the value of your marketing efforts?
Cost Per VDP? Cost Per Lead? Cost Per Vehicle Sold?
{CLICK} What if you looked at similar metrics for your recruiting efforts?
Cost per VDP – Your Cost per VDP indicates to you what you’re spending by source to get people in the top of the funnel. Who are you exposing to your vehicles via your marketing efforts? It’s no different in your hiring process. Is your recruiting investment driving applicants to your open positions? That’s your cost-per-applicant.
Cost per Lead – Your Cost per Lead indicates to you what you’re spending by source to get people to submit a lead. What does it cost me to drive engagement and push someone to my store? In your weekly/monthly reviews you are going to be able to identify who is driving you the best and most qualified leads? Again this practice can be applied to your recruitment efforts. What source is driving candidates? Candidates are applicants who actually have the potential to work at your store. How can you optimize that channel to find the best talent for your store.
Cost Per Vehicle Sold – Cost Per Vehicle Sold is the ultimate goal to measure marketing effectiveness. As a frequent attendee of all auto events, I know this is an often discussed and difficult to measure. Fortunately in recruiting getting to cost per hire is less challenging.
So let’s look at how we can leverage this data to make decisions on our recruiting efforts. When we looked at our sourcing insights we found that a typical job board could cost dealerships (regardless of role) upwards of $8 an applicant. Dealerships are spending almost $52 per candidate and over $1,170 a hire.
When comparing that to a career site – which has better SEO value and is a destination to exemplify your employment brand – you get a much better ROI. It only costs $4 for an applicant. $17 per candidate and $75 for a hire.
By looking at the different sources in your recruiting strategy you can find ways to optimize your spend. Why spend as much as you do on the job boards if a well maintained career site can provide you much better ROI?
What kind of profitability can you add back to your store by examining your sourcing spend and more effectively managing the content and resources dedicated to those sources.
Now here’s what this can look at a grander scale with specific job positions. This sample store can look at each of its sources and make determinations about which source is providing the best ROI. And more importantly we can determine where quality applicants are coming from.
When looking at cost-saving efforts your job board sourcing is one area where you can make changes while not sacrificing the quality of the hires you are making.
While we can add more back to a store by just measuring our recruitment spend and managing to it like we do our other marketing efforts, there are other areas within our human capital efforts that we can add back to the store.
Think about a potential position you have open today or your last hire. Do you know how much time that role sat open? Have you thought how much the position cost you ever day it say open? Could you have done something differently to hire a qualified employee faster?
In an effort to find other ways to add back to your bottom-line, Hireology took a look at the most-common roles hired at the dealership and what they contribute to the store’s bottom-line on a daily/weekly/monthly basis.
{Click} Your Auto Technicain is going to drive nearly 1,200 GP a day. This is great value to your bottom-line and operating costs. These however are the hardest to find roles. What are you spending today to find this role to drive profitability?
{Click} We talked before about decreasing GP as a portion of sales. Do you have the right sales team in place to deliver revenue for your stores?
These figures above are an average per person per day. Your store may have different figures but you understand what your employees contribute. If not, you should start looking at this as part of your weekly check-ins.
So based on what we see from our nearly 2,000 auto dealership partners, the average time to hire is 26 days. This means from application to hire it takes 26 days.
{Click} What’s interesting about this is that on average we see that it takes an average of 10 days to review an applicant. Going back to our scenario discussed previously – would you let a lead sit for 10 days?!?! 1 day!?!? What happens when a lead isn’t contacted in your sales dealership.
Imagine looking at your recruitment processes and time investment the same way. Do you know how long it takes your team to hire someone? Do you know how much time it takes them to review a candidate?
{Click} Let’s take this scenario here. What if we take that 10 days reviewed and cut it by 7. Every applicant would at least have their resume reviewed within 3 days.
{Click} Could you hire someone faster and add back $7,000 of gross-profitability (based on average GP).
WHERE ELSE IN YOUR STORE CAN YOU ADD BACK $7,000 IN GP BY MEASURING SIMPLE FIGURES AND MANAGING TO THOSE INSIGHTS.
We are at a critical juncture in our industry. How can we make changes in our dealership operations to drive greater profitability?
We have historically not looked at our human capital/people side of the business. There are simple things we can do as owner/operators to manage this part of our business like we do many other areas.
{Click} How do we look at our costs associated with recruitment marketing? Can we make changes there to drive more profitability?
{Click} Can we look at our processes and manage them more effectively? Where can we find efficiencies that turn into profitability?
