Challenging positions in your dealership deserve good compensation, especially for those related directly to income. Sales people, both on the sales floor and at the service desk, are up to the task every month, striving to provide an exceptional customer experience while selling more than the previous month.
In many dealerships across the nation, pay plans are weighted to benefit the dealership more than the employee. Commission-based plans for service advisors and sales professionals alike can offer a boom-or-bust situation every month. The monthly performance numbers translate directly into that month’s paycheck, and it’s a difficult sea to navigate.
The Challenge Employees Face Every Month
Standard plans involve a base salary – a mere pittance – with a large piece of the pie coming from commission. How that commission is structured varies greatly from store to store. Another piece is CSI-based for many stores.
In any given month, the base salary doesn’t provide sufficient income for any standard of life. The commission varies immensely – one month it could be lucrative while the next it’s nearly non-existent. The customer traffic into your dealership can have a major impact on month-to-month fluctuations in pay. Customer Satisfaction Index scores only consider a small part of the employee’s role and can be heavily influenced on other factors.
And every month, a commission-based employee starts with nothing. It’s a monumental hurdle to overcome mentally for many.
Is Salary the Answer?
Some dealer groups are embracing a salaried approach to sales positions. The intention is to provide exceptional customer service first, with sales expected to follow. For a few team members, this approach might be successful. However, decreased sales are often noticed as the sales motivation simply isn’t emphasized.
A salary structure provides employees with a steady, consistent income source month to month, making it desirable to them. For management, salaries are a danger that allows for performance to decrease with no ill effect on paychecks.
Explore Other Pay Plan Options
To strike a balance with pay plans that benefit both employer and employee, it may be necessary to explore other options. Keep in mind that both sides want the same end result: employees rewarded well for a job well done.
- Instead of a commission-driven pay plan, has a ‘salary-plus’ plan been considered? Average the employee’s annual pay over the year, then structure a plan that has 75 percent or higher as salary. Make up the difference with a commission structure and CSI bonus. Include potential to exceed the previous year’s earnings. This type of pay plan continues to emphasize sales, but secondary to serving the customer well.
- Has a rolling pay plan been explored? Often, the challenge is the unexpected highs and lows that are experienced. These can be mitigated by implementing a rolling three-month pay plan, averaging out three months’ performance for a more consistent paycheck month to month. Essentially, the pay plan structure remains unchanged while removing the mind-bending mental hurdle at the start of every month.
- Account for the rise in the cost of living. Dealership pay plans often don’t consider an annual increase due to cost of living. This small increase, usually less than 3 percent, is usually enough to keep employees satisfied year to year.
Every dealership’s environment is different. Discuss pay plan satisfaction with trusted employees to determine if change is necessary in your store, and which option is most desirable.
This article was originally posted on May 17, 2017
