Making and Measuring Goals — And Winning
Few get to start anything from scratch. A complete do-over. But that’s exactly what happened to Don Chalmers and his team and as a result, the dealership not only became one of the crown jewels in Ford’s roster but, in 2016, earned the Malcolm Baldrige National Performance Excellence Award. It’s like winning the Academy Award for business excellence. Don Chalmers is only the second auto dealership to ever be awarded this incredibly prestigious award and stand shoulder- to-shoulder among the greats of American business.
The late Don Chalmers started his auto career right out of college working for Ford and later shifted to the dealer retail side. For 10 years he ran a successful dealership in Seattle and then returned to his hometown of Tulsa, OK, where he bought several dealerships including Chevrolet, Oldsmobile, Hyundai, Kia and Suzuki. Gary Housley, now general manager and dealer principal, went to work for Chalmers in 1987. Chalmers, however, wanted to return to Ford and was offered the opportunity to open a dealership on the west side of Albuquerque. With a few key employees, including Housley, open Don Chalmers Ford in 1996.
Today the 180-employee dealership has $123 million in sales; in 2012 that figure was $109 million. They have three service locations, 52 service bins and sell about 2,900 vehicles a year.
“A great advertising slogan for us would be that our employees are number one but I can’t advertise that our customers are number two!”
Balancing Stakeholders, Not Selling Cars
“Our whole goal was to do it different,” says Housley. “It wasn’t just about selling the most cars, a lot of people can do that. That wasn’t what we want to do. It really was about balancing our five stakeholders and they are, in this order, employees, customers, community, Ford Motor Co., and shareholders. It’s more balancing the satisfaction and needs of the stakeholders than selling cars.”
Chalmers decided that in order to be a great company and a force in the community they must give back and work within the community to make it stronger. In order to achieve their goals, the team concentrated on employee satisfaction. “I’m a firm believer that happy employees make happy customers; it doesn’t work the other way. So many businesses say their customers are number one. A great advertising slogan for us would be that our employees are number one but I can’t advertise that our customers are number two!”
Before opening the Ford dealership in 1996, Chalmers and his four key executives contemplated how they want to set up the business. “We had a clean sheet of paper. No building, no former management, no history — good or bad — nothing. It allowed us to do what we wanted and to build the processes before we even signed the papers on the property. It was a real luxury.”
The management team took night classes on quality management. They hired a quality coach, and before the first piece of dirt was turned, they had formulated processes on taking care of customers and achieving their goals.
They started with the buildings design and how it affected the introduction of customers to salespeople. “In a traditional dealership, customers drive through the inventory and are approached by several sales people trying to get their ‘up’.”
“I tell our employees that there is more than one way to do something but when you’re working for us, we have a process. I want it done our way and not someone else’s.”
Changing the Sales Approach
They designed the building so that customers are not funneled through the inventory, instead they are guided around a road into a parking area. Customers enter into an art gallery-type atmosphere where a greeter welcomes them and determines the purpose of the visit. If it is to make a potential purchase, a bell rings into the sales department and the next salesmen in line is introduced to the customer. “They don’t have three or 10 salespeople coming at them. They don’t see a sales person until they’re ready to see one. We totally changed the greeting process,” he says.
Not only does it prevent a customer from feeling like fresh meat to hungry dogs, it allows the salespeople time to do other important tasks such as making follow-up calls and reaching out to new clients. I
“We get a lot of leads off the internet and phone conversations, and that’s where our salespeople need to be. They don’t have to worry about traffic and getting customers, we do that for them,” Housley says.
The team wanted to make sure their processes worked and sought outlets for comparisons, benchmarks and evaluations. The chief financial officer become involved with the state’s recognition for quality-run businesses. It wasn’t long afterward that they become the only dealership to receive New Mexico’s Zia Award for Performance Excellence. They’ve also received Ford’s President’s Award, the highest national recognition for customer satisfaction and market share, 13 times over the past 18 years. Only four percent of domestic Ford dealerships have accomplished such a feat.
They then set their eyes on the brass ring, the Baldrige award, which is the highest level of national recognition for performance excellence a U.S. company can receive. The award focuses on five key outcome areas: product and process, customer, workforce, leadership and governance and financial and market.
It took them a decade to finally make it to the winner’s circle. They first applied at the state level in 1998 and in 2005 finally won it. In 2007 their 50-page application made its way to national consideration but wasn’t good enough to warrant a site visit. After another try in 2008, they had a site visit and didn’t score very well. In 2012, they came close but still the grand prize alluded them. In 2016, their hard work paid off.
“In the auto industry you are not short on data, you get lots of it. If you try to reach out and compare your data with other industries, it’s a little difficult,” he says. The criteria for the award changes every year. “It teaches you things that you need to start addressing. Seven years ago, we had to say how we were dealing with cyber security. What the heck was that? I’m sure Ford knew about it but it didn’t cascade down to the dealerships at that time. The award also had a section on succession planning and we put together a big framework on succession planning and strategic planning. We’re a poster child for that.”
Chalmers died from cancer 20 months before they won the award. His two children were not involved in the business. “It’s a testament to our work that when Don passed away we knew exactly what we had to do. A lot of dealerships kinda lose their way a bit when that happens but we had everything in place.”
One of the most important feedback the team got from the site visits was that the employees seemed disconnected with the dealership, its vision, its goals and their roles. “We discovered a disconnect that we didn’t know was there. We really thought we were communicating but the message wasn’t getting across. We redoubled our efforts.”
New employees are mentored by senior leadership and Housely works with them using the firm’s “How I Connect” guide that aligns each employee’s role to the dealership’s core values in order to deliver the best experience. The new employee orientation training is followed by role-specific sales or technician training, annual safety and compliance training, ongoing training and leadership traing. Each employee receives about 71 hours to training annually and updates their their How I Connect form annually.
Employee satisfaction and engagement are handled in several ways including employee surveys (their own as well as Ford’s) and by changing their communication outlets. “Three years ago we realized that Millennials don’t read paper. You can’t communicate with them on paper so we set up our own employee Facebook page and communicate in a variety of ways, iPads, phones, all sorts of social media platforms. We make sure they see positive comments from customers. We do a lot of things.”
Employees are also rewarded for meeting goals and winning awards. “It’s enough money so that they pay attention and are committed,” he says. They also receive other bonuses, incentives, discounts and career opportunities as well as traditional benefits.
The processes are working. The retention rate of sales consultants increased from 57.3 percent in 2011 to 71.4 percent in 2015, significantly higher than the national average of 26 percent for non-luxury brands. According to Ford’s Consumer Experience Index, customer satisfaction for new vehicle sales and maintenance repair was 88 percent, again higher than the 81 score that Ford dealers averaged.
A 12-Step Program
One of the lessons they’ve learned from Baldrige is the importance of goals, processes and measurement, and if the desired results aren’t achieved then to go back, look at the processes and see where the missteps are and correct them.
They use a systematic 12-step strategic planning process to develop annual plans that are used by the workforce through a balanced set of key performance measures, which are analyzed and communicated on a daily, weekly and monthly basis.
“Everything goes back to Baldrige and process, discipline, and then documenting the processes,” he says. For instance, when a car comes in for service, maybe six to 10 people can be involved in that transaction but the customer only sees the service advisor. The team can do everything right but if a tech forgets where he parked the car, then there is an unhappy customer waiting for a car. If everyone is following the process, that shouldn’t happen.
“We train everyone on our processes so that everyone knows what’s going on before and after them,” he says. “I tell our employees that there is more than one way to do something but when you’re working for us, we have a process. I want it done our way and not someone else’s. People around here are trained to anticipate your next move and if you’re not following the process, it messes everyone. Now, if you can improve our process, that’s great. We even have process to improve the process.”
Being a process-oriented business is so engrained that it’s “part of our DNA,” he says. “If something goes wrong, in a manufacturing world, you look to see if there was a defective part. We look at the people and process. If the process is right and a human messed up, then that person needs to be retrained.”
He admits there are special challenges in the service department. “Sometime you fix the car and sometimes you fix the customer. If we have an unhappy customer, we ask, ‘Did we fix the car?’ and then we look at the customer’s expectations. Sometimes the customer’s expectation of how the vehicle performs and how it was meant to perform are two different things.”
Housley says their foray into the digital world is a “constant evolution. What works today may not work tomorrow.The toughest thing is figuring out why customers go through the front door.” He’s interested in marketing to niche groups using social media. “A lot of people share a lot of information on Facebook, more than I do. Many put their place of employment and we have a hospital a mile-and-a-half from one of our locations. We created a Facebook campaign aimed at those people saying we’d pick up the vehicle and service it. You have to stay in front of them and learn. I’m the oldest in the group and I have to challenge myself to stay relevant and current.”
Identify the Problem, Fix It
Again, it goes back to the Baldrige process. “If we’re no selling as many new cars as we should, then we build an action plan to address what we’re missing in getting those customers. Let’s get the data, identify the problem and build an action plan around it.”
Housley says using the Baldrige framework allows the company to set and communicate goals, connect employees to these goals and ensure as much quality control as possible.
“We take a lot of pride in meeting these Baldrige standards and they’re not easy to understand,” he says. “I’m a car guy. I don’t speak Baldrige. We have a quality dude who brings it down to something we all can understand. But every small business needs a framework to measure how you’re doing and Baldrige allows you to do that.”
Adding, “If we can do it, anyone can do it.”