In Finance and Insurance, keeping top employees means creating a flexible work culture

EFG Cos. CEO John Pappanastos says a negative dealership culture could affect hiring and retention rates for F&I office Photo credit: EFG Cos.

In a changing world, where potential tech and transportation hires are wooed with flexible hours and pay plans, dealers still are treating employees as though they have no choice but to be there, experts say.

Competition in the auto retail industry is fierce. The hours can be long and grueling. Employees regularly strike deals in the glow of midnight oil, only to arrive at the dealership early the next day. Few employees stick around the same dealership for more than two years, according to the National Automobile Dealers Association’s 2017 Dealership Workforce Study.

Treating employees like stakeholders, not pawns, is the key to nurturing a workspace where top performers want to be, EFG Cos. CEO John Pappanastos told Automotive News. Especially in the finance and insurance office, where mistakes can cost dealerships far more than a sale, hiring the right people matters.

Part of the challenge is balancing a work force that values competition over culture. Promoting and praising salespeople who demonstrate cutthroat tactics breeds mistrust among employees. Dealers aware of employees who practice unsavory sales tactics should reprimand them to set a precedent for the store, Pappanastos said.

The negative stereotype that comes with auto retail, Pappanastos said, “makes it difficult for [dealerships] to attract talent to the industry.”

“I just don’t get why these guys don’t see their employees as a key stakeholder. They don’t understand they are in the service industry,” he said.

The key to attracting talent is linking economics to culture. Employees should not be treated as commodities, but Hireology CEO Adam Robinson says some dealers have better processes in place for their products than their staff members.



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“If you show me a business that’s been named best place to work, I will show you a business that spends a lot of time getting their hiring process right,” Robinson told Automotive News. “It doesn’t happen by accident.”

Attracting talent

F&I profit center

F&I managers’ salaries increased more than any other dealership position last year, the National Automobile Dealers Association says.
  Average salary in 2016 % change
General mgr. $318,172 0
F&I mgr. $138,209 4
Sales mgr. $130,342 2
Service mgr. $115,082 1
Source: NADA 2017 Dealership Workforce Study

The automotive retail industry struggles with marketing itself as a viable career path, according to Robinson. Of the 67 percent of Americans who were open to switching jobs in 2017, just 1.25 percent would consider working in a dealership, according to a 2017 dealership staffing study by Cox Automotive and Hireology.

Attracting talent is one of its main expenses. The automotive retail industry spends more than $70 billion a year on people, Robinson said, between payroll, bonuses and benefits. Turnover itself costs dealerships billions of dollars a year in wasted search and training expenses as well as mistakes made by inexperienced employees.

A strong team combats the hiring expenses by paving the way to more efficient operations and sustainability.

“The only thing dealers have 100 percent control over is who they put on their payroll,” Robinson said. “It’s the biggest untapped competitive advantage that dealers have.”

When it comes to staffing a successful F&I office, dealers look to the top performers in their pool of salespeople. Issues inevitably arise when dealers promote salespeople who lack the other skills necessary for F&I, Pappanastos said.

More so than any other area of the dealership, F&I offices need to keep operations above-board. Attention to detail and integrity are two invaluable features of an effective F&I producer.

Most salespeople aim for a promotion to F&I manager, said Ellen McGee, EFG brand content manager. The national average salary for an F&I manager was $138,209 in 2016, according to that NADA study. F&I managers with a median experience level of 4.9 years earned $159,779 on average, an increase of 7 percent from 2015 for those with that experience level.

Interviewing for integrity

Discerning an applicant’s integrity can be difficult, which is why Dianna Freeman, owner of Freeman Motors, suggests multiple interviews for each candidate.

Spotting inconsistencies between interviews or hearing an opinion counter to the dealership’s core culture are red flags that could help an F&I director determine whether an applicant is a good fit.

The group, which operates a Toyota and a Lexus store in Santa Rosa, Calif., also screens the candidate’s social media pages.

“For us … most people who have lost their jobs in F&I have been for compliance reasons. We let people know upfront we are extremely compliant in every way,” Freeman said. “There is no tolerance at all with being untruthful with customers or bending the rules in any manner.”

Not all cases of noncompliance occur because of malicious intentions; some stem from ignorance or human error. Pappanastos recalled that at one dealership, a top-selling F&I manager who regularly pulled $1,900 in per-vehicle revenue found that amount dipping to $1,400 after undergoing EFG compliance training.

“That was a success. That wasn’t a failure — we know why it dropped,” Pappanastos said, adding that keeping operations compliant is more important to a dealership in the long run than high F&I per vehicle.

When it comes to compliance, good is often not good enough. In EFG audits, F&I producers whose deals meet compliance standards 90 percent of the time are considered failures.

“It would be about 10 percent of the deals had missing information, could be a missing signature, or one of the numbers are in the wrong line,” McGee said. “The dealers will not tolerate close compliance.” a

Amy Wilson contributed to this report.

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