Invest in human capital, auto giant tells dealers

The head of the world’s second-largest retail automotive group has told Australian Dealers they must invest in human capital if they are to thrive.

Speaking at the AADA National Dealer Convention in Melbourne in August, Penske Automotive Group (PAG) President Robert H. Kurnick, Jr., said his company improved its staff retention by 50% simply by putting time into developing staff’s skills and experience.

Staff turnover in the retail automotive industry is typically around 50 per cent. When Mr Kurnick started at PAG in 1999, the company’s figure was 80 per cent. He said that contributed to low customer satisfaction and the lack of succession planning for key roles provided little to no incentive for employees.

“So we began a process to improve hiring and improve retention,” Mr Kurnick said. “The first thing we did was put together a field network of HR professionals. We endeavor to, for every 200 to 250 employees, have an HR professional, so we can be in touch with our employee base.

“We then started some comprehensive initiatives to improve hiring and improve retention. So we instituted some job suitability and some background checks, and after that we focused on compensation and pay plans, and we focused on benefit plans, and we focused on what the causes of employee-related litigation were, and very importantly we focused on safety and training.

“And when it came to training, I think that was where we were really focused on the need to build the future leaders of our companies, the need to build a bench of aspiring managers. So we developed in conjunction with NADA a terrific in-house training program where these high-potential candidates go through a seven-month training program, which includes on the job experience and most importantly some leadership development.”

PAG also conducts an annual, comprehensive, employee survey of every single employee to rate the company across a variety of different metrics and benchmarks.

“The important thing is every year we hear what we are doing right but, more importantly, we hear where we can improve and we have to respond to that,” Mr Kurnick said.

“As a result of that we meet with those employees at each dealership where we are getting low rankings almost immediately. It worked for us too. In 2003 turnover was 41 per cent. Go back to 1989, it was 80 per cent, and last year we were trending at 21 per cent.

“We do a lot of work to see whether 21 per cent is the natural level or can we improve that a bit more.”

Mr Kurnick also highlighted the importance of developing the layout and facilities at a dealership. PAG’s flagship store in Scottsdale, Arizona is absolutely massive.
Offering over 20 different brands, it has a state-of-the-art service department, café and coffee bar, and even a car racing museum. Mr Kurnick said investing money in the layout and facilities of a dealership can enhance customer service experience and boost retention.

Another crucial area is online presence and use of social media. In response to customer buying trends, PAG has developed a strong social media presence. Recent statistics shows 40% of leads come in after hours. This is partially due to the increase in shopping online, particularly for younger generations.

Mr Kurnick emphasised the importance of having 24/7/365 connectivity, as it’s one of the most powerful ways to communicate with customers.

PAG has a specialised team that communicates with customers via Facebook and Twitter. It’s a great way to build the presence of a dealership, which is why PAG makes an effort to post content regularly. Motor racing results, special offers and promotions all engage the customers.

PAG is the world’s second largest automotive group, operating 327 franchises including both retail and commercial truck dealerships, primarily in the US and Europe. The company also has a presence in Australia and New Zealand, distributing commercial vehicles, engines, power systems and related spare parts and services.

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