Becoming processed focused - quality improvement for automobile dealers

Changing technician pay plans to clock-time won't improve customer service. You need to change the whole system.

Moving to clock-time does not and will not improve quality. Moving to clock-time and/or other customer centered performance system requires a complete cultural shift for the entire service process as well as the whole dealership. Becoming "process focused" is where the opportunity for significant improvement exists. The majority of dealerships do not understand being process focused because they don't understand their business that way, and cannot or will not change from their traditional management styles.

The majority don't know how to measure true quality. Ever see statistical techniques utilized by process owners (technicians, service writers, sales people, parts, body shop, owners, etc.) individually or in cross functional teams? You must measure, understand, control, and perpetually improve their processes by reducing cycle times, improving productivity, reducing costs, and significantly improving quality as defined by the customer, internally and externally.

Flat-rate is piece work, and is prehistoric (Talorism is dead) as are many of the 100-year-old deeply rooted practices and beliefs in the dealership sector. These type of systems do not exist in progressive, high-performance organizations of the '90s and those positioned to survive into the next century.

Some key features of flat-rate:

* It is not process focussed.

* It is not customer-driven.

* It is not in any way a holistic approach to an overall team centered dealership, culture, and environment.

* Quality will suffer in favor of productivity.

* It is a sure road to employee dissatisfaction.

* The system lowers a person's self-image.

* It cultivates mediocrity. It does not deliver quality levels required to survive in today's competitive market (three errors/defects per million).

* It does not serve to optimize both customer and dealership performance.

* Piecework pay systems discourage change.

* Piecework pay systems limit the flexible use of the organization's most important resource, its people.

* Piecework systems stem from the belief that people have no incentive and can not be trusted to do their best, are the source of all quality and productivity problems, and that money is the sole motivation.

For a complete review of these points, read Measuring, Managing, and Maximizing Performance by Will Kaydos.

When asked either through surveys and/or one-on-one, technicians, when really pressed, will respond to the flat-rate system regarding quantity by saying, "Quality is not a part of the system, i.e. I get paid on time to complete," or, "You cannot perform quality work under the system," or, "The system undermines team work within and throughout the dealership."

The result is that we now drive our customers through the machine as fast as we can, extract as much money from them as possible, and hope they come back.

Because of the systems in place, we continuously screw each other for the sake of our own department's interest, with total disregard for the customer.

Ford, Chrysler, GM, and Acura, to mention a few, are delivering a very strong message through their customer-centered programs regarding change and the dealers future. The manufacturers know they are in competition with each other to win a base of loyal customers. Dealers must know it, too.

Here are some keys actions from dealers who have embraced radical change. They have:

* Abandoned the flat-rate system and other incentive systems that prevent dealerships from best serving all stakeholders;

* Installed a customer-driven planning and deployment process that drives key business factors;

Implemented process-focused, cross functional teams to put plans into action, with periodic reviews to access/adjust the plan;

* Partnered with companies like Motorola, Ritz Carlton, Hewlett Packard, Xerox, Modicon, and others outside the dealership environment to learn from the best in the world;

* Flattened, the dealership - driving toward a more direct employee/customer relationship:

- No sales manager (sales person manages the entire process).

No F&I person (sales person manages entire process).

- Experimented with the sales person making service appointments for their customers.

- No service director (a service work group manages the service process).

- Experimented with service writers selling cars.

- Open book management - all employees are trained to read and understand the financial statement excluding wages and salaries.

- Status quo no longer accepted by owner and employees.

They have also obliterated the following five deadly dealership diseases:

1. Lack of constancy of purpose.

2. Emphasis on short-term profits.

3. Traditional performance and incentive systems.

4. High turnover at all levels.

5. Running dealership on visible figures alone ("counting the money").

They have also rid themselves of these serious obstacles:

* Neglect of long-range planning and transformation.

* The supposition that solving problems, quick fixes, employees are dispensable, and modernizing facilities will transform the dealership.

* Our problems are different.

* Blaming the work force (all levels) for problems.

* Anyone that comes to try to help us MUST understand all about our business.

* Blaming everyone and everything for our problems.

* Superior manufacturing practices and techniques don't apply to us.

One dealership that has made these changes has enjoyed the following results:

* Profitability at over three times the national average.

* Total customer retention (all departments) of 60 percent. The average U.S. dealer customer retention vote is 20 percent.

* Productivity in all departments is up over 20 percent.

* Total percent of errors and rework in the entire dealership has been reduced by Over 30 percent.

* Improved employee satisfaction over 30 percent.

* Recognized by the Tom Peters Group as a model for radical organizational change.

* Recognized by People Management Resources, a Beaverton, Ore., a best practices organization which showcased the dealership along with Microsoft, Hewlett Parkard and IBM Canada, to name a few, as an organizational model for the 21st century.

The bottom line is that it is not only the flat-rate system that needs to be completely overhauled, but the entire dealership that needs to reinvent itself. There is a choice. Survival is not mandatory.

Robert E. Werner is president of The Edwards Group, a dealership consulting firm.

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