As business leaders, one of the ways we help our employees reach goals is to establish processes. There are dozens of processes in the dealership, from the meet and greet on the lot to service lane check-in, to payroll and reconciliation.
Every process you have is important because it helps to eliminate errors, ensure that your customers are being treated right and that the job is done correctly.
However, having processes in place doesn’t always guarantee your employees will follow them. Incentives are often tied to a goal. Goals that are traditionally cherished include number of units sold, gross profit, per vehicle profit in F&I, RO volume, customer-pay RO revenue and so on.
The problem with this type of incentive program is that employees become focused on the goal instead of the process. Many employees discover that they can skip or ignore entire parts of the process and still achieve the goal.
Unfortunately, when this happens managers tend to congratulate the employee instead of pointing out the fact that the process wasn’t followed. This reinforces to the employee that the goal is valued more than the process.
This is not a good message to send. More than likely the employee will stop following your process and come up with his or her own process that works. As long as they sell more cars, who cares if they lie to the customer? As long as they pull in more customer-pay revenue, who cares if they are selling unnecessary services?
Your dealership may achieve short-term gains from this attitude, but in the long run your reputation and brand will take a beating.
I would love to see a dealership change its incentive program to focus on processes instead of goals. Which processes deliver the best results in your dealership? You can use your DMS to establish benchmarks and track KPIs for employees. Then give rewards based on how well your employees follow the process, not for achieving a goal.
This may sound like a crazy idea, but focusing on the process will still deliver results. In fact, it may improve your results. Here’s why:
1) Goals Reduce Employee Happiness
When employees focus on the goal they say to themselves: “I’m not good enough yet. When I reach my goal I’ll be good enough.” In effect, you’re teaching them that success is tied to reaching a goal and not to doing their job well. To many employees, the idea that they have to reach an ambitious goal is stressful.
However, if you teach your employees that their goal is to follow your process, this takes some of that stress away. They come to work knowing what they have to do every day without the pressure of having to make a big sale. Employees are happier because they know that as long as they do their job well, they are valued.
In case you’re worried that this change in mindset will reduce results, don’t be. If they are being held accountable to following the process, you will sell more cars and bring in more service revenue, guaranteed.
2) Goals Limit Results
If a salesperson’s goal is to sell 20 cars per month, and he reaches that goal two days before the end of the month, how hard do you think he’s going to work to make sure he sells 21 cars? Sure, there are a few highly motivated individuals out there that would keep going. But after working hard to reach a goal, it’s human nature to want to relax a little bit.
Focusing on the goal can actually limit your results. Focusing on the process ensures that you will always get results as long as the process is being followed. When a salesperson comes in every day and does what they’re supposed to do, that person will consistently sell cars.
3) Goals Cause Setbacks
Every time you set a goal you are bound to have setbacks on the way to that goal. Obstacles arise, schedules change, emergencies happen. When this happens it can discourage your employees.
If they are not on track to meet their goals halfway through the month, there’s a risk that the disappointment will cause demotivation instead of more motivation. We can’t always be in control of everything.
When an outside force interferes with your plans it doesn’t have to be a setback. If you’re focused on the process, it will not be viewed as a setback. The employee simply goes back to following the process as usual.
Dealers that place a high value on reaching goals may want to rethink the importance of goals vs. processes. If your workplace values goals above all else, employees will find shortcuts in an attempt to reach them. If you create a workplace that values its employees for doing their jobs well, they will be motivated to keep doing their jobs well.
A goal can provide direction but committing to the process is what delivers results. Hold your employees accountable to the process, and they will make the system work.
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