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Staying Power: Boosting Employee Retention Rates

The cold, hard facts make it abundantly clear: Companies, including automotive shops, need to change how they treat employees, not only if they want high retention rates, but simply if they want to succeed.

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The cold, hard facts make it abundantly clear: Companies, including automotive shops, need to change how they treat employees, not only if they want high retention rates, but simply if they want to succeed.

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After all, less than a third of American workers feel engaged at work, according to a 2013 Gallup Poll. This should matter to repair shops, if for no other reason than because statistics suggest the more engaged employees are, the more likely they’ll stay – and the more successful their companies will become.

Another Gallup Poll, for example, indicates that the top quartile of companies surveyed in 2012, in terms of employee engagement, also had 22% more profitability, 10% higher customer reviews, 28% less theft and 48% fewer safety incidents than the surveyed companies’ bottom quartile.

Even better, it’s a symbiotic relationship: Who wouldn’t want to work for such a company, and what good employee wouldn’t want to stay? No shop owner wants to spend time and money recruiting high-quality workers only to have them quickly abandon the company for a competitor.

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So, what are companies in that top quartile doing right? And what are those at the bottom doing wrong? Tire Review asked tire professionals and their consultants to consider the topic and speak from ex­­perience. Prepare for some self-examination, some change, and for the many successes that come from earning the most loyal employees in town.

How Owners Make Good Employees Leave

Rick Barnhart has a list of “mistakes owners make that cause employees to leave.” Do you see yourself in his descriptions? Self-awareness, as they say, is the first step toward improvement.

They Place Too Much Emphasis On Pay – “I have seen owners that have the attitude, ‘I pay him a lot, so he should put up with a lot.’ That usually means put up with the owner.

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“Pay is important to get right, but it’s seldom the reason that people leave. Look at the studies that show what’s important to employees and you’ll find that pay is never at the top. When owners put it at the top, they’ve created a retention problem. According to Inc.com, employees want purpose, goals, responsibility, autonomy, opportunity, transparency, and they want to get paid fairly.”

They Have Poor Pay Plans – “Even though it isn’t all about pay, not having good pay plans will cause retention and motivation issues.

“Many owners make pay plans too complicated. They should be understandable, clearly explained, related to that person’s job des­cription, aligned with company goals, and routinely reviewed. I have heard many employees at various companies mention this as a problem.”

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They Lack Defined Goals and Expectations – “All employees feel better if it’s clear what’s expected of them. Goals should be clear and priorities need to be communicated as often as possible.

“Good companies develop a review process and it needs to be done on a specific schedule, not when there’s a problem or when the owner feels like it. One-year intervals should be the minimum.”

They Lack Help and Support to Get the Job Done – “Have you ever seen a new person start and quit in the first few days? I have, and it’s usually because the person was thrown to the wolves when he or she started and felt uncomfortable about what to do.

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“Without a concise orientation and on-boarding process, employees feel they are being bounced around by whichever wolf they’re running with at the time. Openness and responsiveness to an employee’s request for help in getting the job done is important. If your counterpeople are complaining about the slow POS system and telling you it’s hurting customer service, get it fixed or mitigate with process changes.”

They Don’t Let People Go When It’s Time – “Other employees know when someone isn’t pulling his or her weight, or when a person doesn’t fit the culture. They look to the owner to do something about it. Many times it’s best to terminate these employees. Have you ever put off firing someone and then had another employee say something like, ‘I wondered how long you were going to let that go on?’

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“On the other end of the spectrum are the extremely good employees that many times can’t be retained. I have seen small business owners use desperate measures to keep people that most certainly will either eventually leave anyway or should leave.

“If an owner feels that he or she can’t succeed without a specific person, that owner has the potential to create a culture that’s not conducive to keeping good employees. As soon as the key employee is paid more than they should be or given less hours or better benefits, whether it’s a flexible schedule or any other thing that others would like to have, then the culture is not equitable. When that occurs, the company is at risk of losing other good employees.

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“When someone is really good and you can no longer pay that person what they want or keep them challenged – if they’re better than the best job you have – then it’s probably time to accept that person’s departure. Being supportive of what’s best for the employees will gain you respect and credibility.”

They Don’t Accept That They Train for Their Competition – “I have seen owners that hesitated to allocate resources to train employees because they will then go to the competition. Accept that this is a cost of doing business. Great companies realize that some people will train and leave, but those that stay will perform and the company will be viewed as a great place to work.”

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They Don’t Have a Development Plan for All Positions – “After training comes development. There are resources out there to help you develop your existing employees.

“Tire Leadership 21 is an example. You might think it’s too expensive or you can’t have people out of the store that long. The ROI of employee development will make it well worth it, assuming your business is receptive and supportive of continuous improvement. Think about development not just for weaker employees but for good ones that can benefit even more from quality programs. Pull performance up, don’t just push it up.”

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They Don’t Think About Ways to Make the Company a Great Place to Work – “Would you really want to work for your company? Ask yourself, honestly, ‘What can I do to make this a better place to work while maintaining a good profit?’”

Finders Keepers

Deanna Arnold, president of Employers Advantage, a small-business human-resources consulting firm in Cornelius, N.C., talks about the rudimentary elements of employee recruitment and retention. Do you have a solid foundation in these basics?

How Can a Dealer Recruit Good Employees? – “There are many ways, but it really needs to be through targeted, specific recruiting that starts by clearly identifying and documenting what you’re looking for. Know what is required, or what you’re looking for, as it relates to the job as well as its fit within the business. This includes technical skills, industry knowledge, attitude and personality.

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“What is defined among those things for each role and business is what makes an employee good by that business’ standards. Once you know what you’re looking for, you can target your recruiting efforts to trade associations, employee referrals, networking groups and more.”

What are the Roots of Poor Retention? – “Employee turnover can be attributed to a number of factors. It can depend on the employees’ personal situation or it can depend on factors at work. For some employees, it may be financial and for others it may be career advancement or opportunities, or poor management or work environment. It all depends on what’s important to that particular individual.”

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How Can You Create and Maintain Employee Engagement? – “One way is by setting expectations: Clearly define what is expected of employees and what the consequences and rewards are for meeting, exceeding or not meeting those expectations.

“Another way is by providing ongoing feedback and open two-way communication: Create both formal and informal feedback and communication opportunities where employees are held accountable as well as recogniz­ed. Allow employees to be active in the day-to-day aspects of operations. Support their goals beyond their current roles. And reward work that’s above and beyond.

“Yet another way is to motivate employees: People are motivated by different things, so it’s important to determine what those things are and incorporate them into the culture.”

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What About Creating and Maintaining Employee Opportunity? – “Work with employees to determine what their strengths and goals are so that a career plan within the business can be created for them. That gives the employee the ability to see potential, to know what he or she needs to do to reach those goals, and to have the support of the business in reaching them.”

How Do You Determine Whether Compensation is Truly Competitive? – “It’s really simple: Review market data and conduct a full compensation review.”

Real-Life Applications

Jeff Wallick asks us How Does Your Company Recruit Good Employees, and How Do You Define ‘Good’? – “Probably like many companies, we recruit on websites like Monster.com, Indeed.com and informally on LinkedIn. Our marketing department also does a nice job working to build our social media presence, specifically connecting with tire dealers. Some of our best employees come through existing-employee referrals.

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“But our organization lives by eight core values, the first of which is that our customer is the most important person in our business. We have two primary customers: internal and external, and our internal customers are our employees. We do our best to make sure that both feel important.

“A good employee has many of the soft skills that people associate with a quality employee: good communication, hard-working, ability to follow direction, maybe even the ability to lead others. We look for people who also connect to our purpose as an organization.”

How Much Money and Time is Invested in the Process, and How Does That Motivate You to Keep Them? – “We invest heavily in developing our people so we can retain top talent. Our employee training and development department was created earlier this year, and we’re also investing heavily in our leadership and management teams in 2014 and beyond.

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“Certainly, some employee turnover can be healthy, but we’re committed as an organization to developing, challenging and celebrating our people while reducing turnover. Without happy internal custo-­ mers, we’re not able to properly take care of our external customers.”

Why Do Good Employees Leave? – “I think there’s a tendency to believe good employees leave companies due to other financial opportunities. I think that’s part of the decision-making process, but I don’t believe it’s a top-three priority.

“Ultimately, good employees want to be part of an organization that shares a profound mutual respect with them. At K&M, we’re certainly not perfect, but we’re genuinely focused on providing new opportunities to our best people, developing and challenging them in healthy ways. It may sound clichéd, but I believe people quit long before they quit companies. In the meantime, you end up with actively disengaged employees that can be damaging to the very culture of a company.

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“That active disengagement manifests itself as an unhappy or frustrated employee. In fact, there is research that indicates humans are capable of feeling more than 100 emotions, of which less than 40% are positive. Of those possible positive emotions, less than half can be attributed to the workplace and only one or two emotions can be directly attributed to the organization itself. Other possible positive emotions are linked to the employees’ direct supervisor. So when we say our business is a ‘people business,’ it literally is.”

If You Believe the Reasons Go Beyond Financial Compensation, How and Why? – “I think financial compensation is part of the formula, but there are many other factors that make up the components of an engaged, productive employee. Maslow’s Hierarchy of Needs theory perfectly represents this. In this case, financial compensation would fall into the ‘safety’ category, above which are the more profound physiological needs like ‘love’ and ‘belonging’, ‘esteem’ and ‘self-actualization’, or ‘autonomy’.

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“At the end of the day, we’re simply a tire distribution company. But, at a fundamental level, we’re a company of people and purpose, and that can be very powerful when harnessed properly.”

Do You Know Any Relevant Statistics? – “There is an oft-quoted Princeton University study from 2010 that measured the correlation between compensation and happiness. There are quite a few other highly respected organizations that have performed similar research and seem to generally support the findings. What we’re talking about are employees who are engaged in their work and content with their current employer.

“There also is some interesting supporting research by Dr. Robert Emmons of the University of California at Davis who studies something he calls gratitude conditioning. Emmons wanted to determine if, in fact, there is a link between gratitude and happiness and it turns out there is. It’s also important to note the distinction between feelings of gratitude and feelings of indebtedness. People who reported being indebted to others showed increased signs of anger, hostility and frustration.”

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What are Some Ways a Dealer Can Keep Good Employees? – “Establish your purpose as a company. Then connect your people to your purpose and constantly reinforce that connection. When I talk about purpose, I don’t necessarily mean profit. There’s a great TED Talk by a guy named Simon Sinek titled ‘Start With Why’ that perfectly illustrates this point. In the words of Sinek, profit is a result.

“My point is this: If your employees come to work in the morning to collect a paycheck, establishing any kind of meaningful connection to the company is going to be difficult. As a business owner, if you can connect your people to something more genuine and profound, you’ll be amazed by what your organization can accomplish.

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“I think it’s also important to consistently show appreciation for your people and to do it in front of their peers. Praise in public and criticize in private. For a retail store manager, five-to-10-minute standing meetings each morning ensure everyone is on the same page, and allow you as a leader to celebrate successes, praise employees and maybe even share certain key performance indicators.

“Sharing metrics like daily break-even profitability, service work and tire sales goals strengthen the connection between people and purpose, while driving accountability in the process. Keeping employees on their feet limits the length of the meetings, keeping them short and productive.”

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How Can an Owner Create and Maintain Employee Engagement? – “I believe people inherently want to continuously grow and develop. There are obviously exceptions to that, but I think the development of human capital is so important for organizations, especially as companies in every industry compete for the best talent. The tire industry is no different, except I think there are some unique challenges we will face in the coming years.

“I believe the tire industry will face something that resembles a talent drain over the next several decades as the current workforce nears retirement age, unless we can collectively work together to inject new, young talent into the industry. I don’t imagine that will be a popular opinion, but I believe that’s an unfortunate reality, and there has been quite a bit of discussion about this topic over the past few years in most of the leading industry publications, including Tire Review.

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“The emerging talent in Gen Y is often lured to other industries with promise of opportunity, career growth and both personal and professional development. Certainly, those opportunities exist in the tire industry, but perhaps not to the extent of other notable industries like technology and advertising. To attract the next generation of leaders, the tire industry must not just work to overcome negative and sometimes false perceptions, but genuinely focus on developing human capital, connecting people to purpose, and providing opportunities for growth on multiple levels.”

What About Employee Opportunity? – “We believe opportunity is a key piece of the puzzle in attracting and retaining top talent. To that point, organizational growth is necessary. Responsible, sustainable growth is foundational to taking care of our customers. Growth allows us to create new opportunities for our people and allows us to better service our external customers through improved delivery service, a more diverse brand and product portfolio, and numerous support services from a program, marketing and IT perspective, to name a few.

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“At K&M, family is a key component in our success on multiple levels. Like many great companies, we look to promote a family-like work environment built on mutual trust and respect. But, for us, it’s more literal.

“Since 1970, we’ve been a family-owned company and we’re quite proud of that. We’ve more than doubled in size since 2011, but we’ve focused on responsible, sustainable growth. This is critical when building a culture of trust and mutual respect. In the 44 years since K&M was founded, we’ve never had a layoff. This is a testament to the company’s steadfast focus on making our customers the most important people in our business. And it’s a principle that almost all tire dealers can implement themselves.”

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Article courtesy of TIRE REVIEW. By Joanne Draus Klein

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