SUCCESSNOW!PRESENTS:

OPERATIONAL EXCELLENCE

in DEALERSHIPS

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Notice the “Background Field” of This PowerPoint Presentation?

What Do You Think It Signifies?

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Maps? Compass?What do these signify?

How About . . .

WHERE You Need to Be Going? . . .

And HOW You’re Going To Get There?

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Your Dealership….

Needs Leaders Focused on Operational Excellence.

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Operational Excellence can be driven and created. We do it everyday in many of our client-dealerships.

• We want you to be the “Drivers” of Operational Excellence.

• SUCCESSNOW! and Effective Accountability Management will provide the “Roadmap”.

• We need you to provide the leadership, drive, and determination.

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SUCCESSNOW! will focus on providing you the tools to get the job done.

Our Key Concepts Will Include

• What are effective leadership skills and how do you enhance them.

• Accountability Management – The primary elements of effectiveness.

• Time Management

• Operational Best Practices

• Business Management Expectations

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Effective Accountability Management Mandates That….

You Cannot Manage Results….Just Activities! Manage the Activities, and the Results Will Follow!

• “Measure What You Intend To Manage!”• “Inspect What You Expect!” …..and “Let Everyone Know the Score!”

“When we deal in generalities we will never succeed; when we deal in specifics we will seldom fail. When performance is measured, performance improves; and where performance is measured and reported, the rate of improvement accelerates!”

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Everything We’ll Discuss This Session Falls Under the Umbrella Of

“OPERATIONAL EXCELLENCE IN DEALERSHIPS”

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Effective Accountability Management

1. Plan your work, and work your plan!

2. Clearly define and communicate your expectations.

3. Measure what you intend to manage!

4. Inspect what you expect!

5. Reward positive results, and respond appropriately to negative results! (Positive behavior that is rewarded will be repeated; and negative behavior that is not effectively addressed will, likewise, be repeated.)

6. Develop and Implement a Systemic Structure! (“Dissimilar” people operating within the same Systemic Structure will produce “similar” results.)

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EffectiveAccountability Management

1. Plan your Work, and

Work your Plan!

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Planning Your WorkGeneral

• Forecasting Methodology

• Personnel Modeling – Departmental

• Advertising / Marketing Budgets

• Achievement of CSI Objectives

• Inventory Planning – New Vehicles, Pre-Owned Vehicles, Parts, Other Inventories

• Accountability and Time Management

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Planning Your WorkSpecific

• OTDB’s, (Opportunities To Do Business) By Category

• Closing Ratios By Category• $PVR’s By Category• ELR Planning By Category• Margin (GPM) Planning By Category• Head-Count Planning• Expense Account Planning• Asset Level Planning By Category• Management Calendars (Individual)

– Time Management

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Working Your Plan• Action Planning Process

• Manager’s Meetings– Asset Meeting, Forecasting Meeting, Review Meetings Save-A-Deal,

Make-A Deal Meetings

• Associate Group Meetings– Total Store (Monthly Kick-Off / Celebration)– Departmental and Business Unit– Sales Meetings (Sales & Service)– Training Meetings– Town Hall Meetings

• One-On-One Meetings

• Implementation & Execution

• Regular and Frequent Feed-Back On “Plan Performance”

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EffectiveAccountability Management

2. Clearly Define and

Communicate Your

Expectations!

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Clear Definition and Communication of Expectations

• Dealership and Departmental Organization Charts

• Documented and Signed Job Objectives for Each Manager and Subordinate in All Departments

• Accountability Sheets, to Provide the Associates with a Format to Tell YOU “How They Made Today Successful”

• Documented Compensation Plans that Reinforce Job Objectives and Accountability

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Clear Definition and Communication of Expectations (cont.)

• Clear Documentation of Important Operational Processes– Road to a Sale (both Variable and Fixed)– Pre-Owned Vehicle Age Control– Special Order Parts– Warranty Submission and Parts Retention– Forecasting Process– ASR Process– CRM Process– General CSI Processes– Complaint Resolution Process– Other Critical Process Documentation

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EffectiveAccountability Management

3. Measure What you

Intend to Manage!

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You Can’t Manage What You Don’t Measure!

• How Do You Know Whether You’re Winning or Losing………

Without a Scorecard?

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Measure What You Intend to Manage

• Know All Your “Key Success Indicator” (KSI’s)• Understand the “Metrics” for Each KSI• Understand the “Guidelines” (if available) for

Each KSI• Use a Currently Available or Supplemental Tool for

Measuring Each KSI• Develop a Method to “Scorekeep” the KSI’s• Ensure That “Scores” Are Always Clearly

Communicated to Involved Managers and Associates

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Currently Available Measurement Tools

• Month-end Financial Statement• Dealership DOC• TSA Dealer Composite Report• Sales Consultant Productivity

Reports• CRM Reports• ILM Reports• Advisors’ Productivity Report• Technicians’ Productivity

Report

• Month-End Parts Inventory Analysis

• Manufacturer’s Warranty Claims Reports

• Manufacturer’s CSI Report• Pending Deal Report• Interim Monthly Financial

Statements or Trial Balance Reports

• Advertising Strategies & Results Analysis

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Supplemental Measurement Tools To Consider

• Accountability Sheets• Service, Parts, and Collision

Center Associate Productivity Boards

• Vehicle Sales Department Associate Productivity Boards

• Repair Order Analysis Reports (Hours and ELR by Labor Category)

• Managers’ Written Reports of “One-on-One” Meetings

• Completed “Task Lists” Within Managers’ Monthly Calendar

• Detailed Report of the Four (4) Primary OTDB Categories by New and Pre-Owned

• Sales, Gross, Expense and Inventory General Ledgers

• Month to Date F&I Product, Penetration, & Gross Summary

• MTD Gross Log • Internal CSI Reports• TSA Managers’ Meeting

Report Template• TSA Daily Scorecard

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Effective Accountability Management

4. Inspect What You

Expect!

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Inspect What You Expect!

• Most of the KSI’s That You Need to Inspect Should Be Scheduled Within MS Outlook on Your “Management Calendar”. (Also see Prior-Listed “Measurement Tools”.)

• Daily One-on-One Meeting with Controller or Office Manager

• Ensure That Subordinates also Effectively Use the Scheduling Tools Within MS Outlook.

• Ensure That All “Scoreboards” or “Scorecards” Are Regularly, Consistently, and Accurately Updated.

• Ensure That Accountability Sheets Are Reviewed Every Day By Your Management Staff.

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Inspect What You Expect! (Cont.)

• Do YOU REALLY UNDERSTAND the content of each of the Prior-Listed “Measuring Tools”? Do You Know How To “Interpret” the Information? Do You Know How To “Respond” To This Information? If Not, Ask For Help!!

• Do Your Subordinates REALLY UNDERSTAND the content of THEIR department-specific “Measuring Tools”? Do They Know How To “Interpret”? How to “Respond”? If Not, Get Them Trained!!

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Accountability Management Mandates….

• “Measure What You Intend To Manage!”• “Inspect What You Expect!” …..and “Let Everyone Know the Score!”

“When we deal in generalities we will never succeed; when we deal in specifics we will seldom fail. When performance is measured, performance improves; and where performance is measured and reported, the rate of improvement accelerates! Thomas S. Monson

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Effective Accountability Management

5. Reward Positive Results and

Respond Appropriately to Negative Results!

(Positive behavior that is rewarded will be repeated; and negative behavior that is not effectively addressed will, likewise, be repeated.)

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“Reward” or “Respond”! You MUST Do One or the Other!

• Ensure that you always employ the Strategies outlined in The One-Minute Manager.

• Ensure That Each Associate Understands and Buys Into Your “Expectations” (See Element 2).

• Ensure That Each Associate Knows How (Provide “Blueprint”) to Meet Your Expectations.

• Frequently and Consistently “Reward” Those Who Meet Your Expectations. Remember, “Reward” May Only Mean a Sincere, “Attaboy!”

• Frequently and Consistently “Respond” To Those Who Do Not Meet Your Expectations. Remember, “Respond” May Only Mean a Private and Profes-sional, “I’m Disappointed With Your Performance!”

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“Reward” or “Respond”! (Cont.)

• If You Have an Effective “Measurement” Process (Element 3) and “Inspection” Process (Element 4), You Will Know Whether to Reward or Respond!

• The “One-on-One” Meeting is the Best Forum to Reward or Respond with Consistency! But if the Reward or Respond should be immediate, Don’t Wait! Do It Now!

• Where Possible, Always Develop “Documentation” To Record When and Why You Rewarded or Responded.

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“Rewarding” Through Compensationor Other Material Incentives

• Your Dealership Compensation Strategy Should Include All Of The Necessary “Elements” for an Effective Monetary “Reward” Program. You Need to Learn How To Most Effectively Use These “Elements” To Match “Expectations” and the Culture of Your Specific Department.– One of These Elements Is “Miscellaneous Incentives– Retail Automotive Associates Have Proven to Respond Well to

“Miscellaneous Incentives”.– “Miscellaneous Incentives” Are Intended To Be Flexible; But

They Must Be Well-Designed, Well-Budgeted, and Well-Managed.

• By Nature, Most Associates in our industry are Competitive and Respond Positively in a “Contest” Environment. Contests Should:– Be Frequent, But of Short Duration (10 – 30 Days Maximum).– Include “Qualifiers”, Whenever the Reward Has a Significant

Material Value.– Often Include Rewards Other Than “Money”.

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“Responding” To Inadequate Performance

(CONFRONTATION)• Confrontation is “Necessary” and “Healthy” . . . Yet

Neither the “Confrontor” or the “Confrontee” Likes It!

• If you want to break bad habits, you’d better be prepared to get in people’s faces.

• You have to be honest with people . . . brutally honest. Tell them the hard cold “truth” about their performance.

• The only way to change people is to tell them, in the clearest possible terms, what they’re doing wrong.

• Team members must be given a “chance” to change….and if they won’t, or don’t change, they must be De-Hired.

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“3 Strikes and You’re Out”

Strike 1 Counsel

Strike 2 Confront

Strike 3 Terminate

Note: “Some Associates Require Extra Innings in Order to Modify Their Behavior”.

• As an “Industry” We in the Retail Auto Business Have Always Been “Too Quick to Hire and Too Slow to Fire!”

More on CONFRONTATIONCONFRONTATION

• We Must Make Our People “Accountable”– When we Tolerate Complacency, Negative

Attitude, and Inferior Performance• We Facilitate the Process of Allowing “Our Best”

Associates to be Dragged Down to the Mediocre Level of “Our Worst”

• We, Ourselves, Are Dragged Down to a Level of Mediocrity

• Confrontation is Required to Achieve Accountability! Confrontation is Unpleasant!

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Effective Accountability Management

6. Develop and Implement

a Systemic Structure! (“Dissimilar” people operating within the same Systemic Structure will produce “similar” results.)

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Systemic Structure• Those Dealers Who Pride Themselves

in Developing and Executing “Best Practices”……– “Document” Their Key Processes “In Detail”

– Consistently “Train” These Processes– Consistently “Monitor” These Processes– Consistently “Enhance” These Processes

• And The “Operative Word” Is……..?

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“PROCESSES”!(Plural)

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Rethink The “Operative Word”!

• Those Dealers Who Pride Themselves in Developing and Executing “Best Practices”……– “Document” Their Key Processes “In Detail”

– Consistently “Train” These Processes

– Consistently “Monitor” These Processes

– Consistently “Enhance” These Processes

Now The “Operative Word” Is……..?

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“CONSISTENTLY”!

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Again, Rethink The “Operative Word(s)”!

• Those Dealers Who Pride Themselves in Developing and Executing “Best Practices”……– “Document” Their Key Processes “In Detail”– Consistently “Train” These Processes

– Consistently “Monitor” These Processes

– Consistently “Enhance” These Processes

Now The “Operative Words” Are……..?

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OK, Put It ALL Together!

“CONSISTENTLY”

“DOCUMENT IN DETAIL”

“TRAIN”

“MONITOR”

“ENHANCE”

“PROCESSES”

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“DOCUMENT IN DETAIL”!“TRAIN”

“MONITOR”“ENHANCE”

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What Processes to Consistently Document in Detail, Train, Monitor, and Enhance?

• Annual Budgeting and Monthly Forecasting

• Inventory Management– New Vehicles

• Age Control– Pre-Owned Vehicles

• Age Control• Model Inventory

– Parts & Accessories• Special Order Parts• Age Control

• Receivables Management• Scorekeeping for Success• Road To A Sale

– Vehicle Sales– Fixed Operations

• ASR Process

• High Energy Merchandising• Warranty Administration• Dealership Policies and

Procedures • Maximization of CSI• Maximization of ESI• F&I Compliance• GLB Compliance• “Do Not Call” Compliance• Red Flags Rule Compliance• Action Planning Process• Manufacturer Incentive & Co-

op Administration

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Effective Accountability Management

1. Plan your work, and work your plan!2. Clearly define and communicate your expectations.3. Measure what you intend to manage!4. Inspect what you expect!5. Reward positive results, and respond appropriately to

negative results! (Positive behavior that is rewarded will be repeated; and negative behavior that is not effectively addressed will, likewise, be repeated.)

6. Develop and Implement a Systemic Structure! (“Dissimilar” people operating within the same Systemic Structure will produce “similar” results.)

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Performance Improvement

1. Identify the Opportunity

2. State the “Rule, Guide, or Benchmark”

3. Quantify the Opportunity

4. Determine Alternative “Causes”

5. Develop Alternative “Solutions”

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Primary “Causes”• Manager(s) didn’t know

the Benchmark• Manager(s) didn’t relate

to the “Opportunity”• Manager(s) didn’t Have a

Plan• Manager(s) didn’t Work

the Plan• Manager(s) didn’t

Understand the Expectations

• Manager(s) didn’t Feel Accountable….Or Pay Plan Was “Insensitive”

• Manager(s) didn’t Have a Process

• Manager(s) didn’t Effectively Measure

• Manager(s) didn’t Inspect

30% Net-To-Gross Sales $ 1,000 of sales

Cost of Sales $850 85%

Gross Profit $150 15%of gross

Controllable Expense $66 44%

Controllable Profit $84 56%

Fixed Expense $45 30%

Operating Profit $39 26%

Net Adds. & Deducts $ 6 4%

Net Profit $45 30% 4.5% Net-To-Sales

0%

5%

10%

15%

20%

25%

30%

Proper Analysis of methods and activities.

Knowledge of what to do with the analysis data (What needs to “Change”? What should you manage and how?)

Implementation Plan to fit the culture and skill level of your organization.

Follow-up Structure and Process.

Managers with vision and support

DEVELOPING A VISION AND STRATEGY

COMMUNICATING THE CHANGE VISION

ESTABLISHING A SENSE OF URGENCY

CREATING THE GUIDING COALITION

GENERATING SHORT-TERM WINS

ANCHORING SYSTEMS AND PROCESSES

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Prioritizing Prioritizing “Change”…“Change”…

INCREASED PROFITABILITY IS THE KEY!INCREASED PROFITABILITY IS THE KEY!

1. Expenses – Controlled to “Guide” Level or Below

2. Transactional Gross Profit – Maximized with Systems

and Procedures

3. Inventories and Receivables – Achieved Through

Asset Management Disciplines

4. Merchandising – Increased Market Share

Predictable Improvement

What Is Management’s Role?What Is Management’s Role?

Coordinating the Development and Communication of the Change Vision and Change Strategy.

Establishing and Maintaining the Sense of Urgency.

Implementing and Managing the Environment for Accountability.

Ensuring that Short-Term Wins are Acknowledged and Celebrated.

Permanently Anchoring Proven Best Practices into the Dealership Culture.

The Mission Of This

SUCCESSNOW! Bootcamp . . .

First, to help you become a Leader who Drives

Operational ExcellenceSecond, to improve your understanding of the

business opportunities available in your dealerships

Third, to improve your skills in

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It Is Up To YOU!

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QUESTIONS?