In the last issue I addressed three areas involving selecting the best candidate for your special finance department. They were Seven Common Traits, Selecting the Best Candidate, and Pay Plans. Part 2 addresses the areas that insure success once the best candidate has been selected. Selecting the best candidate combined with proper orientation to the dealership will greatly raise the percentage of success. Oftentimes the best candidate currently works at the dealership. Remember, "The best salesperson is not always the best candidate." Sub-prime finance requires different skills than traditional selling or F&I. Interview potential candidates within the organization before making the decision to hire from the outside. Once the candidate is selected, follow the outline listed below and watch the department grow!
1. Define and Explain the Dealership's "Corporate Culture"
In many instances, new special finance managers are hired and are not informed about the corporate culture of the dealership and senior management. Corporate culture is the rules a company lives by. These rules include corporate policies pertaining to customer service, compliance, false statements, misrepresentation, fraud, hold checks, promissory notes, and spot deliveries. Once the new employee understands the way a dealership operates it is easy for everyone to coexist and become successful for the long term.
2. Include the Special Finance Manager as Part of the Management Team
One of the biggest problems facing new special finance managers is not being part of the management team. This serves to increase the rate of failure and makes the transition process very difficult. Special finance managers should be involved in management meetings, planning sessions and take an active role in each sales meeting. When special finance managers are treated as "stepchildren" by management, it sends a clear message to other staff members that this department is unimportant and is managed by a "lame duck." Dealerships who involve sub-prime finance managers in areas such as advertising, inventory, and training always succeed in building another profit center. With over 60% of the buying public credit impaired, this department is no longer an afterthought. Today, lenders offer very lucrative finance and lease plans for customers with less than perfect credit. Dealerships must recognize this valuable member of management.
3. Training
A successful special finance manager requires on-going training. The sub-prime market is changing daily and managers must be properly trained to insure success. I believe the same problems that existed in 1994 exist today because dealers fail to recognize the need for professional training. When a new manager is hired, consider why a change was made. Either the previous manager did not accomplish the goals set by management or it is a start-up department. In either case, training will eliminate constant turnover and poor production.
4. Define Levels of Autonomy
During training sessions, I ask attendees if they know their levels of autonomy. Less than 10% know exactly what they can and can't do in various situations. Special finance managers should be given guidelines in order to alleviate this problem before it starts. Areas that need clarification include who the person reports to, minimum gross on a per deal basis, authority to hire staff, lender issues, advertising and inventory. Once these areas are defined the process is much easier to manage from a senior management level.
5. Provide Sub-Prime Finance Manager with Necessary Tools
Often new managers are hired and are not provided with the proper tools to ensure success. These tools include an office that is private enough to conduct interviews; computer systems, fax machines, daily inventory list, good lenders, advertising; and most of all, proper inventory.
6. Require Daily Reports
New finance managers should be informed of the reports senior management requires. It is much easier to implement reporting procedures in the beginning than it is later. Often new managers fail to keep accurate reports because they are not informed of what management wants or requires.
7. Develop a Business Plan
New managers should be instructed to develop a business plan during the first 30 days of employment. The plan should be reviewed by senior management and approved or modified. Once a plan is in place it should be reviewed each month in order to monitor success.
It is more important than ever to hire and train the right manager for the dealership special finance department. The special finance department requires a highly trained professional. This person can build a profitable department that is respected by lenders and customers, eliminating the problems some dealers experience with fraud and misrepresentation.
Paul Snider is President of VOISYS Systems Corporation, specializing in lead-generating services including 800 loan-by-phone and Internet applications.