Service Management Millennium
By Gene White
The computer age, consumerism and "high-tech" vehicles have radically changed the skills needed by our management today and into the millennium. During the years after World War II, new car sales were the dominant factors driving the dealership's profit. This, along with the short life of vehicles, caused an overall lack of emphasis on the service area. The energy crunch of the early '70s, the consumerism movement and CSI have caused dealership management to sharpen the skills of their service people. The projection of flat new car sales and reduced new vehicle gross profit in the millennium has caused management to evaluate each department as a profit center. No longer will new vehicle grosses be able to cover the losses of a marginal department in the fixed operations. Any service manager, parts manager or body shop manager whose department is not in the black must realize the future of his or her job is suspect.
We can no longer promote someone with mere technical skills into the manager's level; we must look for professional management skills or provide professional management training. Today we must look for people with people skills, computer literacy, higher levels of education, and who understand financial management. Mechanical skills are a plus, but being a skilled technician is not a necessity.
It is difficult to deal with today's customers. They are better educated as to their rights as a consumer, know the fine points of arbitration and are provided with many avenues of pursuing those rights inexpensively. Many are even looking for rewards beyond the warranty and free repairs. Most states have lemon laws and procedures which allow the customer to, in some cases, even recover interest paid on the financing. Free arbitration is provided through many avenues, the Better Business Bureau being one of them. A manager today who cannot prepare and present a logical case to these boards can cost the dealership thousands of dollars. The lessons of not managing his/her staff, not getting signatures, not documenting repairs properly and ignoring customers' rights can cost dearly.
"Computer Literacy"
Computer literacy is a must with today's managers. The lowering costs of computer hardware, the increased data bank that must be managed, along with the fact that an increasing amount of communication with factories is being handled through computers and satellites, dictates this. The manager does not need to be a computer programmer, but he or she must be able to understand the computer logic in order to design, request and interpret management reports delivered from computers. Many older managers do not even trust computers to establish order points and order quantities on the parts departments simply because they will not take the time to understand what controls the systems and how to make it work for them. The same is true of other fixed operations departments.
Higher levels of education do not necessarily mean college. Some people stop learning as soon as they get out of any school and the world passes them by. Higher levels of education means continual schooling through the manufacturer, self-education, but most important, a flexible mind willing to learn and accept new challenges. In the next millennium, daily change and challenges are going to drive this industry faster than it ever has moved in the past. Knowledge that is more than seven years old is needed to build upon, but is otherwise obsolete today. Crystal radios yielded to tubes, then to transistors and now to integrated circuit chips for radios-and who knows what tomorrow, organic thought interpreters?
Financial Management
Financial management is meant to indicate the ability to bring business into the dealership and put profit on the bottom line of the financial statement. To do this your manager needs to understand merchandising, not just advertising. They must understand their ability to pay staff and make a profit in their department. They must understand how to retain a portion of gross profit as net profit, a torturous path through overheads, policy work, shop supplies, equipment investments and rent, and finally, a net profit before taxes!
Organizational Structure Changes
With the advent of computers, the organizational structures are changing drastically. The old pyramid structure of 10 reporting to one has been replaced by a structure swelling in the lower management ranks and narrowing at the middle to upper ranks. We no longer need middle managers to accumulate and summarize data for the upper levels of management, but we do need more people inputing data as it is generated, computer operators. Upper management, who are computer literate, have the ability to generate more specific reports and paperwork than any other time in history. The challenge today is to decide what data is meaningful to manage with, what data really measures performance, and ignore pages of data that are nice to know but will cloud your mind.
Warranty Interpretation
Warranties today vary based on options selected during certain months on certain vehicles, some portion of warranties that are transferable, warranties that apply to vehicles sold during promotions, overriding emission warranties and warranties extended on certain vehicles by the manufacturer. Other overriding factors are proof of maintenance, proof of ownership or even vehicle abuse. The service manager of the millennium is actually a new position in the dealership, call the position an administrative assistant or parts and service director. We still need the service manager level of decision-making but we need an overriding business manager who can talk the consumer's language, make profit happen and continue to develop technical staffs. Usually this level of management is not an ex-technician. Technicians deal in good or bad, black or white decisions daily. Managers dealing with the public constantly work in gray areas. These two personalities are 180 degrees out of phase with each other.
The burning question is, where do I find such people since a good part of the dealership's future hinges on this decision? You need to look for a person willing to learn the automotive business, who has an advanced education and who possesses at least a talking knowledge of mechanics (mechanically inclined). We as an industry need to visit our schools, explain the careers available in dealership management and explain the salaries available in this industry. In most cases we pay well above salaries paid in other career fields.
We must change our image as perceived by the public and attract this articulate, better-educated manager. This will enhance our image and make the future recruiting of professionals easier. Some suggested starting points: hotel/motel management trained people, business management graduates, engineering graduates, technicians who further their education in colleges and military personnel with technical skills who worked as a managers.
Good luck in your search, since the end result for the dealer or general manager is peace of mind with profit. This makes the search worth the effort.
Gene White is president of Gene White Management Inc. He is a recognized expert and has conducted in-dealership evaluations and training (automotive, heavy-duty trucks, recreational vehicles and marine) for the past 22 years. He has published many "expert" level articles and has conducted workshops for NADA, ATD, FADA, NACE, WD&S, accounting CPAs and multiple State Associations and 20 Groups. He is a member of SAE, IIE, and is a Charter Member of the National Bureau of Management Consultants. gwhite@dealeronline.com
