Walk onto a construction site and you can see everyone has their role, and they are all working towards a specific end goal. The electricians are running wire, the plumbers are soldering pipes, the sheet rock guys are plastering the seams, the window guys are aligning and shimming for a perfect fit and the Foreman is ensuring that everyone is doing their respective jobs, ensuring that the timing of one phase jives with the appropriate next phase to ensure the house gets completed in an orderly fashion. Additionally, that Foreman is making his calls, gathering up various contractors and setting the appropriate timing, not just of the NEXT project, but likely the next few projects. This is a man with a plan, and he is always “working on something”, better said “working TOWARD something” and that is the example of a true leadership role, and if it is done well, it is an example of true Leader. True leaders are hard to find, but they naturally inspire and motivate people to work “for” them to help achieve the end goal!

When you look at the big picture overall objective of a Fixed Operations Manager, the end goal could be simply phrased as “Profitable & Consistent Growth”. The challenge however, is not in knowing what the goal is, but in actually working towards it.

Fixed Operations Management is one of, if not the, most unique Management roles in the retail automotive industry, realizing that no other role has the responsibility of “absorbing” the entire dealerships’ expenses! Absorption, which has been the buzz-word for years, but especially this year, is not the “goal”, it is simply a point along the way to the end goal. Certainly it is the responsibility of Fixed Operations Management to be working towards and ultimately past the 100% absorption mark, even when they have least amount of resources available to them, and the rest of the Management Team has no responsibility for any profitability.

When I say that the rest of the Management Team has no responsibilities for profitability, it is not that I am saying that they are working “against” profitability, more so that any profitability achieved is nothing more than a fortunate result of enough unit sales, not that they had a specific plan, with consideration of expenses ever part of their equation, and that includes the Controller/Office Manager as well!

Think about it, are the 37 Sales Managers are never held responsible for any “semi-fixed” or “personnel” expenses? There seems to be a simple shrug of “oh well, that’s simply the cost of selling cars!” Sure, the lead Sales Manager (GSM) may have to keep within a budget for the advertising expense, but realistically, that’s it for the Sales Dept and even with that one and only expense to manage, I’ve never heard of a GSM or Sales Manager being “scolded” for exceeding the advertising budget, nor have I heard of one being congratulated for coming in under the budget! No leaders here!

The Used Car Manager only has to concern himself with the reconditioning costs, which aren’t a semi-fixed or personnel expense anyway, but even if reconditioning cost a dollar, it would be too much for him anyway! No leaders here!

Even the Controller, who should be the one minding the “store’s expenses” more so than anyone, doesn’t haven’t any accountability or responsibility either! Sure, she will give you a hard time if you don’t have the appropriate internal form filled out correctly, or that a Service Advisor was able to get a rental without issuing a Purchase Order, but honestly – the Office never has to “tighten their belts” – when was the last time (or any time) that a person was cut from the office?

Yes, she’ll veto the purchase of a new PC and think she’s doing some great deed, but realistically and unfortunately, most controllers are nothing more than “report card providers”, meaning, they print off the report card (DOC/statement) and may circle or highlight specific expenses indicating they are out of line, but other than that, there is no INSTRUCTION or guidance provided. No leaders here either!

Clearly, the only “expense control” required of the Sales Departments is nothing more than a “hope” that their gross profits exceed their expenses, no matter what those expenses are! The Controllers’ only responsibility seems to be printing the document, regardless of the results!

“Don’t worry, Service is responsible for the absorption anyway!” right?

Enough of my ranting about the uselessness of most Managers - Who’s going LEAD the Profitability of the Dealership?

Clearly, that responsibility lies in the hand-cuffed hands of Service & Parts Management. Now rather than discuss why and how Fixed Operations Management is hand-cuffed, since we all know it to be true anyway, and only owners, primarily focused on the showrooms production have the power to change it, the question posed of you today is, “what are you working on, better still, what are you working towards, right now?”

First and foremost, you need to know what the “BIG” number is. For most manufacturer dealers, I would suggest that until you get there, 105% fixed absorption should be your goal. I realize that you may be hovering around 50% or 60% right now, frankly, it is what it is, but you have to have to your overall objective, that far off “carrot” that you are working towards. When you are on the 1st step, your goal is not to get to the 2nd – it’s to get to the top of the stairs, right? Now I do recognize that you cannot get to the top of the stairs without a moment on each step, but as mentioned, the goal is not the 2nd step, 3rd or even 6th; it’s the top of the staircase!

I also realize that if you are hovering around 50%-60% that 105% may seem like an unattainable goal, but if you don’t shoot for the moon, you’ll never get off the ground and if you are shooting for “average”, wow… really?

Now your target/objective is determined – frankly, that’s the easy part. The next and certainly the most challenging step and not coincidentally, where true “leadership” lies is in the development of the “Vision” on how to go from Step 1 to the Top of the Stairs!

The next and definitely most important next step is bringing your Team into the mix on believing and buying in to your “vision” on the overall objective itself, and even more so your plan on getting there. Without question, this is much easier said than done, by that I mean, most people will buy into YOUR objective and they will likely buy into your plan on getting there. When I say “buy in”, that means that they agree, but doesn’t necessarily mean that they will take an active role in helping achieve it.

So where are you right now? If you are simply taking each day at a time, what are you a Sales Manager?

If you need help determining the big number – Give ATi a call or email – we can help!

If you are in the midst of Vision Development or you are at the beginning of Vision Development, a True Leader knows how to utilize available resources and is strong enough and smart enough to get help when needed, even if that help does nothing more than save time - if you need some help or want your Vision developed “faster” – reach out to ATi and we will help, it is what we do!

If you’ve developed the vision and need help executing it to get your operations moving up the stairs, we are here to help. Whether it’s Service, Parts or the Collision Center – ATi is your Fixed Operation Solution!

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