Our colleagues on the manufacturing side of the Automotive industry are asking for some equity in their pay. Enormous payouts have been given to leadership in bonuses and to stockholders.
Who all contributed to this profitability?
Should we use a multiples based method?
When we look at Auto Retail, there are places where the rare Sales Associates earns more than a Manager. These are typically outliers.
On another hand, General Management pay has reached a point where it bears rethinking.
I hear from a lot of GMs. Recently, something a concerning pattern has emerged.
A majority of Dealers still offer a 5-12% commission and a base ranging from $8-20k on average. Dealers in the past assumed this gave an incentive to work hard for a greater payout.
The flaws here are now easier to witness.
When margins shrank-what happened? Good managers fled to more consistent pay structures. Those staying often required significant changes in their monthly comp.
Are GMs truly motivated by the bottom line of the P&L? How many even fully understand this or have been trained to operate every lever?
When GMs call, with no formal education and 5-7 years in any type of a leadership role, they are expecting, regardless of the size of the rooftop:
$250K? higher
$350k? Higher
$500k? HIGHER
At $650-700,00 GMs are regularly complaining about their pay, citing other stores in their group or region making 2-4x of this.
Yes, complaining.
Entitled or conditioned?
How do we justify this while paying the front line team $15 and thinking they are overpaying? Donna who's been around forever, helps everyone, knows so much, takes care of customers, covers for your managers and team-how is she doing?
Dealers/GMs think of her pay at an hourly rate and to them, $17/hour sounds generous, but fail to consider this equates to $34,000 annually and the healthcare options you offer her would cost her $7200 + per year, plus $5-8000 in deductibles.
Normalize talking pay in projected annual salaries.
Back to the archaic General Manager/GSM comp structures. Is He (rarely she) really, truly worth $12 to $40,000 Per WEEK?
That's the math.
The math those *only*making 12-15k per week are unsatisfied with.
In the past, some said, we can't find anyone to do the job- or the classic "you have to understand the car business."
Was this ever true, or did we not try?
I urge you to look into the regular pay of some of the smartest, most talented business professionals in the country. Well-rounded in Finance, Economics, Labor, Retail, Supply Chain, B2Anything. Other than Hedge-fund outliers, you could hire a steady stream of talent who are equipped to run your business and be delighted with less pay.
With their qualifications + business acumen, learning how Dealerships operate would require very little time at all, with remarkable payoffs.
The OEMs have their problems to sort out. Auto Retail could use this as an opportunity to look at market value for all roles.
Let's talk.
