Ally All Ears Podcast Episode | Break down the silos between fixed operations and commercial services

In this episode, we interview Nick Jackson, Dealer Training Manager for Ally, to discuss how dealers could build bridges between dealership departments by encouraging communication and teamwork.

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Jackie Charniga: Hello everyone. It’s Jackie Charniga again with Automotive News and welcome to the All Ears podcast. This podcast is sponsored by Ally Financial and produced by Automotive News Content Studio. In each episode, we cover topics important to automotive retail executives. We’re calling on Ally leaders to share their expertise and knowledge to help dealers and others navigate transformational changes in the industry successfully. Today we sit down with Nick Jackson, Dealer Training Manager for Ally, to discuss how dealers could build bridges between dealer departments by encouraging communication and teamwork. Hi Nick. Thank you very much for taking the time.

Nick Jackson: Hey Jackie, thanks for having me.

JC: For years, management consultants and business magazines have discussed the issues that arise with corporate service employees when they work in silos rather than as a unified team. What are some of the specific problems that working in silos could create in dealerships when sales, service and F&I operate with their own rules and structure and do not communicate with each other?

NEW JERSEY: I think that’s a good thing to address for the dealership industry in particular, it seems to be a problem in many types of businesses, but dealerships being complicated as they are, it almost lends itself to having different departments operating in their own little silo. This is something my team talks about a lot with dealers when we do training at dealerships or in a public place. If you think about the complex nature of the dealership business, you have a part of the organization that sells parts, labor, new and used vehicle sales, financing type products and insurance and it’s very easy for each of those things to operate in their own little silos. But when that happens, it creates a lot of conflict between parts of the business that we know are heavily dependent on each other to get what they want to get done. This creates miscommunication and inefficiencies between departments.

If you think about it from the back of the dealership starting with the parts department, if your parts department doesn’t have the parts to allow the service department and technicians to complete their job, they don’t have not the parts to do the job. Your technician cannot turn the key. If the technician cannot turn the key, you may be preventing the sales department, new or used, from obtaining inventory available for sale. If you can’t do PDI and you can’t do reconditioning work because you don’t have the parts and the technicians can’t do the job without the parts, then you don’t have a car for sale to a customer. And if you don’t have a car to sell to a customer, you don’t have the opportunity to earn F&I income, an opportunity to trade in, and all those other things. There’s a lot of emphasis that needs to be placed on leaders and dealers to create enough communication to create the right kind of culture where people understand how important other roles and other areas of the business are to that succeed as well as they can be.

JC: Could you share some first steps that dealerships might consider to break down silos at their dealerships?

New Jersey: The first place I think of in terms of pain points when departments operate in silos is between the used car department and fixed operations. Across all departments, one of the easiest first steps dealers could take is to sit down with people from all areas of the business and recognize what pain points you have between departments and find ways to increase the level of communication or collaboration that needs to occur to eliminate those pain points.

It may start with department heads. Maybe you get contributions from individual contributors and stuff like that. And another thing that dealerships might consider doing, if they’re not doing it already, is to sit down and forecast with managers as a team instead of forecasting for departments individually. One thing that we do in our training, particularly in our simulation class, MRO or retail operations management, is we have people on the variable side of the business, a GSM or even a GM who came to the front of the business. down and say, “if you want to sell X number of used vehicles this month, for example, let’s see what that means for your after-sales service and how we can communicate to them what we need to achieve what we want to achieve.”

This is often a bottleneck between used cars and our after-sales service. A lot of used car handlers will say I can’t get my cars reconditioned fast enough. And often what I do is I try to throw that question or pain point back at them and ask them what they could do. And often, if you’re thinking as a used car manager or a variable operations manager of any kind, if you could tell your service manager exactly how many hours of reconditioning work you need his share per month hopefully this will help them prepare to help you in the way you need to be helped throughout the month and not create those bottlenecks that we often see between these two departments. As a manager, you might wonder what you could do differently to help eliminate these pain points and bottlenecks between departments.

JC: The dealership is such a competitive space and the most variable element in dealership operations is somehow the human. How can a company also create teamwork to get its department heads, sales, F&I, service, parts, marketing and administration on the same page?

NEW JERSEY: Much of this begins with culture. If you foster an environment where people are required to communicate very clearly, very frequently, and very effectively in other areas of a business, you start to eliminate a lot of those whim type situations, especially coming back to that example between maybe a used car department and a service operation. If I’m a used car manager and I decide that I’m going to have a tent sale extravaganza in the next two months, and I start acquiring more inventory than I normally would, if I don’t properly communicate this with my service manager, I’m just fueling these issues that may even already exist. To be able to communicate, “I’ve gone out and bought 40 vehicles that are going to land here on the dealer lot in the next few weeks”, be prepared for that in terms of planning technicians and understanding labor demand- work. of your internal customers, like your used car department, instead of not telling them at all.

It starts with a culture and an understanding of the information others in the business need from you to do their jobs and to help you achieve your goals and objectives. Culture is definitely one thing, but also compensation plans, different types of compensation plan ideas can help foster a more cohesive type of environment in a dealership, as opposed to an environment where car departments used care only about themselves and the same goes for new, F&I, service and parts. I think compensation plans have gone a long way in communicating to individuals what needs to be done for them and for the organization to be as successful as possible.

JC: I’m really interested Nick in your compensation plan idea. Could you share an example of how a dealership successfully removed a silo with a change in compensation structure?

New Jersey: We had a dealer participate in one of our MRO classes who shared with the group one of the ways he was able to break down those barriers, those silos between departments and encourage people to work more closely together for the benefit of the organization as a whole, this is what they call their “bucket concept”. It started by paying managers instead of the gross margin or revenue generated by their individual departments, they were paid from the gross margin of the dealership as a whole, for example. For them, what this has proven to accomplish is that if you have a used car manager, that person is no longer just working on their compensation plan for their own benefit. In order to be as successful in their compensation plan as they could be, they need to support the after-sales service, the parts department, the new car and F&I department and everything else in every way possible in order to to create the pot that they get paid and make that as healthy as possible. It was definitely a way to take advantage of a compensation plan and just look at this bucket concept where managers in different departments have to be paid a different percentage of that bucket. But if they’re all paid out of the bucket as a whole, if somebody needs help somewhere to turn around a struggling department or some challenges that they’re facing, that’s really going to create that culture where it’s going to be all on deck from a management perspective to create the best outcome for the dealership as a whole.

JC: I’m glad it’s working in the field and thank you very much for this insight and your time. That’s it for this episode of the All Ears podcast. Thanks again to Nick for providing this information and on behalf of Ally and Automotive News Content Studio, thanks for listening.

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