The Puget Sound Dealer Official Publication of the Puget Sound Automobile Dealers Association 16101 Greenwood Avenue N Bldg 2100 Seattle WA 98133 Phone: 206 542-3551 Fax: 206 542-7561 Email: firstname.lastname@example.org www.psada.com
BOARD OF DIRECTORS 2013 President Sara Carter Carter Subaru, Shoreline 1st Vice President Steve Klein Klein Honda, Everett 2nd Vice President Jim Walen Ford-Hyundai of Kirkland 3rd Vice President Dan Wilder, Jr. Wilder Auto Center, Port Angeles Trustee Position #1 Marc Ikegami Doug’s Lynnwood Mazda, Doug’s Lynnwood Hyundai, Doug’s Northwest Cadillac Trustee Position #2 Doug Byers Byers Volvo, Seattle Immediate Past President Jim Morino Acura of Lynnwood PSADA STAFF James R. Hammond Executive Director Linda Halverson Executive Assistant Susan Leonhardi Programs and Data Base Manager
A Message from the Editor Do You Want To Be A Carrot, An Egg, or a Coffee Bean? One day a young girl about 12 went up to her elderly grandmother in the kitchen as she was bent over the sink preparing potatoes for a stew. The little girl said to her grandmother, “My life is boring and worthless.” Her grandmother stopped and immediately inquired why her granddaughter felt the way she did. The little girl said, “Nothing comes out the way I want it to. People don’t agree with me, and I know I can’t always be wrong. And, nothing seems exciting.” The grandmother saw the situation as a perfect time to share a valuable story with her granddaughter. The grandmother asked her granddaughter, “Would you like to be a carrot, an egg, or a coffee bean?” The little girl looked at her grandmother very inquisitively. “What do you mean?” she asked. The grandmother asked her granddaughter to sit down. Then she put three pots of water on the stove to boil. After they boiled, the grandmother dropped a carrot into one pot, the egg into the second pot, and a coffee bean into the third pot. After about 10 minutes she asked her granddaughter to inspect the three pots. The grandmother pulled the carrot out of the boiling water and showed it to the little girl. Then she said, “When this carrot went into the boiling water, it was strong and firm. Now it is weak and soft.” Then she pulled the egg out of the second boiling pot of water. “When this egg went into the water it was fluid and flexible. Now it is hard.” Then she asked her granddaughter to observe the third pot of boiling water with the coffee bean in it. She asked her grandmother what she observed. The little girl said, “It has changed.” The grandmother agreed. She said, “Yes, it has changed. When it went into the water it was firm. After being in the boiling water a while it filled the entire water with its flavor and filled the air with its aroma.” So which do you want to be? A carrot, an egg, or a coffee bean? When things get difficult around you, how do you respond? When your employees go through trials and difficulties, what kind of encouragement and perspective do you give them? Next time ask them if they want to be a carrot, an egg, or a coffee bean? James Hammond Executive Director
Michele Foley Office Assistant
Inside this Issue
For information on advertising in this publication contact Jim Aitkins Blue Water Publishers, LLC 360.805.6474 www.bluewaterpublishers.com
Message from the President - Sara Carter
Eight Ways to Make Employee Reviews Meaningful
2013 Year in Review - State Tax Audit Defense
Hiring the Best People
Jerry Horrobin - A Man of Vision and Leadership
Health Care Reform In a Nutshell
A Timeline for Key Health Care Reform Provisions
American Fidelity’s Health Care Reform Act Support for New Car Dealers
American Fidelity’s Health Care Reform Made Easy
A Perfect Match - TV and Online Video Drive Digital Engagement with Automotive Consumers
A Powerful Lesson in Good Dealership Management - The Promise of Good Execution
The Gold in Your Data and Who Owns It
You Talk. We Listen. At Ryan Swanson, we connect with people on a human level. Thatâ€™s why our approach to helping clients reach their goals is practical, straightforward and cost effective. Itâ€™s our no-nonsense way of doing business that puts people first, like Brad Brotherton of Brotherton Cadillac.
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Message from the President
Sara Carter Carter Subaru
A Big Thank You to Our Sponsors Who Supported our Grand Reception at the Seattle Auto Show
The PSADA Board of Directors wants to thank all of our sponsors of the Grand Reception at the Seattle Auto Show for their support and generosity. We could not have kicked off the Seattle Auto Show with such a grand event if it wasnâ€™t for you. First we would like to thank our Platinum sponsors: Arden Hetland, CEO, American Financial and Automotive Services; Christine Williams, Manager, Consumer Marketing, AutoTrader.com; Patty Jackson, Vice-President, State Farm Insurance, Western Region; JoAnn Baker, The Seattle Times; and Tom Pietzsch, Boeing Employee Credit Union. Additional thanks goes to our Gold Sponsor, John Roehm, Key Bank National Association. Also we would like to thank our friends at the following companies: American Fidelity Assurance Company, Bank of America, Clear Channel, Moss Adams, Olympic Dealer Marketing, Payment Insured Plan, Ryan Swanson & Cleveland, Peterson Sullivan, United Car Care, U.S. Dealer Commercial Services, and Wells Fargo Dealer Commercial Services. We send each of you a very big thank you and want you to know that we appreciate your generosity very much.
Eight Ways to Make Employee Reviews Meaningful
By Britenae Pierce Ryan, Swanson & Cleveland, PLLC
Employee reviews should be valuable to both the dealership and its employees. Reviews are an opportunity for open communication to give praise and constructive criticism. Meaningful reviews help improve employee performance, decrease turnover, foster a positive work environment, and create a written record of performance. However, providing a meaningful review is not as easy as it may seem. Below are nine ways to help make an employee review meaningful. 1. Give feedback throughout the year. The end of each calendar year is the traditional time for employers to give employee reviews. But many employers do this to the exclusion of giving feedback throughout the year. This is a mistake. Genuine workplace issues may be glossed over for the sake of the holidays, having to conduct a multitude of employee reviews, or simply forgetting issues that occurred months in the past. Providing feedback throughout the year, whether in a formal or informal review setting, is helpful to make sure the employee is meeting expectations at all times. It is also helpful to address problems as they occur, so they can be resolved in a timely manner. More frequent reviews are also helpful to create a written record of behavior or concerns. For example, employees who are terminated for poor performance often complain that they heard nothing throughout the year but were surprised by a negative review at year-end. This is not helpful for either improving employee performance or for the employer substantiating its case of poor performance. Instead of waiting until year-end for an annual review, carve out time throughout the year to meet with employees to provide mini-reviews. Mini-reviews can be done as issues arise or on a more formal basis such as quarterly. These mini-reviews will help keep both employees and managers accountable for improving the work environment and productivity.
2. Share both positive and negative feedback. Managers giving employee reviews often give only positive feedback or negative feedback. The former scenario may ignore issues that should have been raised and the latter may make the employee defensive and unwilling to improve performance. It is best to strike a balance, sharing both the positive aspects of an employee’s performance and the areas which could be improved. Every employee could improve in some way, and the review is a great opportunity to share ideas for improvement. Conversely, every employee does at least something right. Giving positive feedback will help employees know that their good work does not go unnoticed, which will encourage them to do more good work in the future. 3. Give concrete examples. Giving specific examples of employee performance during the review is an easy way to illustrate the feedback you are sharing with the employee. For example, instead of saying “you always try to avoid responsibility” you should state “last week when I gave you a new assignment you passed it off to someone else, which is not okay when I asked you to do it.” These specifics help substantiate the issues raised in a review and also allow the employee a better opportunity to respond to feedback. 4. Prepare for each review. Some people view the review as a once-a-year task they must get through, never to be thought of again until the next year’s review. This mindset does not help either the employee or the dealership improve. To avoid this mindset, consider creating an agenda before the meeting, to be shared with the employee. Then both the employee and the manager are prepared to discuss the set topics and to give input on each. An agenda is important even if a manager chooses not to share it with the employee in advance, to ensure that issues are thought-through before the meeting. Preparation allows a more meaningful conversation on both sides. 5. Treat a review as a two-way street. Employees should be encouraged to raise issues and give input during their reviews. Allowing for interaction on both sides helps the employee feel valued and also helps the dealership improve its employee relations and even business practices. A conversation, instead of a lecture, will help the review be more meaningful. 6. Keep each review simple. While it is helpful to have an agenda, it is not helpful to have such a long list of topics to be covered that none of 10
them can be addressed in depth. Instead, keep the review simple, focusing on several key issues that need to be discussed. This is another reason why it is important to give feedback more than just once a year, so that you can address matters as they arise instead of waiting and presenting a laundry list at year’s end. 7. Create an action plan with quantifiable objectives. Just like it is important to create an agenda before the review, it is also important to leave the review with an action plan for the employee. The plan should contain specific objectives for the employee to accomplish within a certain timeframe. This helps the employee aim for a specific goal, rather than something more vague like “improving performance.” Be sure to follow up on the objectives at the appropriate intervals to make sure the employee is on track and meeting the agreed upon goals. 8. Keep a record of the review. Summarize the review in a written document that will go into the employee’s personnel file. This is important to keep a record of issues raised, actions planned, and also to maintain a record in case of future complaints or litigation by the employee. There is no specific format required – the documentation can take the form of the agenda with some written notes, a follow-up email identifying the action plan, or a more formal write-up addressing all the issues covered in the review. The written record can protect the dealership from future claims but also is a useful tool to keep track of an employee’s progress from review-to-review. Britenae Pierce is a partner practicing in Ryan, Swanson & Cleveland, PLLC’s Employment Rights, Benefits and Labor Group. She can be reached at 206.654.2289 or email@example.com.
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2013 Year in Review >> By Rachel A Le Mieux CPA, Partner Peterson Sullivan LLP
It’s a great day, you are in a great mood, cars are selling like hot cakes, and then you open the mail. You have been selected by the Department of Revenue for an audit. I don’t think it’s a secret but in case you did not know, the auto dealer industry is one of the most audited industries in the state. Many dealers are on a regular schedule and are audited every 4 years, while others may only be audited occasionally. For the most part, Department of Revenue auditors are very professional, friendly, and knowledgeable about the statutes, rules, and audit procedures pertaining to this industry. What we must remember however, is that the auditor’s job is to determine whether or not the proper amount of business & occupation tax (“B&O”) as well as sales and use tax has been paid to the state. For whatever reason, there is a preconceived notion with many auditors that the auto dealer industry is fraught with businesses that try to cheat on taxes or that regularly underpay the business tax. While it may not be true in all cases, it seems like the auditors have been approaching audits from the standpoint of how much has been underpaid rather than confirming that the amount that was paid was correct. Over the course of the last year, we have participated in many Department of Revenue audits. What follows is a discussion of lessons learned, changes in tax policy, and some best practices that may just make your next audit less burdensome. 12
State Tax Audit Defense
Lessons Learned Documentation is the key to a smooth audit. The auditor must be able to trace the gross revenues reported by tax category over the course of the audit period to the gross revenues reported within the company’s financial records. The auditor must also be able to verify that the amount of sales tax collected from customers was the same amount of tax remitted to the Department of Revenue. Additionally, the auditor will need to verify that amount of sales tax paid or use tax self-assessed by the business on its purchases is correct. If the dealer has a substantial number of sales and or purchases, the auditor may suggest that a sample of the business records be used to streamline the audit. The use of a sample in an audit can be both good and bad. If the financial records of the business are in good shape, the sample may be a good thing. But, if there are a number of errors, especially on large dollar items, then the use of a sample could distort the taxes which may be due over the course of the audit period. Sampling methodologies can be complex and may distort the results of the audit. It is important to understand the type of sample that will be utilized by the Department. Block samples typically look at a period of time, e.g. three months. Statisti-
cal or random sampling typically look at stratified groups. An example of a stratified sample is one where a random number of items valued between $1,000 and $2,500 purchased during the entire audit period will be reviewed. No matter what type of sample is used, the auditor is evaluating whether or not sales or use tax has been appropriately remitted to the Department of Revenue. Errors within the sample are then projected against gross revenues or purchases during the entire audit period to arrive at an amount of estimated sales or use tax that should have been collected and or remitted to the Department. The most common errors we found, made by the Department of Revenue, included accounts having nothing to do with the collection or payment of sales tax being included within the sample and applying an error percentage to the wrong gross dollar amount. Both errors resulted in too much tax being assessed. No matter the sampling methodology used, it is important to carefully review the sample and the results to ensure that errors are eliminated. The Department of Revenue auditor schedules contained math errors. In all of the audits we reviewed, we found math errors on the Department of Revenue audit schedules. The errors ranged from issues with the sampling, to schedules not being properly linked. You typically receive the draft schedules in a format that you cannot edit. You should always ask for the draft schedules to be sent to you in Excel format. That will allow the opportunity to review each worksheet within the file to ensure that everything is linked correctly and that all the formulas are properly working. The most common errors made by the dealers found by the Department over the last year in the audits we observed included:
Missing or incomplete documentation. By far the most common error was documentation that was incomplete or missing. It is important to remember that certain affidavits are required to prove the exempt nature of a sale. Affidavits were often present within the sale jackets. But, signatures were missing, addresses may have been missing, and failure to record trip permit numbers existed. Some auditors are under the misconception that a copy of the trip permit for a nonresident sale must be present within the jacket. This is not true. The law requires that a vehicle leave the dealerâ€™s premises under the authority of a trip permit. However, the trip permit number must be recorded on the affidavit. Changes in Tax Policy Nonresident Corporation Sales. One of the biggest changes in tax policy and audit procedures for the dealer industry was for sales of vehicles to nonresident corporations. In one audit, the Department was denying the exempt nature of a sale of a vehicle to a nonresident corporation. The Departmentâ€™s old procedures had stated that a nonresident corporation had to obtain a nonresident corporate permit from the Department prior to purchasing a vehicle for use outside of Washington. The dealer was to keep a copy of the nonresident corporate permit in the sale jacket. Because the dealer did not have a copy of
By far the most common error is documentation that is incomplete or missing. It is important to remember that certain affidavits are required to prove the exempt nature of a sale.
Over reporting of gross revenue on wholesale auction sales. Wholesale sales of used motor vehicles are exempt from B&O tax when sold at auction by licensed vehicle dealers to other licensed dealers. The good news here is that a credit gets applied in the audit.
Misclassifying exempt auto sales. Mistakes are often made by dealers in reporting the type of exempt sale. For example, an auto dealer reported a non-resident sale as an interstate sale. While the result of the transaction (exempt from B&O tax and the collection of sales tax) is the same, the auditor originally denied the sale as exempt and assessed tax because the documentation is the car sale jacket was wrong. This required additional work by the dealer to prove the exempt nature of the sale. The documentation required for the two types of sales is different. Luckily, the dealer was able to obtain the correct documentation to substantiate the exempt nature of the sale.
this permit, the auditor denied the exemption and assessed tax. Tax was assessed even though there was other ample evidence to support that the corporation was not a Washington corporation. However, upon discussions with the Department of Revenue, we were able to prove to the Department that the law only required the nonresident corporation had to prove that it was in fact not a Washington domiciled business. In short, the Department has updated their requirements to clarify that proof of nonresidency does not need to come from the Department. Rather, the documentation must come from the state of incorporation. We found this is generally satisfied by obtaining a copy of the corporationâ€™s Secretary of State Registration in the state of incorporation. This is true whether the entity is a corporation, LLC, partnership, etc. 13
Other Acceptable Documentation. The statute and the rule regarding documentation are pretty clear. But there is one element in both the statute and the rule that often gets forgotten by the Department when it reviews a dealer’s sales jackets. The auditor will get focused on the specifically named documents. For example, if there is no prior year tax return, or utility bill issued within the last two months, the auditor may stop and say there is insufficient documentation to support the exempt nature of the sale. The result is the assessment of sales tax and retailing B&O tax. However, the statute and the rule provide that in addition to a copy of the buyer’s valid out of state driver’s license or other official picture identification issued by a jurisdiction other than Washington, a copy of “…any other document determined by the department to be acceptable;” may be allowed as proof of the exempt nature of the sale. (RCW 82.08.0264(2)(vii) and WAC 458-20-177). There are also numerous published Washington Tax Decisions which provide Department rulings on what will be allowed as other acceptable proof of the exempt nature of the sale. Therefore, if an auditor denies the exempt nature of the sale because the specific listed documents were not available, remember the phrase “or other acceptable documentation,” before you just agree to pay the tax. Best Practices As we have discussed, documentation is the key to a smoother audit process. Since we know the industry is regularly audited by the Department of Revenue we believe it is good practice to get into the habit of self auditing your business. Some best practices employed by auto dealers involve: •
Performing periodic reviews of purchases to ensure that sales tax was paid on items such as office supplies, cleaning supplies, and forms at the time of purchase. If sales tax was not paid at the time of purchase, for example, on items purchased from an internet seller or on items purchased for resale but later used by the business, self assess use tax and remit it to the Department.
the affidavit. While not an official document, obtaining a copy of the CARFAX which shows that the vehicle was registered out of the state within a short period of time after the sale may be acceptable proof of the exempt nature of the sale. •
Conducting regular training for the sales force on what proof is acceptable and not acceptable for documenting the exempt nature of a sale.
Taking the time to understand the audit process. It is important to understand the audit process from the initial contact by the Department all the way through the appeal process if necessary.
Summary – Don’t Pay More Than What is Legally Owed Department of Revenue audits are a fact. The auto dealer industry is one of the most audited industries in the state. An audit can be a real pain – even if your records are in order. But, you may have a better audit experience if your documents are in order and you take the time to understand the audit process. If you receive an assessment, make sure you agree with everything and that there are no mistakes. If you believe you have exempt sales that are being assessed in error, keep questioning. If all else fails, you should evaluate whether or not to appeal the assessment. That is a topic for another day. For more information on this topic, Rachel can be contacted at 206-382-7711 or at email@example.com
Documentation is the key to a smoother audit process. Since we know the industry is regularly audited by the Department of Revenue we believe it is good practice to get into the habit of self auditing your business.
Implementing a policy for exempt car sales where the car cannot leave the lot until accounting or other manager has signed off that all necessary documentation is present. In cases where the sale is to a Native American on the Native American’s tribal land, take a picture of the place of delivery, attach it to the appropriate affidavit, and note the address or cross street as well. Make sure the buyer and the seller or seller’s representative sign
Hiring The Best People
One of the questions I’m asked most often by the managers I work with is, “John, how do you hire the best people?” I always begin my answer with, “First you create the best job.” I explain, the best people will only be attracted to (… and, as importantly, stay in) the best job. Because they’re the best – top performers in their chosen profession – they expect the best of everything. By this I mean: •
The best pay and benefits – they produce more so they reasonably expect to be paid more and be rewarded with top notch benefits The best working conditions – where they spend their time every day needs to be the best for their job – clean, comfortable, fully equipped work space with the best equipment available The best management support – they expect their managers to help them be more successful, recognize their superior productivity, encourage their continued development of their knowledge and skills The best people around them – they want the other people they work with to also be the best – they know this brings out the best in them The best company – they look for companies with great reputations for customer service, commitment to leadership in the industry and community service The best products and services – they understand the importance of belief in the quality and value of the products and services they represent
Is being the best worth it? It will take considerable initial and continued investment of time, focus, energy and money to achieve all the above – is 16
By John Strom
this a good investment? Are the results worth it? My answer is absolutely!! Organizations I’ve observed and have had the privilege of working with that have achieved the above enjoy higher sales, greater profitability, higher employee and customer satisfaction, and a much more positive and enjoyable work environment with many fewer problems for management to have to deal with every day! Another way to look at it is to consider the opposites of the above – what’s that like to work there? How are they doing? Who gets to decide what’s best? Certainly you’re making the decisions in your organization so your views are important. But to truly attract the best you need to remember that they’re deciding whether or not to be a part of your company/your department so you’ve got to pass their test! So one of the most important things you must do is to truly, completely understand what would make the best people judge your situation as the best. That’s what we’re going to discuss in the coming articles. Best Pay and Benefits How important is the money to hiring and keeping the best people? Not as important as you might think! In fact, research continuously shows that while great pay and benefits certainly influence whether or not people take a job initially, these are not the things that keep them on board. For most top performers, it’s the opportunity to “do what I do best everyday” that attracts them and keeps them. They’re more motivated by the work itself, less by the money or the benefits. (Their relationship with their manager is also vitally important – much more on this later). That being said, when it comes to pay and benefits, it’s to your advantage to pay them top money and provide
top-notch benefits – because they earn it! They’re the top performers and therefore contribute the most to the organization so it just makes sense to compensate them very well. Tie their pay to their performance and you’ve got the best situation for both – when they produce more, both you and they make more. Consider giving them special benefits too – benefits that are important to them, that they value (e.g. flexible work hours, special office or work location, special parking). Most importantly, recognize them – tell them specifically what you value in them – show them a lot of appreciation. Typically when you praise their achievements, it motivates them to achieve even more. Some like this recognition in public; other prefer more private acknowledgement. Be sure you know which each person prefers and act accordingly. To summarize, top pay and benefits are necessary to attract the best people but not sufficient to keep them. I’ve always believed that when you pay the best you get the best people, so be the leader for compensation in your area. Then you can reasonably expect your people’s best performance. And when all the other “bests” are in place, you’ll get it! For more on pay and benefits, see my column in Vol. 2012, No. 2, Compensation: The “Perfect Pay Plan.” And for some guidelines on hiring, read my column in Vol. 2013, No. 1, Recruiting & Hiring The Best People. Don’t forget to go through the Recruiting & Hiring Checklist in that issue. To get the best people on your team you need to be Excellent in all areas. One final question: Are you willing to do what it takes to be able to hire the best people? I often hear people say they want to be the best. It takes action to actually be the best. Are you willing to take that action? Next time we’ll discuss the best working conditions and the best management support. Stay tuned! John Strom has been helping retail automotive managers improve their performance for over 25 years. He has held a number of management positions in both single-point and multiple franchise operations, including General Manager. His company, Strom & Associates, is a member of the Performance Development Group. To learn more about their services, visit www.perdevgrp.com
Photo by Adam Buchanan
By Craig Chastain
A Man of Vison and Leadership
The odds were better than good that Jerry, Mike and Rondi Horrobin would end up in the car business. After all, their dads were better than good at it. Spend some time listening to Jerry Horrobin’s stories and you understand why he is an icon among Northwest auto dealers. His father, Gordon “Red” Horrobin, started Jerry young, prepping vehicles at his used car store at 6th and Bell. A semi-pro athlete and entrepreneur, Red taught his son the basics of the business and mentored by example with a hard-driving work ethic. By 1950, Jerry was on the Ford Motors team, working in distribution out of the Seattle-based facility that was once a part of a national network. “Ford had great training programs that really supported the dealers in our region,” says Jerry. “We were servicing ten zones out of the Seattle office and learning everything about our products and the car business from top to bottom.” The relationship with Ford would last throughout Jerry’s career. His early success with the company opened an opportunity to purchase a franchise in the Tri Cities in 1959. By the 1960’s Jerry Horrobin Ford in Pasco was thriving. As he settled into that community with his young family - wife Liv and children Mike, Wendy and Rondi – Jerry also began building on what would become another vital part of his life’s work: community service. He was President of Kiwanis in Pasco and President of the Pasco Chamber of Commerce. In the early 1970’s he was instrumental in creating the Pasco Auto Mall, and was one of the original board members of Tri City Water Follies Association, which started the hydroplane races in Tri Cities.
After more than a dozen years in Pasco, the 1967 Tri Citian of the Year did something that most dealers, at the time, would not even think of doing. He left his thriving dealership in Pasco and moved the Horrobin clan back to Seattle to open Foothills Ford in Bellevue. It was a bold and brave thing to do in the late ‘60s. Before long Jerry was again in the fast lane, active in the Washington State Auto Dealers Association, and joining other proactive iconic dealers like Bob Will, Warren Westlund and Pat Goodfellow to start the King County Auto Dealers Association, later to become the Puget Sound Automobile Dealers Association. Community service and commitment didn’t escape Jerry’s attention either. He became President of the Bellevue Rotary and was very active in the Seattle Yacht Club. But his truest love was for his own industry and Ford. For years Jerry served on the Ford Advertising Association. “It’s important to give back to the communities and the industry that support your business,” he says. “We’ve always tried to be there when needs arise, whether it’s education, local athletics, or community events.” “Gas shortages, union issues, training, employee benefits,” Jerry remembers. “There was plenty to keep us busy.” Ultimately, the challenges led to changes that have impacted Northwest dealerships into the present, including establishment of the Washington State Auto Insurance Trust, the PSADA Labor and Wage Committee, and the Auto Training Center at Shoreline 21
Community College. Begun as a sales training resource, the Training Center has developed into a nationally recognized center for schooling in all elements of the auto business. Jerry Horrobin has packed several lifetimes into his car dealer career. He and Liv nurtured their shared passion for boating aboard their beloved “Liv O” powerboat. He expanded his enterprises into banking, including a Tri Cities startup and board positions on three banking enterprises. A licensed pilot, he flew with associates and family for both business and family. And, as might be expected, this lifelong car guy passed his love for the business to his children Mike and Rondi.
Indeed, Mike and his family (two grown children, four grandchildren) have embraced their Oak Harbor home and planted deep roots. In addition to her duties as company vice president, wife Cathy is active in the community and has served on the local school board. They pursue activities away from the showroom like backpacking and golf. Together they support local and regional activities ranging from parades to music festivals, athletics to military functions. The presence of the nearby Whidbey Naval Air Station is, they believe, both an asset and an obligation.
Volvo franchise in downtown Seattle. At Frank Kenny Toyota Volvo Rondi held sales and management positions for four years before going back to work for her dad. When her dad sold Foothills Ford in 1985, Rondi took her automotive expertise to work for Dave Wilson at Bellevue BMW Subaru. Three years later Bayside Automotive Group hired Rondi Rondi Horrobin to be their General Manager for their Chrysler Jeep franchises. These days she is part of the sales team at Auto Connections in Bellevue. Rondi says, “I owe all of my success in the automotive industry to my dad. He was an amazing mentor.”
“We ‘re always looking for ways to honor and support our military neighbors, whether it’s a veteran’s parade, a special event or just providing a good deal on a vehicle,” says Mike. “The Navy presence here makes Oak Harbor even more special.”
“I love the car business, and my current situation makes it possible for me to spend more time with my automotive clients,” says Rondi. “Like my dad and brother, customer loyalty is important to me and my clients know I’ll work hard for them. I also love what I do.”
Rondi Horrobin has maintained the family tradition in her own way. Like her brother, she worked in the Ford dealership in Bellevue while pursuing a degree in business at the University of Washington. After college she had the opportunity to work for another iconic Seattle dealer, Frank Kenny at his Toyota and
A strong work ethic. A commitment to service. A love of cars. Three generations of Horrobins have shared those traits that have placed their name among Northwest dealer icons. They’ve been good at it…maybe because their dads were good at it.
“I believe we survived those challenges because of our reputation and our commitment to Chrysler,” says Mike. “After 30-plus years we’ve shown we love their cars and we’re here for the long haul.”
Cathy and Mike Horrobin
Photo by Adam Buchanan
Like his dad, Mike started young as a lot boy and learned the business from an inspirational father. After graduating from Central Washington, Mike worked for several years at the Bellevue store and then, at the ripe old age of 29, he acquired a dealership on Whidbey Island that would ultimately become Oak Harbor Motors. After 34 years in business, today it is the only new car dealership (Chrysler, Jeep, Ram and Dodge) in Oak Harbor or Island County. Chrysler’s extensive reorganization five years ago left standing the Horrobin dealership while more than 800 stores were closed around the country.
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Health Care Reform...
Although it has been over three years since Health Care Reform passed, significant confusion remains. This summary reviews the four pillars upon which the law was built: The individual mandate, Exchanges, premium tax credits to purchase Exchange coverage, and the employer mandate (also called the Free Rider Penalty). Individual Mandate In 2014, nearly all individuals will be required to have minimum essential coverage or pay a tax. There are exceptions if coverage is unaffordable (costs more than 8% of household income), for low income tax payers, and for short coverage gaps (less than three months). The tax for any month is 1/12th of the greater of a flat dollar amount ($95 in 2014, phased up to $695 in 2016) or a specified percentage of household income (1% in 2014, phased up to 2.5% in 2016). The tax is 50% for children under age 18. The maximum family tax is three times the tax that applies for an adult. The tax is capped at the amount the individual or family would have to pay for the average cost of bronze level Exchange coverage. Health Insurance Exchanges An Exchange is a marketplace to buy health coverage. States (or the federal government on the state’s behalf) were required to establish Health Insurance Exchanges to offer private insurance to individuals and small employers (generally with 100 or fewer employees). Effective 2017, it is possible larger employers can participate in the Exchanges.
in a Nutshell
By American Fidelity Administrative Services, LLC
Several coverage levels will be available through the Exchanges: bronze, silver, gold, and platinum. All individuals who legally live in the United States and are not incarcerated may enroll in Exchange coverage. The coverage is guaranteed to be available regardless of health condition, may not exclude coverage for preexisting conditions, and may have premium rates that will vary only based on age, geography, tobacco, and family size. Tax Credits to Purchase Exchange Coverage Individuals with modified adjusted gross income below 400% of the Federal Poverty Level may be eligible for subsidies to pay for Exchange coverage. However, no subsidies are available for individuals who are eligible for government provided coverage, such as Medicaid or Medicare, or affordable (the cost of employee only coverage is less than 9.5% of modified adjusted gross income) and adequate (at least 60% actuarial value) employer-sponsored coverage. Free Rider Penalty Large employers that do not offer health coverage to full-time employees and their dependents or offer coverage that is “unaffordable” or “inadequate,” and have at least one employee enroll in Exchange coverage and qualify for a federal premium tax credit or cost-sharing reduction, must pay a Free Rider Penalty. Originally effective January 1, 2014, the IRS stated it will not assess any Free Rider Penalties in 2014. If the employer does not offer coverage to substantially all full-time employees (working 30+ hours per week or 130+
Health Care Reform has been and will continue to be complex and in a dynamic state of change. American Fidelity Assurance Company understands that complying with the Health Care Reform rules and addressing rising plan costs can be challenging, and we welcome the opportunity to assist you by offering educational resources designed for plan sponsors. The purpose of this article is to provide a high level overview of Health Care Reform.
hours per month) and their dependent children, the monthly penalty is 1/12th times $2,000 per employee after the first 30 employees (assuming at least one employee receives a Federal premium tax credit or cost sharing reduction for Exchange coverage). If the employer offers coverage to all but 5% (or 5 if greater) of its full-time employees, it has met the requirement to offer health coverage to “substantially-all” full-time employees. The second penalty applies if the coverage is “inadequate” or “unaffordable” (as described above). The amount of this penalty is 1/12th x $3,000 per month per employee who enrolls in Exchange coverage and receives a federal premium tax credit or cost sharing reduction. The amount of the penalty is capped at the amount the employer would have had to pay for not offering coverage at all. This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained in this article are subject to change as the appropriate agencies publish additional guidance. American Fidelity has worked alongside PSADA since 1973. We have extensive relationships with dealerships across Puget Sound. Our goal is to help make Health Care Reform easy for PSADA members. American Fidelity Administrative Services offers a suite of services, such as consulting assistance and time/eligibility tracking software to help manage the Free Rider Penalty. Whether you are looking for more
comprehensive strategic planning and administrative assistance or just some guidance with Health Care Reformrelated questions, AFAS provides an end-toend solution by offering a variety of services that can assist with managing the developing law. Again, it is recommended that you always consult with your legal counsel. American Fidelity Administrative Services does not provide tax or legal advice. Given the complexity of the Health Care Reform rules, we always recommend working with your own legal counsel to discuss how your plans could be affected. Finally, any Federal tax information provided is not intended or written, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in our written work products. 25
American Fidelity’s Health Care Reform Act Support for New Car Dealers With the advent of the new and complex Health Care Reform Act, American Fidelity Assurance’s (AFA) administrative services department, American Fidelity Administrative Services (AFAS), set themselves to the task of understanding the Act and the ramifications of the Act that affect new car dealers. One of the reasons many dealerships have turned to AFAS for Health Care Form and other health and welfare benefit issues is that they are independent – they do not insure major medical coverage. As such, they are well positioned to offer an objective view of all available options to dealers. In 2011 PSADA worked closely with AFAS to add a dealer resource portal to its website www.psada.com so dealers could access AFAS’s Health Care Reform Act support site to find answers to their Health Care Act Questions. Over the years since the Health Care Reform Act has been implemented, AFAS and AFA have been allies to dealers with support and programs to help them climb over the immense health care debacle. These Health Care Act related articles from AFAS are being provided to help dealers better understand the Health Care Reform Act and its multiple-year deadlines, as well as make dealers award of programs that can help them eliminate the confusion so they can implement efficient health care programs that satisfy the requirements of the Act. About American Fidelity and Dealers American Fidelity Assurance (AFA) has been the administrator of PSADA’s Section 125 Plan services for 40 years. During those 40 years they have worked closely with PSADA dealers and their employees. The majority of the 100 other dealer associations in the nation have a close and productive relationship with AFA. AFA is a pioneer in Section 125 planning. Founded in 1960, American Fidelity provides supplemental health insurance benefits and financial services to education employees, auto dealerships, health care providers and municipal workers across the United States. Their industry focus allows them to provide customized solutions tailored to specific employee groups. Plus, their salaried career Account Managers are committed to service and develop specific, needs-based recommendations for each dealership with whom they work. American Fidelity is a third-generation, 50-year old family-run business that has consistently performed with solid financial stability. Since 1982, American Fidelity has been rated “A+” (Superior) by A.M. Best Company, one of the nation’s leading insurance rating services. In addition to financial stability, American Fidelity was also named one of FORTUNE magazine’s “100 Best Companies to Work For” in America for nine years. American Fidelity serves more than 1 million Customers in 49 states and in 23 countries worldwide.
Committed to SeAttLe. ConneCted to you. At u.S. trust, our advisors bring dedication, resourcefulness and a unique global perspective to wealth management. they take the time to listen and learn about your individual needs before creating customized strategies and solutions that help you achieve your goals and build your legacy. We invite you to connect with one of our advisors today to learn more. tReVoR CoBB, CFP® Senior Vice President and Private Client Advisor 206.358.8936 firstname.lastname@example.org 800 Fifth Avenue, Floor 32 Seattle, Washington 98104 ustrust.com
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Strategic Planning Administrative Services Ongoing Support Puget Sound Auto Dealers Association (PSADA) does not endorse any company, nor does it have an opinion in support of, or against, this health care reform program. This content is being provided to you for your information. As with all programs, you should consult your health care professional and corporate counsel to determine if this program is a good fit for your dealership. American Fidelity has worked with PSADA for 40 years and is the administrator of itâ€™s Section 125 Plan for dealership employees.
About American Fidelity Administrative Services Founded on a History of Service Solutions American Fidelity Assurance Company (AFA) is a family-owned organization with a 50-year history of providing customers and new car dealers with employee benefits and administrative service solutions. In response to great demand from customers to provide more in-depth health plan analysis and consulting assistance, American Fidelity Administrative Services, LLC (AFAS) was established.
American Fidelity Administrative Services AFAS provides employee benefit support services for employers and specializes in Health Care Reform solutions. AFAS is staffed with professionals who have extensive experience providing benefit play consulting, legal, actuarial, and compliance review services for both large and small employers. Their goal is to deliver a broad range of solutions to help their customers save time and money in connection with their health and welfare benefits plans.
Why Dealers Have Chosen American Fidelity Administrative Services The primary reason dealers have turned to AFAS for assistance with Health Care Reform and other health and welfare benefit issues is that they are independent - they do not insure major medical coverage. Because of this, they are well positioned to offer an objective view of all available options and are willing to provide assistance regardless of the path you choose to pursue.
Multi-Service Discounts AFAS has created a Health Care Reform solution that is expansive in its support and simplifies your responsibility. Their combination of expert consultants and best-in-class services makes AFAS a one-stop provider for Health Care Reform assistance. By combining these solutions into an integrated package, you receive coordinated support and access to preferred pricing. They offer the following opportunities to save: â€˘
Receive a 5% discount on all services when you purchase three or more
By signing a two-year contract, the cost of a Health Care Reform implementation package and any service set-up fees can be spread over a two year period, and all fees will be guaranteed for two years
AFAS can create a fixed-priced package tailored to your specific needs
Some products and services may be provided by third-party contractors or affiliated companies. AFAS does not provide tax or legal advice and, given the complexity of the Health Care Reform rules, we always recommend working with your legal counsel to discuss how your plans can be affected and to review guidance provided by our AFAS consultants. AFAS consultants provide information for plan sponsors about health and welfare benefit plans but do not provide guidance on specific insurance products; AFAS can provide a referral to an insurance agency if you would like assistance implementing or revising an insurance product. For more information about this article and programs contact American Fidelity at 877.302.5073, option 6, or log on to AmericanFidelityConsulting.com
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A Perfect Match TV & Online Video Drive Digital Engagement with Automotive Consumers
By Jeff Kent Business Development Manager Comcast Spotlight – NW Region
Have you ever pondered about what elements make up a powerful partnership? Or looked at some of the most intriguing and amazing couples the world has ever seen? How about the most successful professional sports duos that not only won championships, but changed the landscape of their sport forever? Some of the same elements, driving forces and environmental factors which brought these people together to accomplish amazing feats still help shape societies and industries today. Most of these amazing partnerships in the history of the world were the combination of two colliding forces (or individuals) that gravitated towards each other to fulfill a need or a passion. Think about these historical couples: · Cleopatra & Mark Anthony · George Putnam & Amelia Earhart · Bill & Melinda Gates · Martin Luther King Jr. & Coretta Scott King · Clyde Barrow & Bonnie Parker · Prince Charles & Lady Diana Consider how these partnerships transformed technology and business: · Thomas Edison, J.P. Morgan & the Vanderbilts - Edison Electric Light Co. · Wilbur & Orville Wright · Bill Hewlett & David Packard · Richard & Maurice McDonald · Bill Gates & Paul Allen · Steve Jobs & Steve Wozniak · Ben Cohen & Jerry Greenfield · Larry Page & Sergey Brin · Comcast & NBC Universal 39
Last, but not least, imagine what these sports stars accomplished together: · Arnold Palmer & Jack Nicklaus · Larry Bird & Kevin McHale · Michael Jordan & Scotty Pippen · Joe Montana & Jerry Rice · Magic Johnson & Kareem Abdul Jabbar · Roger Maris & Mickey Mantle · Ali & Frazier In today’s automotive category there is another powerful partnership, couple and duo that has formed over the last decade as a result of the ever-changing media landscape and the power of the digital automotive world. That perfect match is television and online video. Today, if you are attending a dealer conference, reading any automotive dealer magazine, attending any automotive training, seminar or webinar, attending a dealer ad association meeting or simply discussing the current category landscape in your twenty group there are a few dominant themes: · Video is here to stay. · The millennials are a demographic group to keep your eyes on. · The focus on big data to target in-market shoppers is becoming more prevalent daily. These themes have become omnipresent, since it has never been more vital to pay special attention to your overall media mix and video strategy to continue to drive digital engagement among automotive consumers. Television advertising and online video drive digital engagement in the automotive category. Why is this important? Television and online video (a perfect match) create awareness and demand, while the Internet fuels the lower end of the purchase. Let’s first examine why. The Power of Multi-Screen Advertising Multi-Screen advertising is the environment where these two aligning forces (television and online video) combine and form a perfect match, partnership or couple. Advertising strategies evolve with consumer behavior over time, affecting automotive consumers especially. Car buyers and other consumers have shifted their focus on how they are interacting with media. In fact, 90% of all media interactions today are screen based.1 Consumers today spend over 56% of their time consuming media on TV and online.2 I recently read an AdAge article about a large internet company that inked a $100 Million upfront deal with Publicis agencies DigitasLBi and Razorfish for 2014, and was not 40
surprised by this deal. Frankly, none of us should be surprised. In addition, multi-screen advertising improves advertising recall and engagement. This is critical to acknowledge in the vast and cluttered automotive media landscape. When consumers are asked if they recall seeing any advertisement for a set of brands, there is a 48% increase in brand recall when utilizing multiscreen (74%) versus TV alone (50%).3 Plus, when the same consumers were asked about which details they remembered about a specific auto brand advertisement, there was a 43% increase in engagement utilizing a multi-screen media mix versus TV alone. These same trends exist right here in our backyard. In a recent Re-contact study among Comcast subscribers in the Northwest, 92% of Northwest multi-screen automobile decision makers agreed or strongly agreed that they notice TV ads relevant to their current needs, 85.5% said they notice an online ad if it was relevant to their current needs, and 48% said that they noticed a TV ad if they saw it online.4 As an automobile advertiser, these trends present many opportunities to access desirable consumers and drive business to your dealership, now and into the future. Car buyers and other consumers are spending massive amounts of time watching TV and doing a lot more than surfing online. Now, let’s quickly take a look at television. Television is not Going Anywhere… nor Should It All great partnerships, couples or duos result from the individual strengths from each side. One side of this equation is television, with the power of the content that television can be relied on to deliver. While the television landscape continues to evolve with the emergence of digital technologies, both broadcast and cable networks will deliver the highest concentration of impressions available, now and in the future. Television also is the fuel which drives digital traffic and conversions in the automotive world. A recent study by Online Drive looked at over 125 dealerships and over 2,200 consumers and found that TV lifts traffic by 112% and conversions by 172%. Television advertising offers dealers a myriad of opportunities, from tapping into the powerhouse world of sports (especially when partnered with online) to top content consumers can’t stop watching. It doesn’t stop there. Did you know that Cable companies and other interactive TV providers are working with technical-solution providers to enable creative executions to be personalized and on-the-fly, based on demographics, geography, weather and more? Imagine the elements of your TV commercial (lead character, featured product or setting) changing via the targeting process based on region, gender, age, time of day and weather conditions. You know as well as I that zone or geographical targeting is no more important in any
other category than it is in the automotive set. Cable providers and the right high speed internet providers will continue to provide the unique geographical targeting capabilities that are perfectly aligned for individual automotive dealers primary marketing areas, or otherwise referred to as areas of responsibility. Simply put, television advertising has worked for over 30 years in driving consistent brand awareness, and it’s going to work for another 30 years.
and Washington, 73% of Northwest Comcast consumers notice online ads if the content is relevant to them, and 54% of Northwest Comcast consumers use the internet and watch TV at the same time.4 Don’t get lost in the crowd when choosing an online site for your ad message: nearly 30% of the adults online say they will immediately leave a website if they think it’s cluttered with ads. Plus, if they do land on an ad cluttered site, 75% say they pay less attention to the ads on that site.7 Whether it’s a tablet, smartphone, PC, laptop or any other device you use to connect to the internet and search for cars, video is taking over the internet. When auto consumers are ready to buy and they go online, your video presence and strategy will put consumers behind the wheel and push them closer to your dealership floor.
Who’s television’s partner in taking your business to the next level? Let’s find out. Video Marketing and the Automotive Internet Landscape All good couples say that an individual is only as good as their partner. The perfect complement to your TV strategy should be a sound digital video strategy, especially as automotive dealers continue to drive the pace in the evolution of the internet marketing landscape. The increase in quality and decrease in price of video cameras together with the increase in internet connection speeds driving the mass adoption of broadband has fueled the growth of online video exponentially over the last five years. Consumers want to watch video online, resulting in over 147.4 million Americans watching video online.5 This video consumption has a more direct effect on consumers than simply reading a print ad - we are accustomed to watching everything from babies riding Roombas to crazy cat videos - which makes online a great fit for our advertising dollars. However, it’s not just the consumption that makes it important, it’s the way online is consumed that benefits your TV advertising. The reason why is because when you watch TV you lean back and let the video wash over you. When you watch online video you engage with a product. Whether it’s pre-roll video with a forced impression before a news clip, or in banner video where you choose to watch the video, you have engaged with a TV advertisement that happened to take place online. All this engagement helps you remember the ads you saw more. YouTube users consume six billion hours of video each month and there are 100 hours of video uploaded every minute.6 Since this consumption is enormous, it is also important to address relevancy of message and clutter. While most of the data available is global, we know that in Oregon
Your Perfect Match to the Future Driving forces and environmental factors continue to bring successful people and businesses together to accomplish amazing feats. Most of the amazing partnerships in the world’s history were the combination of two colliding forces (or individuals) that gravitated towards each other to fulfill a need or a passion. Just like these “perfect matches,” partnering TV with digital video, delivered across multiple screens to premium audiences, puts more automotive consumers on a direct path to purchase. It’s simple: TV and online video create demand and digital fulfills it. So whether you are like Bonnie and Clyde, Gates and Allen, Jobs and Wozniak or Montana and Rice you can form the perfect partnership by aligning your TV and digital video strategies to take the wheel and steer more automotive consumers to your website, your dealership and that next big sale. Google – August 2012 “The New Multi-Screen World” eMarketer, US Adults 18+ July 2013 3 Nielsen. Google Cross-Platform Ad Effectiveness Study 2011. *Multiplatform = Ad Exposure on TV, PC, Phone & Tablet 4 Source: Comcast Plus-Recontact, R1-2012 Tot12month, Scarborough. Total Survey Area: Adults 18+. Base Profile: Seattle-Tacoma DMA 5 Nielsen. Cross Platform Screen to Screen 2012 6 YouTube press statistics 2013 7 “The Perils of Ad Clutter,” Burst Media 1 2
A Powerful Lesson
in Good Dealership Management
Promise of Good Execution
Successful dealerships have three basic core processes in place: • One for people • One for strategy • One for budgeting and operations Most dealerships have these core processes disconnected from the everyday realities of the business and from each other. This is due largely to a lack of disciplined execution. Today the difference between successful dealerships and non-successful dealerships are its competitors, and their ability to execute good management practices. Some “leaders” put too much emphasis on high-level strategy and on intellectualizing and philosophizing, and not enough time on implementation. They agree on a project or initiative and then nothing comes of it. Sometimes they fool themselves into thinking their areas are running well. There are many managers who fall victim to the “gap” between promises they have made and results their areas are delivering. During my many years as a trainer, manag-
By Jay Rogers
ers have told me they have a problem with accountability – people are not doing the things they are supposed to do to implement a plan. They want to make changes, but, in a lot of cases, they don’t know what to change. What we know about the “Gap” – • In most cases it is not the strategy that failed, but, instead, the fact it was not executed well. • There is a blind spot between what the dealership’s leaders want to achieve and the ability of the organization to achieve it with the right personnel. • Too often the big thoughts are not translated into concrete steps for action. If this isn’t done they become pointless and meaningless. • Without execution, breakthrough thinking breaks down, learning adds no value, people don’t reach their stretch goals, and the effort stops dead in its tracks. • What you end up getting is change for the worse, because failures drain the energy from organizations. Repeated failure destroys it.
An Adult Spends the Majority of Their Daily Time Consuming Media on TV and Online.
Are your advertising efforts focused appropriately?
Contact Jeff Kent to launch your Multi-Screen Campaign today! 206.858.6582 Jeffrey_Kent@cable.comcast.com Source: eMarketer report - US Time Spent with Media, The Complete eMarketer Forecast for 2013, July 2013 44
“Going to the Next Level” What is “Good Execution”? • It’s about getting things done. • It’s running the dealership versus conceiving or planning. • It’s setting goals.
How do we get things done?
To understand good execution, you have to keep three key points in mind: 1) Execution is a discipline, and integral to strategy. • It is a systematic process of: • Discussing how’s and what’s • Questioning • Follow through • Accountability • Assessing organization’s capabilities • Linking strategy to operations and the people who are going to implement the strategy • Synchronizing people and their various disciplines and talents • Linking rewards to outcomes • Mechanisms for changing assumptions as the environment changes • Upgrading the dealership’s capability to meet these changes 2) Execution is the major job of the business leaders. • In its most fundamental sense, execution is a systematic way of exposing reality and acting on it. Most companies don’t face reality well. • An organization can only execute if its leader’s heart and soul are totally immersed in the company. Leadership must have a comprehensive understanding of the business, its people, and its environment. 3) Execution must be a core element of an organization’s culture. • The heart of execution, again, lies in the three core processes: • People process • Strategy process • Operations process • Robust dialog is essential to surface the reality of the business. • Prosecuting must be with vigor, intensity, and depth. Passion. • When people are engaged in the processes they argue the right questions, search out reality, and reach specific and practical conclusions.
How people talk to each other absolutely determines how well the organization will function. • Is the dialog stilted, politicized, fragmented, and butt-covering? • Or is it candid and reality based, raising the right questions, debating them, and finding realistic solutions? Execution is led and established by the leaders of the company.
The Building Blocks of Good Execution 1) Building Block One: The Leader’s Seven Essential Behaviors What exactly does a leader in charge of execution do? How does he or she keep from being a micromanager who is caught up in the details of running the business? • Know your people and your business. • Insist on realism. • Set clear goals and priorities. • Follow through. • Reward doers. • Expand people’s capabilities. • Know yourself. One of the most effective ways to coach is to observe a person in action and then provide specific useful feedback. The skill in coaching is truly in the art of asking questions – incisive questions that force people to think, to discover, to search, and to bring out the realities. Digging for realities takes “Emotional Fortitude.” Emotional Fortitude gives you the courage to accept points of view that are the opposite of yours, the ability to deal with the conflict, and, the confidence to encourage and accept challenges in a group setting. It enables you to accept and deal with your own weaknesses, to be firm with people who are not performing, and to handle the ambiguity inherent in fast moving, complex organizations. 2) Building Block Two: Creating the Framework for Cultural Change When looking at changing the culture in a dealership to encourage growth, there are two areas of focus: the Hardware of the company and the Software of the company. Hardware is guidelines, organizational structure and processes. Software is the people’s beliefs and behaviors. One is just as important as the other. It is similar to a computer. The hardware of a computer is useless without the right software. Most efforts at cultural change fail because they are 45
not linked to improving the business’ outcomes. To change a business’ culture, you need a set of processes – social operating mechanisms that change the beliefs and behavior of people in ways that are directly linked to the bottom-line results. You need to change people’s behavior so that they produce results. • First you tell people clearly what results you are looking for. • Then you discuss how to get those results. • Then you reward people for producing the results. “We don’t think ourselves into a new way of acting. We act ourselves into a new way of thinking.” A dealership’s culture is the sum of its shared values, beliefs, and norms of behavior. • Values – fundamental principles and standards, such as integrity or respect in the industry, as well as the organization’s work ethics. • Beliefs – these are what influence specific behavior: training, experience, what people hear inside or outside about the company or from its leaders. This is the area that most likely needs to be changed to create a culture of executions. • Behaviors – these are largely predicted and created by the values and the beliefs that a company embraces and lives. A culture. If you were to ask your people these questions, how would they respond? What are our beliefs? What are we great at? What do we stand for and what would we die for? What are our limitations and what are our goals? What are our standards and what are our expectations? What is the culture of our Puget Sound dealership? The foundation of changing beliefs and behaviors is linking rewards to performance and making the linkages transparent. A business’ culture defines what gets appreciated and respected and, ultimately, rewarded. It tells people in the organization what’s valued and recognized. In the interest of trying to make their own careers more successful, people will concentrate. If 46
a company rewards people for good execution, its culture will change. Rewards come in different ways. • Recognition in group • Pat on the back • Time off to spend with family • Bonus • Increased compensation • Increased benefits • Reward trips Knowing your people can assist in this area. Recognizing what type of reward will motivate a particular person and following up with that reward and making a big deal out of it, will help to change people’s beliefs and behaviors. Example Set of Beliefs: • We can grow faster than the market-profitability and use our capital efficiently. • We can increase productivity year in and year out. • We are committed to our clients’ success. • We will achieve service excellence. • Collaboration is the key to our success. • We are going to be accountable and committed. • We will be better listeners to our clients. As a national trainer for over 30 years, I have witnessed countless numbers of dealerships expanding and excelling because of their disciplined attentiveness to good execution. Remember, good dealerships have three basic core processes in place: people, strategy, and good budgeting and operations. It’s about getting things done, running the dealership versus conceiving and planning, and making goals. Know your people and invest in them, and always be accountable and committed to your goals. Jay Rogers, JRg Jay Rogers Group, is a nationally recognized automotive marketing and development trainer. Prior to starting his own company, Jay was Director of Training and VP of Sales with a national finance services company located in Texas. He is recognized for turning companies around with processes and procedures that improve efficiencies and profitability. Jay can be contacted at njrogers@jayrogersgroup .com.
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LEARN MORE. EARN MORE. Looking for research, insights about online marketing or merchandising best practices? Find all this information and more at DealerLearningCenter.com. 47
The IN YOUR DATA and who owns it
By Scott Dreisbach
The importance of accurate data is undisputable. The reliance on accurate data has become a way of life in every department of every dealership in the world. There is no doubt in any self-respecting dealer or manager’s mind that the decisions we are all faced with on a daily basis are predominantly data driven. So much so, that we sometimes forget how important it is to have specific systems and processes in place that help us manage “by the numbers.” Those systems and processes are not often thought about until the data stops flowing or becomes unreliable. This covers the full spectrum of nearly every decision we are faced with in managing a successful dealership operation. The significance and importance of this data is undeniable and is the life blood of competent dealership decision making. Clearly, dealers and managers rely on many different vendors having free and unfettered access to the data in order for their particular tool to operate properly and work the way the tool was designed, presumably, to make the dealership more efficient and profitable. When the data is
used to increase profitability, you and your vendors are technically mining your data and pulling out the “Gold” for your operation’s benefit. Vehicle inventory management is what we specialize in and our reliance on flowing data is no different than any other vendor. Our system identifies specific opportunities that when acted upon, directly affect the bottom line in a positive way. These decisions are driven by your data. Clearly, any vendors who access dealership data are bound by law to safeguard and protect this data. Confidentiality Agreements, Privacy Addendums and other safeguard instruments are standard fare that all vendors must provide to the dealer. The question I am putting on the table is this: Who owns your dealership data? There are DMS providers who recognize the importance of data. They are happy to help the dealership, (the way they should) by allowing approved vendors access to the data they need to enhance the dealership operation. There are also DMS providers that are trying to monetize the
dealership data by charging both the dealership and the vendor to have the data that the dealer wants the vendor to have (and has specifically approved). DMS providers have even gone so far as to do everything possible to thwart successful data flow. They try and convince the dealer that “non certified” vendors pose a severe security risk, and even though the dealer has granted specific DMS access with a legitimate username and password, they want to stop this data exchange from happening unless someone pays them their fee. Some providers have even gone so far as to disable usernames and passwords. Essentially, they are trying to resell YOUR data and mine some “Gold” for themselves from something that does not belong to them – YOUR data. Your data is not being protected by these type of DMS providers. Frequently they are selling are selling the information. Take a look at this actual screen shot of what appeared recently on some dealerships’ login screens. This is clearly an underhanded scare tactic posed as coming from your data security watchdog. It is designed to force this vendor to “Pay to Play”. This username has been disabled and the dealer who wants us to have the data is not being protected. He is being punished. As a vendor whose tools absolutely help dealerships make more money, I firmly believe that the data is owned by the dealer and the dealer has the right to grant access to that data if he or she chooses. Data is an asset that is no different than any other asset on the balance sheet. It belongs to the dealership. Nobody has the right to sell any part of any of your assets except the dealer. So watch out for land mines. Be smart about watching your assets. Know your vendors and what they do. If you would like to learn more about what your data can do for your operation in our system and how much “Gold” you can extract from it, please feel free to contact me anytime. Scott Dreisbach VP, Valuinsight, Inc., email@example.com / www.valuinsight.com / 561 368 7810 X108 50