13 minute read
4 Ways Employee Retention Benefits Your Dealership
By Mary Anne Hoggan
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The pandemic labor phenomenon known as the ‘Great Resignation’ is predicted to continue into 2022 – almost half of employees are looking for a new job or plan to soon. This means, keeping your best talent is critical to your success. But how do you do that? And why does it matter?
Here are four ways employee retention benefits your dealership.
WHAT IS EMPLOYEE RETENTION? WHY IS IT IMPORTANT?
At its simplest, employee retention is how long an employee stays at your dealership. The time someone stays at a given job has been dropping steadily for years, and most recently a study revealed that most people stay just over four years at a single employer.
A recent survey of the up-and-coming Gen-Z workers shows they want to stay on the job only 3.72 years on average, and 25% of those surveyed said they would only spend 1-2 years on a job before moving on. But time spent finding new employees and training them is money lost, and there are other disadvantages to high turnover, as well.
These costs and benefits have driven many dealerships to laser focus on employee retention.
The first and most common benefit of employee retention is reduced costs. Think about the many steps to recruiting that cost time and money: • Posting an ad online and vetting potential candidates. • Interviewing and onboarding, including paying for items like uniforms, nametags, and office equipment/setup. • Recruiting and referral incentives. • Training (It can take six months to one year to truly learn a role and the organization.) • Repeating the recruiting cycle if a bad hire is made.
According to a 2017 CareerBuilder Survey, 74% of employers say they have hired the wrong person for a position and companies lost an average of $14,900 on every bad hire.
These are all costs that can be eliminated or reduced significantly by retaining your current employees. But retention is about more than just your bottom line.
2. IMPROVED CUSTOMER EXPERIENCE
You save money and time by keeping your best talent. The other beneficiary of employee retention is your customer. If a customer knows and likes your employees, he or she will likely be a repeat customer, from parts and service to purchasing vehicles.
But another part of this is customer expectations and the kind of experience they want to have at your dealership. The more consistent the process and the people they deal with, the better it is for them. And satisfied customers make for a more profitable dealership.
Experienced employees provide those consistent experiences. In addition, they understand the business and how your team works together. The better the teamwork, the smoother your operations will be. A new employee will take time to become part of your team.
3. INCREASED PRODUCTIVITY
Losing employees hurts your bottom line and your dealership’s performance. The more often employees leave, the more productivity will be disrupted. While the trainer and trainee are working together, everyone around them has to pick up the slack or certain things may take longer or simply not get done.
Even if a new hire is an excellent fit, it will take the individual several months to reach his or her maximum productivity after training. This means it will take even longer for your team to return to full strength – impacting staff and customer service.
The simple solution is prevention through employee retention programs. A high performing team runs smoothly and efficiently, maintaining a dealership’s sales and reputation.
4. IMPROVED EMPLOYEE MORALE
Studies show that happier employees are more productive and more likely to stay. Keeping employees happy has many facets, including a strong employer brand (what prospective employees see that attracts them to work for you in the first place).
Creating a positive employee brand or culture goes far beyond sales commissions. Happy employees are recognized, listened to, work in a positive environment, and maintain a healthy work-life balance. In the wake of COVID, many businesses are understaffed. A 2021 study by CareerPlug suggests that 50% of employees have considered leaving their current job in the last 12 months. Feeling overworked due to exiting staff is a valid reason why employees may look elsewhere for employment right now.
Retaining an experienced team that works well together supports a strong work environment and employer brand. It’s vital to a dealership’s business success.
HOW TO INCREASE EMPLOYEE RETENTION
Positive culture, competitive compensation and benefits, ongoing training, and career development are all methods to retaining the best talent for your dealership. It’s also important to offer recognition where it is due.
In addition, when you must hire, you can attract good candidates by offering an employee referral program, screening potential job candidates well, and hiring the right people in the first place. The wrong hire can be extremely damaging to company culture, and the right one can propel you to the next level.
Remember, employee turnover not only hurts you, but it also benefits your competition.
RETENTION AS A CULTURE
Employee retention is a part of your culture – part of your employer brand. It is unique to you. The more you show that you care for employees and their advancement, the more they will care about you as an employer. Investing in them means they also invest in you.
To support those goals, NIADA has supported the independent used auto dealer community for more than 75 years. They offer ongoing sales and other dealership training that can help you find, and keep, the best in the business.
The CARLAWYER©
By Eric Johnson, Partner in the law firm of Hudson Cook, LLP, Editor in Chief of CounselorLibrary.com’s Spot Delivery®
Here’s our monthly article on selected legal developments we think might interest the auto sales, finance, and leasing world. This month, the developments involve the Consumer Financial Protection Bureau, the Federal Reserve Board, the National Credit Union Association and the Federal Trade Commission. As usual, our article features the “Case(s) of the Month” and our “Compliance Tip.” Note that this column does not offer legal advice. Always check with your lawyer to learn how what we report might apply to you or if you have questions.
FEDERAL DEVELOPMENTS
CFPB Issues Opinion on FCRA
Obligations. On July 7, the CFPB issued an advisory opinion outlining certain obligations of consumer reporting agencies and users of consumer reports under Section 604 of the Fair Credit Reporting Act. Noting that some CRAs use insufficient matching procedures, such as name-only matching, which can result in consumer reports being provided to persons without a permissible purpose to receive them, the advisory opinion explains that the permissible purposes listed in Section 604 are consumer specific and affirms that a CRA may not provide a consumer report to a user unless it has reason to believe that all of the consumer report information it includes pertains to the consumer who is the subject of the user’s request. In addition, the advisory opinion clarifies that it is unlawful to provide consumer reports of multiple individuals as “possible matches” where the requester only has a permissible purpose to obtain a consumer report on one individual. The CFPB notes that disclaimers will not cure a failure to have a reason to believe that a user has a permissible purpose for a consumer report. The advisory opinion also reminds users of consumer reports that Section 604 strictly prohibits them from obtaining a consumer report without a permissible purpose for doing so. Finally, the advisory opinion outlines some of the criminal liability provisions in the FCRA.
CFPB Releases Blog on Auto Debt, Delinquency Rates, and Repossession Rates of Young Servicemembers. On July 18, the CFPB released a blog post highlighting its prior research on the amount of auto debt young servicemembers carry, as well as delinquency and repossession rates among young servicemembers. The blog post also highlights the Department of Justice’s recent enforcement actions addressing illegal repossession practices under the Servicemembers Civil Relief Act and states the CFPB’s expectations that creditors, servicers, and repossession agents adhere to the SCRA’s requirements, especially when using repossession technologies like starter-interrupt devices, GPS locators, and license plate recognition.
FRB Proposes Rule Implementing
LIBOR Act. On July 19, the FRB invited comments on a proposed rule that would implement the Adjustable Interest Rate (LIBOR) Act. The proposed rule would establish benchmark replacements for certain contracts that use the LIBOR reference rate and do not have terms that provide for the use of a clearly defined and practicable replacement benchmark rate when the LIBOR reference rate in its current form is discontinued on June 30, 2023. The proposed rule also would provide additional definitions and clarifications consistent with the AIR (LIBOR) Act. Comments are due by August 29, 2022. Board approved a proposed rule on cyber incident notification requirements. The proposed rule would require a federally insured credit union that experiences a reportable cyber incident to report the incident to the NCUA as soon as possible and no later than 72 hours after the credit union reasonably believes that it has experienced a reportable cyber incident. This notification requirement provides an early alert to the NCUA and does not require credit unions to provide a detailed incident assessment within the 72-hour time frame. Comments are due on or before September 26, 2022.
National Associations Request Delay
of Safeguards Rule. On July 21, ACA International, the American Financial Services Association, the Consumer Data Industry Association, and the National Automobile Dealers Association, requested that the Federal Trade Commission delay the applicability date of the Standards for Safeguarding Customer Information rule (the Safeguards Final Rule) until December 2023. Without a delay or extension, the applicability date for the Safeguards Final Rule will be December 9, 2022.
CASE(S) OF THE MONTH Court Refused to Compel Arbitration Where Parties Signed Conflicting Arbitration Agreements in Connection with Online Car Purchase: In connection with her online car purchase, the buyer signed a number of documents electronically, including a purchase agreement, a retail installment contract, and a GAP waiver addendum, all of which contained arbitration provisions. The buyer sued the dealership from which she bought the car and the assignee of the RIC. The defendants moved to compel arbitration. The buyer opposed the motion, arguing that there was no meeting of the minds with regard to the issue of arbitration. The RIC identified Continued on next page
Continued from previous page the dealership as the dealer and contained an arbitration agreement providing that the buyer may choose any arbitrator subject to the approval of the defendants and that the defendants are required to pay up to $5,000 in arbitration costs. The purchase agreement incorporated the RIC, including the arbitration agreement. However, the GAP waiver addendum, which stated that it amended and became part of the RIC, identified another company as the dealer and contained an arbitration agreement that did not specify which party was responsible for paying arbitration fees and costs and provided that the administrator would select one of at least three arbitrators that the buyer identified. Because there was a conflict between at least two of the arbitration agreements over responsibility for fees and how the arbitrator would be chosen and because there was no indication as to the relationship between the dealership named as the dealer in the RIC and the other company named as the dealer in the GAP waiver addendum, the U.S. District Court for the Western District of Washington agreed with the buyer that the parties did not agree on the terms of arbitration and denied the motion to compel. See Bendickson v. Vroom, Inc., 2022 U.S. Dist. LEXIS 114134 (W.D. Wash. June 28, 2022).
COMPLIANCE TIP Our Case of the Month highlights issues that we’ve harped on in prior CARLAWYER© reports regarding arbitration provisions. This Case of the Month highlights how conflicting arbitration provisions can be fatal to compelling arbitration. The purchase agreement, the retail installment contract and a GAP waiver addendum all contained arbitration provisions. However, the arbitration provision in the GAP waiver addendum identified another company as the dealer, contained an arbitration agreement that did not specify which party was responsible for paying arbitration fees and costs (thus differing from the arbitration provision in the RIC) and provided that the administrator would select one of at least three arbitrators that the buyer identified. The court agreed with the consumer that “there was no meeting of the minds” between the parties because: (i) there was a conflict between at least two of the arbitration agreements over responsibility for fees and how the arbitrator would be chosen, and (ii) there was no indication as to the relationship between the dealership named as the dealer in the RIC and the other company named as the dealer in the GAP waiver addendum. As the parties didn’t agree on the terms of arbitration, the motion to compel arbitration was denied. This is yet another reminder to read your arbitration agreement(s) (you are using an arbitration agreement, right?) in your consumer-facing documents and see if you have conflicting terms or requirements.
So, there’s this month’s roundup! Stay legal, and we’ll see you next month. n
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Eric (ejohnson@hudco.com) is a Partner in the law firm of Hudson Cook, LLP, Editor in Chief of CounselorLibrary.com’s Spot Delivery®, a monthly legal newsletter for auto dealers and a contributing author to the F&I Legal Desk Book. For information, visit www. counselorlibrary.com. ©CounselorLibrary. com 2022, all rights reserved. Single publication rights only to the Association. HC# 4892-9019-2172.
WHY WAIT?
January/February 2019 ®DeliverySPOT Vol. 21, Issue 7 A Monthly Legal Update for Auto Dealers and Finance Companies from CounselorLibrary® ® , publisher of IN THIS ISSUE:
DEALER/BANK RELATIONS Dealers Are from Mars, Finance Companies Are from Venus
5Federal Law
What Access Problems?
By Thomas B. Hudson
6Insurance Issues Vendor’s Single Interest
Insurance—Important Pesky Details
By Elizabeth C. Yen
8Privacy The Brand-New Right to Privacy in
California
By Patricia E.M. Covington 10 Commentary Post-Election Musing
By Michael A. Benoit
By Thomas B. Hudson* (see DEALER/BANK RELATIONS, page 2) Over the years, I have represented both dealers who enter into retail installment contracts and the banks and finance companies that buy the RICs from the dealers. In working with folks from both sides of this divide, I quickly concluded that, in viewing dealership financing, the dealers were looking through one end of the binoculars, while the banks and finance companies were looking through the other end. I’ve found that there are few dealers who understand that, in a typical RIC transaction, the dealer is the creditor. Many (most?) dealers feel that they are in the business of selling cars and that the financing of those sales transactions is the job of the bank or finance company, entities that dealers regularly erroneously refer to as “lenders.” These dealers might consider themselves as agents in gathering credit and other information from car buyers and in getting the RICs and other related documents signed by the buyers. But, if you asked these dealers if they financed their buyers’ purchases, they would deny it. By Latif Zaman WARRANTY LAW Words (and Texts) Matter: When “As Is” Does Not Mean “As Is” By Catharine S. Andricos and Christopher J. Capurso* When you sell something “as is,” what do you generally understand that to mean? Our guess is something along the lines of “what you see is what you get.” When a used car is sold “as is,” the Federal Trade Commission requires the dealer to post a Buyer’s Guide on the car, with a checkbox indicating that the car is sold “AS-IS – NO DEALER WARRANTY” (along with a statement—“THE DEALER DOES NOT PROVIDE A WARRANTY FOR ANY REPAIRS AFTER SALE”). In a recent case, a federal district
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