Bob Clements spoke at the Joint Annual Meeting in Charleston a few weeks ago. He talked about the three keys to a high performing dealership/distributorship: well-defined processes, a plan for growth, and high capacity employees. In my last two articles, I discussed how using technology in well-defined processes and a risk-attentive growth plan has a positive impact on your business. Let’s talk about a new addition to these agriculture dealership tips: high capacity employees.
Clements mentioned that the secret to success is to document each process, manage each process and coach your people. In order to have high capacity employees, you must be able to measure their success. Managing a process means measuring it. You cannot coach what you don’t measure. Recently, I read a book called Traction by Gino Wickman. In his book, Wickman talks about every employee in a business having a “number”, from the general manager down to administrative professional. High capacity employees should hit that number consistently and if they don’t, they should be coached.
I’m not convinced that every employee should have only one number. You could achieve one number while causing other performance metrics to decline. For example, you could hit your parts inventory turns numbers but your fill percentage could be terrible. This would pose all sorts of customer satisfaction issues.
If you can pinpoint the key performance indicators (KPIs) for each employee, you have what you need to coach underperforming employees to high capacity. Each job description should include what the KPIs are for the position so that it is clear when you hire someone and they know what your expectations are. Every employee should know their “numbers” and have knowledge as to where they stand at least on a monthly basis.
Every business owner will have a philosophy of what it means to be high capacity. When it comes to dealership tips, then, the key is to start with some KPIs that make sense and narrow them down to two or three per dealership role. For parts people, it might be average dollars per transaction or average dollar sales per day. For a parts manager, it could be turns, zero sales parts inventory value, and fill percentage. For technicians, it may be productivity or efficiency. For salespeople, it may be won/lost percentage, number of daily contacts, or margin dollars. For a general manager, it may be net income to revenue percentage, net income or revenue growth. Your business system should have the data that you need to calculate most of your KPIs.
Every agriculture dealership needs high capacity employees to be successful. As a business owner or manager, it is so much easier to coach with the support of data. It makes the conversation objective and takes the emotional component out of play. Objective conversations are much more productive and have a higher chance of better outcome.