The following article appeared in the Oct. 14 issue of Automotive New.
Reporting was done by Hannah Lutz.
Bob Simmons began working as a parts driver for LaFontaine Automotive Group as a senior in high school. That was nearly 40 years ago.
As he “caught the bug” for selling cars, Simmons advanced through the ranks and now oversees three stores for the rapidly expanding Michigan dealership group.
“I love what I do right now,” Simmons said, sitting in a conference room at LaFontaine Buick-GMC-Cadillac in Highland, Mich. “I absolutely love it.”
Engendering that kind of passion for working in dealerships is rare — but it may be the key to solving the turnover and retention challenges that have bedeviled auto retailers for decades. LaFontaine Automotive Group seems to have mastered the employment conundrum, boasting a stellar turnover rate of 16 percent annually for the group. Its flagship Buick-GMC-Cadillac store in Highland is a standout, with 11 percent turnover. Many employees have been with the group for most of their careers, moving up from entry-level positions.
Passionate owners, competitive pay plans, clear career paths and cross-department collaboration are core reasons employees stick around, according to some of those workers and the LaFontaine family.
“We don’t turn over people. We have people that grow, that make a very good living and get compensated for the job that they’re doing. It’s an investment in them,” said Ryan LaFontaine, COO of the group that his parents founded in 1980. His sister, Kelley LaFontaine, is vice president.
Their mission: to lead by example. “I can’t just say my biggest asset is my employees if I don’t treat them that way by my actions,” LaFontaine said.
LaFontaine’s turnover performance shines against industrywide metrics. The average turnover rate at U.S. new-vehicle dealerships was 45 percent in 2018, according to the National Automobile Dealers Association’s 2019 Dealership Workforce Study. While that still pales in comparison with the LaFontaine number, the industry number improved by 1 percentage point from 2017 after years of steadily worsening.
Turnover matters because poor retention leads to slimmer profits, said Ted Kraybill, president of ESI Trends, the Clearwater, Fla., consulting firm that conducts NADA’s study.
“We know that there is a direct connection between employee retention and gross profit production,” Kraybill said.
$9 billion opportunity
Dealerships with a good track record of retaining employees for at least three years produce higher gross profits, he said. But less than half of U.S. dealership employees stay at the same store for three years.
ESI’s studies show that a dealership that improves its turnover rate by 10 percentage points adds nearly a full percentage point to total gross profit as a percent of sales, Kraybill said. For the average dealership, that comes to more than $550,000 that could be gained each year. When Kraybill extrapolates that across NADA’s estimate of 16,753 franchised stores in the U.S., the profit opportunity for the industry exceeds $9 billion.
“Dealers who don’t focus on their three-year retention number, they’re leaving money on the table,” he said.
Many of the sales reps at LaFontaine’s Highland dealership passed the three-year mark years ago, said Paul Jordan, the store’s general sales manager until August when he was promoted to a new role.
At least three-quarters of the sales staff has been with the store for a decade. “That’s a big deal,” Jordan said.
Across the industry, turnover on the sales side is worse than the overall number. Sales consultant turnover was 74 percent in 2016, the last year NADA provided a detailed breakdown of its employment study findings. LaFontaine didn’t share its turnover rate for sales consultants.
With strong retention even in sales at LaFontaine, higher profitability does follow. “People look at their employees as a dead cost, but I don’t. I look at them as my biggest asset,” Ryan LaFontaine said.
The Highland store is a paradox — a sprawling, high-volume dealership in a near-rural community about 50 miles northwest of Detroit. Not far from General Motors’ Milford Proving Ground, it is among the top five stores for Buick-GMC new-vehicle sales in the nation.
The 63,000-square-foot dealership employs 300 people and sold about 6,488 new and used vehicles in 2018 in a city with a population of about 20,000. Built in 2008, the store is LEED-certified at the gold level, which means every item involved in its construction and day-to-day operations was inspected to determine how it would affect the water, air and land.
“When I mention Highland, Mich., most people don’t know where it’s at,” LaFontaine said, sitting in the office he shares with his parents and sister in the center of the Highland store. His desk sits alongside a glass wall and faces a 450-gallon fish tank housing dozens of fish. LaFontaine, a certified scuba diver, says looking at the fish relieves stress.
The store attracts customers from outside of Highland in part by offering pickup and delivery services.
“We can’t depend on customers just in our backyard,” LaFontaine said.
Longtime employees help keep those customers coming back.
“If you know, like and trust the person that you buy a house from or a car from, you’ll almost always go back to him,” said Jordan. “And if your person is in the same place, that helps the company.”
Jordan is a prime example. With the company for 14 years after a career in golf course management, he was promoted in August to general manager of LaFontaine’s recently acquired Buick-GMC store in Lansing, Mich.
Planning the path
Employees stay with LaFontaine in part because the company promises to invest in their future.
LaFontaine considers current employees first when a position opens, said one-time parts driver Simmons, now an executive general manager overseeing the Highland store and two others in Lansing and Ann Arbor, Mich.
On a busy midsummer day, Simmons, crisply dressed in a suit and earnest in demeanor, dashes from one area of the Highland dealership to another, stopping for quick, friendly conversations with workers on the way.
Keeping those employees engaged and committed to LaFontaine is a key part of management’s mission. Staffers rarely leave, Simmons said, but when they do, Ryan LaFontaine makes a point to ask: “Did we do everything we can to make sure that they could succeed?”
Long commutes or interest in a store selling a different brand lead to those departure conversations most often. LaFontaine, which has 17 dealerships selling 18 brands, plus seven body shops, will transfer employees to locations that are a better fit.
LaFontaine has added 12 stores since 2012. With that rapid expansion, the company in 2015 hired a corporate trainer to educate employees on business operations and the group’s culture and values.
It’s “so we don’t lose our DNA as we add more stores,” LaFontaine said. “Even though we’re a corporation, we run every store like a family-run store with some corporate disciplines.”
LaFontaine, who works closely with his parents and sister on the dealership group’s direction, loves seeing associates rise within the company.
“But if I don’t invest in them along the way, they’re not going to see that opportunity and growth,” he said. “So we also make sure that once they get into sales, they also go through all departments if they want to get to management.”
LaFontaine also sends promising managers to NADA’s dealer academy. Simmons credits the program with giving him more confidence to run three stores.
At all dealerships, when employees see a career path, they are more likely to stick around, said Suzanne Malo, director of executive search at DHG, an accounting and consulting firm.
“The salespeople of today might be the sales manager for tomorrow and the general manager five years from now,” Malo said. “So if you’re constantly thinking about career development, not only do they feel valued, but then they look to the tenure of the organization and they realize this is a great place to work. Even if that recruiting call came in about a great opportunity, it would be very hard for them to be tempted to leave.”
LaFontaine’s retention success in part comes from avoiding recruitment mistakes. Ryan LaFontaine and the executive team, which includes the LaFontaine family and two trusted advisers, interview nearly three-quarters of the job candidates seeking customer-facing positions.
“I don’t want to know how many cars you sell. I rarely ask that,” LaFontaine said. “I want to look at who you are. Do you prioritize family? Do you prioritize your faith? Do you have passion? Do you have heart? Do you have the work ethic?”
Many dealers use competitive pay plans to hold on to employees, said Kraybill. He contends that the industry’s average turnover rate improved in 2018 largely because of pay plan changes. More dealerships are offering base pay, plus a volume or customer satisfaction bonus, rather than commission.
“They’re focusing more on what it takes to keep the millennials and now this new Gen Z, and I think it’s showing up in lower turnover of sales consultants,” Kraybill said.
Compensation plans updated
LaFontaine updated its pay plans about two years ago but hasn’t abandoned the commission model.
“Anybody in the sales industry would beg, scratch and claw to be on the pay plan that this store has for its sales consultants,” LaFontaine General Manager Jordan said.
The group pays commission on the vehicle sale and the sale of finance and insurance products, and pays volume bonuses when the stores hit sales targets. New sales consultants also have the option to choose an hourly wage to start, so they can depend on set hourly pay rather than full commission as they learn the ropes. Hourly employees receive overtime pay and a small commission. Their hourly pay can go down as commission goes up.
Traditionally, a dealer would say, “‘Here’s your phone; here’s a list of names. Go ahead call them.’ A small percentage of people can be successful working from that,” Simmons said. But the hourly pay plan offers “a longer runway for them to get going, and more people are successful because of it.”
Though revamping the pay plan increased costs by an undisclosed amount, it’s been worth it, LaFontaine said.
The company aimed to create a compensation plan that employees can “steer and grow with and make a very good living as a support for family and their life outside of work,” he said. “I truly think that’s why they rally and grind so hard, especially when we need them at month end.”
Divides among departments are common at dealerships, but an emphasis on communication at LaFontaine Buick-GMC-Cadillac has helped overcome any disconnects between, say, service and sales, managers say.
“We’re not always all going to get along. But if there’s a problem, I sit people down in the room, and we communicate it out,” Simmons said. “It’s amazing how easy it really is to fix a problem as long as you don’t avoid it.”
Longevity on the job can foster such communication. When employees work together for a long time, they tend to make connections and build relationships. For instance, Simmons, also a scuba diver, has gone on dives with one of the group’s sales reps.
More interaction wanted
Talking it out fits with employees’ priorities, Kraybill said. They want better treatment, respect and for managers to listen to them.
“It used to be that there would be a hierarchy and the traditional idea is to delegate,” Kraybill said. But today’s workers want more interaction with the leaders of the store, such as the general manager.
“These new employees and the younger employees want to interact with the person leading the ship,” he said.
Asking about an employee’s weekend doesn’t cut it, added Fleming Ford, ESI Trends vice president of workforce optimization.
“They need to invest time in the employees, asking good questions, asking how they can help them in their careers, helping them be better at their skills,” she said. It’s “helping that employee really become the best they can be.”
ESI suggests that general managers hold a lunch with workers from various departments to build camaraderie.
An open door at the top is visibly apparent at LaFontaine’s Highland store.
All four of the LaFontaines — COO Ryan, Vice President Kelley, and their parents, dealer principals Mike and Maureen — share the windowed office in the store’s center. The setup makes the leadership accessible. Employees pass by and chat or exchange hellos. Customers in the nearby waiting area have a clear view of the company’s leaders.
Ryan LaFontaine is a fast talker, barely taking a breath between sentences, but he’s focused on the people he’s with.
He darts from meeting to meeting trying to make time for everyone who needs him. Family especially is important. He blocks off his calendar when one of his five kids has a game or recital. Employees know work has to wait.
For Ryan, who survived Hodgkin lymphoma after a 2008 diagnosis, the dealership group’s success comes down to this mission: Building lifelong relationships that connect families, strengthen communities and personalize the vehicle-buying experience.
In just about every LaFontaine ad in southeast Michigan, the company touts “the family deal.” It’s a marketing slogan, but it also promises a fair vehicle price, aggressive trade-in appraisals, complimentary vehicle inspections, a sales and service concierge and more.
“You know they talk about the family deal, and it’s no joke,” said Simmons, who stayed close to the LaFontaines even for eight years when he worked for another dealership. “Even when I didn’t work here, I’d call Mike LaFontaine and Ryan. I bought my cars from here when I wasn’t working here. It is definitely a family environment.”
Simmons and other employees credit that environment to passionate, present owners, who instill a drive to succeed within staffers.
Employees “know where the owner wants to go,” Jordan added. “And they’re willing to follow him, which is why we have a low turnover rate.”