Log In

How to Handle Employee Turnover

Replacing individual employees can cost anywhere from one-half to two times the employee’s annual salary. This cost remains high for hourly employees as well. Investopedia reports that replacing an $8/hour employee can cost a business around $3,500. On top of that, companies spend an average of $1,286 per employee a year on training.

All of this to say, employee turnover can be detrimental to your dealership — not just from a workload standpoint, but also from a cost perspective.

The good news is there are plenty of ways you can reduce and prepare for employee turnover. Let’s take a look at a few of them now.

Calculating Employee Turnover

Calculating employee turnover is actually very simple. To get your annual turnover rate, just take the number of employees who left during the year, divide it by the number of employees you started the year with, and multiply that number by 100. For example, if I started the year with 50 employees but 10 left during the year, my annual turnover formula would look like this:

10/50 = .2

.2 x 100 = 20%

How to Reduce Employee Turnover

Create an accurate job description.

It is well known to employees everywhere that job descriptions usually don’t tell the full (or even half) the story of what a job entails. The closer you can get to describing the actual day-to-day responsibilities, workload, skills needed, etc., the better chance you are going to find an employee that actually fits and is interested in the position.

This holds true during the interview process as well. You may be tempted to paint your boat dealership in the best light possible but try to be as honest as you can about the position and your company culture. Bending the truth will only hurt your dealership in the long run.

Hire prospects that are a good fit for the role and company.

In addition to creating a description that truly embodies the role, you’ll want to take a look at personality and experience level during the interview process. If the team you are hiring for has a very serious, old-school approach to work, then hiring someone who fits that description will likely go more smoothly than hiring someone who has a more lax approach.

When it comes to experience, you will want to make sure that you are hiring someone who knows enough to perform the job and may have some room to grow within the company. Hiring an overqualified employee could result in them becoming bored with the role and looking for something more challenging that offers better compensation.

Offer a strong training program.

When you hire a new employee, the amount of time it takes for them to fully learn and understand their role isn’t solely based on their ability to learn, their skill level, or their experience — your training program is also a huge factor.

Are you allocating time for an employee’s training? Do you have a specific trainer on your staff? Do you have written or video training courses or guides? If not, you cannot expect the training process to be fast and efficient. Furthermore, you can’t expect all employees to come out of training with the same base-level knowledge if a training program hasn’t been standardized.

Thankfully, training isn’t something you always have to do on your own. If your business is using a CRM or DMS, they may offer training as well. Here at Dealership Advantage, we take care of all the training related to our software. Whether it is 3 weeks or 3 years after you Go-Live with us, we handle all new employee software training. Our training specialists walk your new employees through how to use Dealership Advantage within their department and help them become proficient in no time.

Employee turnover screenshot

Fire “toxic” employees.

The people you work with can absolutely make or break the job. You could find your dream position and if you are surrounded by mean individuals who like to gossip and cause drama within your dealership, you probably will not enjoy your job.

That is why it is important to weed out any employees who create a hostile, stressful, or otherwise uncomfortable work environment for others.

An easy way to identify such employees is through peer reviews but keep an eye out for employees who have a history of being dishonest, gossiping with others, undermining their co-workers, are overly harsh or demanding, and who push the blame onto others. You may end up stopping three employees from quitting by firing one individual who is the cause of an unpleasant work environment.

Offer competitive compensation.

At the end of the day, a job is a contract between you and an employee in which they sell you their labor for agreed-upon compensation. No matter how good your culture is, how incredible the relationships are, how pleasant the work is, the pay and benefits are always going to matter.

If you want to hire great employees and keep those great employees, offer an appropriate starting salary. You should also consider increasing wages annually to keep up with inflation and offering regular raises for high-performing employees. Expect to pay more for niche and high-demand skills.

You can monitor what other companies are paying for similar roles by looking at job postings on competitors’ websites or heading to job listing sites such as Indeed, Glassdoor, and Monster.

Promote a good work-life balance.

Work-life balance is a big factor when it comes to retaining employees. According to CompareCamp, companies that offer better work-life balance have a 25% lower employee turnover and see an increase in productivity and employee happiness. Similar studies from TINYpulse and Spherion also pointed to work-life balance increasing employee retention. So, if you truly want to reduce retention for your boat dealership, consider fostering a culture that promotes a healthy work-life balance. Policies such as flexible scheduling and a good PTO package can go a long way towards keeping your employees happy.

Develop clear pathways for internal advancement.

An ambitious employee typically doesn't stay in one role over the course of their career. As they develop more skills and become more knowledgeable, many will seek better positions in the industry. If your dealership does not offer opportunities for these employees to advance internally, they will have no choice but to look for them elsewhere. That is why it is important to offer clear opportunities for growth and advancement within your organization. Make sure that employees know the actions they can take to move forward within the company or to gain pay raises. Does your dealership have a flat sales position or are their junior and senior sales representatives? What opportunities are there beyond the senior sales representative position? Can an employee become a sales team manager or sales team leader? Even a simple naming convention like this can signal to employees that there is plenty of room for advancement.

Standardize performance review.

Performance reviews offer a number of benefits that can help you reduce turnover at your dealership. At the most basic level, they allow you to sit down with employees and get an idea of how they are feeling about their position and about the dealership. If an employee does not seem happy, you can discuss any challenges they may be facing and come up with a plan for addressing them.

In addition, performance reviews allow you to validate or dispel an employee's view of their work. If an employee is performing incredibly well, you can compliment them on their performance and discuss the possibility of promotion or pay raises to show them that their work is not going unnoticed. Similarly, if an employee is performing poorly, you can take the opportunity to reset expectations and identify anything that might be keeping them from performing their best.

Hold exit interviews.

When executed properly, exit interviews can give you a deeper understanding of your workplace culture, employee happiness, and ultimately inform you of why people are choosing to leave. If you want to reduce turnover, there is no better way than to get direct input from employees leaving. If you take their feedback seriously and develop plans for addressing common employee complaints, then you should see a decrease in employee turnover rate.

How to Prepare for Employee Turnover

While the tips we discussed above can help you reduce employee turnover, we know that some turnover is inevitable. An employee may outgrow their role, their interests may change, the job may no longer meet their needs, etc. With this being the case, it is important to implement business processes that make transitions after turnover easy. Below are a few things you can do to make handling turnover a little easier.

Encourage knowledge sharing.

The worst-case scenario for a business trying to manage turnover is discovering that only Greg, who just left the organization, knew how to do x, y, and z. You do not want a knowledge silo to exist within your dealership. To avoid this, encourage knowledge sharing between your employees. If a single employee is the only person in the organization who knows how to do a certain task, they likely aren’t very happy about it. It probably leads to them getting called off of other work and being blamed for bottlenecking certain projects. Relieve some of the pressure by encouraging them to share what they know with others.

Cross-train your employees.

Encouraging your employees to share their knowledge is fantastic but having processes in place to actually ensure knowledge sharing is even better. That’s where cross-training comes in. Cross-training is the process of training your employees for multiple roles or training them on tasks that fall outside of their roles. For example, you may train online and over the phone customer service representatives on handling walk-in customers. This is extremely helpful when dealing with turnover because you should have one or many employees on hand who can temporarily take over the role/responsibilities of the leaving employee.

Define each role and its responsibilities.

To make hiring an adequate replacement as easy as possible, you should define each role within your dealership and the responsibilities associated with them. Be sure to get employee input and feedback on each role to ensure that your perception of what a role entails is in alignment with the actual day-to-day workload and responsibilities.

Define a transition process.

What does an employee do when they exit your organization? How do they tie up loose ends? How do they transition work that cannot be completed? If you don’t know the answer to these questions, then chances are your employees don’t. If there isn’t a defined process in place for them to follow, things may fall through the cracks. Leads may be lost, customer requests may not be processed, sales may not be finalized. To avoid these things, make sure you define your process of transition work, as well as leads and customers, from one employee to the next.

Have a record of all contact, lead, and sales conversations.

One of the easiest things to lose track of when an employee leaves is lead and customer conversations. Did anyone follow up with that sales lead? Where did the conversation lead off? Have our customers been notified that their usual sales representative is no longer working for us? Did anyone process that work order or is it still incomplete? These are questions you don’t want to be asking after an employee makes their exit.

Thankfully, lead and customer management don’t have to be too difficult. With a dealership management software like Dealership Advantage, no one gets left behind. With the reports that we provide, your new employees will be able to pick up right where previous employees have left off. The visibility within Dealership Advantage allows for a seamless transition from one team member to the next.

Three things you can do right now if you are struggling with turnover.

Ask leaving employees if they’d be interested in training jobs.

If you don’t have a training process in place and are worried about the future of a specific role at your company, make an offer to employees who are leaving or who have already left. They may be willing to stay on to train their replacements or may be willing to work part-time to help with training. If the relationship ended on a high note, it never hurts to make them an offer.

Hold exit interviews.

We’ve already discussed the importance of exit interviews, but we wanted to reiterate here that there is no time like the present. You don’t need to have a formalized exit process in place (though we recommend implementing one as soon as you can) to hold an exit interview. Put together a list of questions that you believe will help you in improving your business and ask the employee if they’d be willing to sit down with you before they go. Sling has a great blog post with a number of fantastic exit interview questions to ask.

Demo Dealership Advantage!

We’ve mentioned our software a couple of times throughout this post and aren’t against shamelessly plugging ourselves one more time. Our DMS is incredibly easy to use both for new hires and longtime employees. It can provide your dealership with direct insight into every area of your business from part management to sales to finance. Dealers who use our software tend to see higher margins and an increase in repeat customers. And when it comes to employee turnover, you can count on us to make sure you don’t miss a single opportunity. New employees receive our expert training and have full visibility into the conversations and deals that past employees were having with leads and customers.

Schedule Your Demo

Connect with Sales

Dealership Advantage is here to help you at any stage of your dealer management journey.

Please share a few details and we’ll be in touch within one business day.

Connect with Sales

Dealership Advantage is here to help you at any stage of your dealer management journey.

Please share a few details and we’ll be in touch within one business day.