Stories From The Field: Outsourced Staffing Increases CSI

By Bruno Lucarelli

It’s 8:30 AM on Monday. Service customer vehicles are stacked up all the way to the highway. Without anyone to direct them, customers abandon their cars and walk through the service lanes. The panicked service manager is calling for every able-bodied employee and tech to act as a temporary valet. This catastrophe adds up to hundreds of dollars every day in lost wages, a physically dangerous situation and a negative customer experience.

If this dealership experience is familiar, you may need to hire a staffing company.

NADA studies show that the cost of onboarding a new dealership employee is $10,000 regardless of the pay grade of the new hire. Even if you are part of a larger group, your dealership takes on these costs as part of your profit and loss.

According to the 2017 NADA Dealership Workforce Study, turnover of positions in the lower pay range (valets, porters, cashiers) tops 70%. Many of these hires leave the dealership in the first 90 days. You have already invested the time and money for advertising, interviewing, checking backgrounds and onboarding new hires, so a significant cost has already been incurred. ESI Trends, the firm that assembles the annual NADA Dealership Workforce Study, calculates that the average dealer loses over $500,000 annually related to employee turnover.

A number like that is a serious motivator to create a change. There are a few ways that a staffing agency can help keep costs down while improving your ability to create a positive customer experience.

To start, using a staffing agency offloads the cost of hiring. A good staffing company will absorb all or most of the money and time you’d normally spend on advertising, background checks, and interviewing for these positions. That means that your HR staff can truly focus on profit-driving positions in sales and service, ensuring your team is solid on every level.

The next big advantage comes when it’s time to look at benefits and insurance. Coverage for these new hires costs thousands of dollars a year, which you can save by hiring through a staffing agency, particularly one that offers great benefits for employees. Just make sure the staffing company you choose carries the right kind of insurance (and enough of it) to cover any vehicle damage, tort claims, and workers’ compensation.

There’s the time and money spent on training individual employees. A quality staffing company should provide pre-training all operations staffers, especially service lane workers. A porter who knows which color hand tag goes on a service waiter is an efficient one.

When you calculate just some of the information above, a dealer principal may begin to understand how much capital is wasted on turnover each year.  However, it’s surprising how many store managers balk when presented with a proposal for paying $20+ per hour for an outsourced porter.  Based on costs associated with average turnover at these positions, they’re likely paying more than that at the end of their fiscal year, with high turnover and terrible customer service as a result.

“By aligning with a qualified outsourced labor company, dealer service departments are not only benefiting from having better control over labor costs, but … increase productivity, service drive efficiency, shop through-put, and, most importantly, customer retention,” says Joel Furno, Founder and CEO at Citrin Hospitality Staffing in Columbus OH.  The company has provided valet and hospitality staffing to such groups as Germaine and Penske.

“[This] enables service managers and directors to focus on more important, revenue-producing tasks like adviser training, customer interaction, and technician recruiting.”

One of the most common scenarios cured by outsourcing is the common tech parking problem.  Studies by companies such as Citrin show that by allowing service techs to pick up and park cars from the service lot, they can lose over $20,000 in monthly technician labor hours. A well-organized valet outsourcing firm will keep the techs under the cars while depending on lower-paid staff to move vehicles in and out of the shop.

Using an outsourcing firm means that you have access exclusively to workers that have been pre-qualified by the company. This will create a valuable pool of permanent hires that have already undergone a six-month job interview.

Here’s a checklist of what to look for when considering an outsourced labor partner.

  • Automotive experience – Don’t use a company with no experience working with a dealership.
  • Pay for the better fit – The agency that meets your long-term needs will save you more money and is worth $20+ an hour.
  • References – Get references from other automotive dealerships and actually do your due diligence on them.
  • Pre-screening – Any agency worth their salt will do a thorough driver’s license, drug test and criminal background check. It never hurts to ask to make sure that they are.
  • Ample Insurance – Make sure they have enough insurance to cover any damages incurred, worker’s compensation, etc.
  • Linguistic Needs – Knowing the ethnic mix of your area, you may want valets that can communicate effectively in multiple languages.
  • A Defined Point of Contact – If there are problems with staffers, you need to have the confidence to call one person that will address the issue. This is someone that should have a decent tenure with the agency and can be relied upon to be professional at all times. They should be available to meet weekly during the first few months of the relationship to make sure both sides are satisfied with progress.
  • Hiring Fees – Hiring fees represent a major source of revenue for outsourcing firms. This can be negotiated and is about $3,000 per person on average. While it may seem steep, it pales in comparison to the $10,000 it will cost to train and hire a new employee.

In addition to this checklist, you should come into the process with a plan for which positions you need to start with immediately, which ones can be added in 3-6 months as the relationship with the agency develops and which ones you will not use the agency for under any circumstances.

Once you’ve signed the contract and started working with the agency, review your CSI history with your agency contact and explain what numbers are being used to identify success or failure of the relationship.

Remember that nightmare scenario from the beginning? Now imagine that it’s 12:30pm on a Tuesday. A valet, an outsourced staffer that has been working for your dealership the past three months, delivers a serviced vehicle to the customers door. He or she hands off the keys with a smile and thanks your customer for their business. Your customer takes to Facebook and tells the world what a great experience they just had with your dealership.

That could be six months from now.

Bruno Lucarelli is co-founder of MSS Auto, owners of the Vin-UP Service Lane Cash Offer Coupon Program. He is the former head of advertising sales for eBay Motors, and is a veteran of Autotrader, Edmunds and CBS-TV.