Fusion Management Briefs - Issue 6

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Essential Insights for Automotive Professionals

may , 2013

03 05 07 09

What makes a good leader?

Executive Insight - An Interview with Ian McLean, CEO of AAG Pty Limited Employee Referrals in your recruitment programmes Are you Losing Customers over the Phone?

CONTENT

03 05

What makes a good leader?

Being a leader is not easy. The challenges, the demands and the responsibilities can all be extremely taxing. While leadership does not come naturally to everyone the good news is that good leadership can be learnt by most of us.

Executive insight: An interview with ian mcClean In this interview, Ian McLean, CEO for the Australian Automotive Group shares his personal philosophy of what makes a good leader, the challenges that leaders face today, and his focus on developing the leadership team within his organisation.

07 09

Employee referrals in recruitment programmes Today, employee referrals account for a great deal of hires. Referrals actually outnumber hires from company career sites and also social media sites and big job boards. This superiority in numbers comes naturally as referrals provide better employees, who stay longer on their positions. Statistics show that referred employees stay employed almost twice as long as employees who were recruited using other methods.

are you Losing customers over the phone?

Recently, Op2ma did a Phone audit on 12 leading automotive brands and spanning over 60 dealerships in Australia. The objective was to discover how dealerships, in general, handled the phone inquiry.

Based on our experience, the phone inquiry is usually not regarded as important as the walk-in inquiry simply because the opportunity of a sale is more apparent in a walk-in customer than in someone who called to ask about a vehicle.

About Us Fusion Business Solutions is a performance-focused consulting group that offers a range of client solutions, including training, consulting and in-business coaching. We also operate a wholly-owned software division called Op2ma, which provides leading-edge web-based management and customer feedback tools. With our Head Office in Adelaide, Australia, we operate in most markets throughout Australia, New Zealand, the Pacific and Asia. We have offices in Melbourne, Sydney, Perth and Shanghai (China). Our philosophy is to offer our clients profit-enhancing solutions, which are both costeffective and innovative. With the business and retail landscape becoming increasingly more complex and challenging, companies must adapt and change, or risk falling further behind. Our clients see an ever increasing need to enhance skills and processes such as pro-active financial management and employee performance management.

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What makes a good leader?

Fortunately, there is a more effective way of identifying the leadership abilities in an individual. This article explores a list of criteria that all leaders must possess if they are to be effective.

A leader must have vision Leaders with vision will inspire their teams and motivate them to achieve great things. Having a clear and compelling

sufficiently secure in your knowledge and experience to accept that others can contribute with their knowledge and experience as well.

Conversely, leaders having no vision or poor vision will lead their organisation to failure or disaster.

Good leaders are aware that knowledge is limited. The ability to acknowledge that they do not know everything, coupled with a desire for learning, even from their subordinates, is the essence of self confidence.

A leader must have character Strength of character allows leaders to always do the right things. Integrity, honesty, and moral courage are what helps leaders to stand the test of time, when doing what is right takes precedence over doing what is convenient or profitable. While many leaders focus on qualities such as intelligence, persuasiveness and flair as key traits of success, they will eventually fail if they do not also possess strong character.

A leader must have self confidence Not the egotistical “know-it-all� who must always be the smartest person in the room, or who cannot conceive that their employees may know more than they do. Self confidence comes from being

A leader must have good communication skills Having poor communication skills is often tied to poor leadership.

A good leader can communicate effectively across many media, varied constituencies, and several environments, but more importantly, they are able to communicate their vision to the entire team and rally them towards a common goal. Good communication skills also mean they are good listeners and quick thinkers, able to increase communication or shut up when need to.

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One of the key challenges facing organisations is the ability to identify and promote good leaders. Most rely on overly simplistic tools that are either too theoretical or subjective. Diagnostic tests and personality profiling, though convenient and easy to use, do not always give the necessary insight into what may comprise good leadership qualities within the unique situation of the organisation.

vision also helps leaders align the organisation and the staff towards a clear goal, and staying the course when things become difficult.

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Being a leader is not easy. The challenges, the demands, and the responsibilities can all be extremely taxing. While leadership does not come naturally to everyone, the good news is that good leadership can be learnt by most of us.

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Essential Insights for Automotive Professionals

A leader must serve A good leader understands that without a strong desire to serve their constituents, they cannot earn and keep the trust, confidence, and loyalty of their team.

They take the blame, and readily give credit to their team. Arrogance, excessive pride and selfishness are traits that will pave the way to failure.

A leader must love Leadership is associated with strength, and as such, love seems remotely related to the traits of successful leadership. In reality, good leadership can only exist where love is present. Empathy, humility and kindness are elements of love, and as such, are strengths, not weaknesses. The Machiavellian idea that it is better to be feared than loved no longer works in today’s organisation.

A leader must be flexible Good leaders are flexible in approach and always put the interest of the team and enterprise before ego. Unlike the “do as I say or you’re fired” approach regardless of the context or situation, good leaders must maintain a reasonably flexible mind-set to avoid a fractured culture within the organisation. Failing to recognise and adjust to changing situations or the collective mood will lead to failure eventually.

A leader must focus The ability to focus and prioritise is one of the most critical traits of good leadership. Good leaders do not “multitask” or constantly look for balance.

Good leaders know what is important and focus all their effort and resources on getting that done. They are intentional and focused; and never spread themselves too thin. Conversely, a leader whose intentions are not aligned with results is not effective and will cause the organisation to fail.

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A leader checks the comfort zone Good leaders seek change and innovation to stay ahead of the curve; and the best organisations compete in the future, well before their competitors get there.

They are constantly moving, constantly disrupting the competition.

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A leader is customer-oriented A good leader is attuned to the needs of the marketplace, and acutely aware of what customers want. They understand that the purpose of their organisation is to serve the customer, and they are focused on improving customer experience, and building customer loyalty through satisfaction. Good leaders know that without customers, there is no organisation.

A leader cares Good leaders care; they care about their team members as much as they care about the customers, and they nurture the people they lead with mentoring and coaching. Good leaders invest in team building; they understand that it is their responsibility to help those they lead succeed.

leaders to stay the course when others are scrambling in fear, to do what is right rather than what is popular, to listen rather than speak, and above all to stay true to your core values.

So what makes a good leader? This list is by no means exhaustive but we think it covers the key characteristics that inspire teams members to follow willingly.

Looking for these traits in the current leadership, and in emerging leaders, and ensuring that those with these traits are promoted and retained, will help to ensure a secure, growing and successful organisation.

A leader is accountable Good leaders do not blame others, they take the blame. They give the credit for success to their team, but always take responsibility for failures that occurred.

Above all, good leaders are accountable to their team.

A leader is “culture savvy” Culture matters, and ignoring this will undo all the talent initiatives and effort to build a great organisation. A good leader does not let the organisational culture evolve by default but rather create it by design. From selecting candidates with complementary traits and attitudes, to nurturing work ethic and initiatives within teams, good leaders constantly guard the corporate culture, and ensure that talents are aligned to produce exceptional results.

A leader must have courage Leaders without courage cannot lead.

Unlike arrogance or bravado, courage is often an inner quality that comes about as a result of self confidence and wisdom.

Courage enables leaders to break the norm, and challenge the status quo.

Courage enables leaders to leave safe harbours in search of new opportunities but also to cut losses and make difficult decisions when they need to. Courage enables an open-mind that readily admits faults and weaknesses. Courage enables

Characteristics of poor leadership • Unenthusiastic and lacking energy • Underachieving • Not being able to inspire • Does not work well with others • Setting rules but not following them • Stubborn and not receptive to new ideas • Does not learn from mistakes • Low emotional quotient • Focusing on themselves and not teaching others

Executive Insight

An Interview with Ian McLean CEO of the Australian Automotive Group

After completing a Marketing Degree at Monash University, Ian began his career in automotive when he joined the graduate programme offered by Shell Australia. He subsequently moved to Sydney where he spent the next 12 years in Ford where he worked in diverse roles ranging from Field Manager (Ford) to Marketing Manager (Ford Credit) to State Manager in Perth.

In 2000, he joined Renault Australia as Marketing Manager for the marque launch where he helped build the business and brand from scratch to a 20-dealership operation across Australia.

Ian moved to Fiji 5 years later where he joined Toyota as CEO, running a 250-employee operation over 5 sites with 5 brands, followed by another stint as CEO for a large Toyota dealer group with more than a thousand employees. The need to spend more time with his family in Australia eventually brought him back to Melbourne where he took on the role of GM with a Volvo dealership.

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Essential Insights for Automotive Professionals

Ian is currently the CEO of the Australian Automotive Group Pty Limited (AAG). AAG operates a group of 6 dealerships in Sydney covering Ford, Mitsubishi and Opel as well as a number of automotive related businesses. AAG is a subsidiary of South African group, Imperial Holdings.

Accounting for 50% of Ford vehicles sold in Sydney, AAG also have businesses in financial services, aftermarket products, automotive paint and wholesale used car.

The group employs 350 people with an annual turnover of approximately $350 million. AAG is looking to expand its Australian automotive business over the next few years.

In your opinion, are leaders born or can they be groomed?

Leaders can definitely be groomed. I am by no means a natural leader, but what I am is a good observer. Over many years, I have observed how leaders (good and bad) worked, and from those observations, developed a leadership style that seems to be very effective and works for me.

What, do you think, are the characteristics that make a good leader?

Leaders come in all shapes and sizes, and often great leaders are found amongst the most unlikely places. I believe that good leaders show the following key characteristics: Ability to listen, empathy, decisiveness, self-discipline, enthusiasm, ability to take tough actions, and most importantly, setting good examples by walking the talk.

What is the one trait that you believe every leader must possess?

The ability to listen and, if appropriate, act on what you have heard; people respond when a leader listens to their issues and then follow through. You earn enormous respect and dedication from your team when you do what you say you will do. It amazes me how many people don’t follow through on what they say they will do.

What are the common mistakes that you think leaders sometimes make?

When they lose touch and arrogance takes over. Never lose touch with your roots or your true inner self. Remain true to yourself regardless of how successful you are.

What do you think is the biggest challenge facing leaders today?

It would be the sheer volume of information and the increasing complexity of issues that leaders must deal with on a given day without spreading themselves too thin. The need to carefully manage their time to achieve a balanced life becomes a real priority.

Can someone be a good leader, but not a good manager? Which is more important to an organisation - a good leader or a good manager?

Yes. Two examples of good leader/bad manager would be Kevin Rudd and, to an extent, Ted Baillieu. Both appeared to be good political leaders who led their parties to victory, but once in power were terrible managers. They did such a bad job running the government that both were subsequently removed by their

parties. You need both good leaders and good managers; in the long term, you need to be able to manage what you are leading or it will eventually fall apart.

What’s your focus for developing your leadership team within your organisation?

I believe in focusing on fundamentals such as implementing performance management, training, talent management, and succession planning for building my leadership team. My goal is to make AAG an employer of choice for people who want a career in automotive retail.

What advice would you give someone going into a leadership position for the first time?

Talk to your people. Have those vitally important one-on-one chats at all levels of the organisation. “Management by walking around” may be an old system but it is a great way to keep in touch at all levels of the business.

Do you think the automotive industry (at the Dealership level) has done a good job developing leaders?

The skills learnt in automotive retail are invaluable. Many wealthy entrepreneurs from previous generations grew out of auto dealerships. Auto retail teaches you how people think and buy, and how to press the right buttons with customers.

It teaches you how to manage people.

It also teaches you how to “trade”; the simple art of buying low, selling high and making something in the middle is best learnt in the car business. And once learnt, it will hold you in good stead for life.

We help you scale new heights Fusion Business College is Australia’s No. 1 automotive-focused Registered Training Organisation (RTO), providing leading-edge training solutions to dealers, manufacturers and financiers. Our team can help tailor and customise programmes to help you achieve your goals. Call Tim McGrath on 1300 807 177 to find out how.

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BUSINESS COLLEGE A division of Fusion Business Solutions

Employee referrals in your recruitment programme

However, to ensure that your referral programme actually works, companies need to invest time and money to set up

Building a referral programme that is user-friendly will make it practical for employees to refer friends and associates.

Studies show that most employees will take part if the programme is accessible and the referral process simple. Here are some suggestions that will help make your employee referral programme more effective: Incentives Employees who introduce talents to your organisation should be appropriately rewarded. Incentives can come in many forms besides cash: Paid time off, subsidised holidays or relevant products and services, or even a points system where rewards are tallied at the end of the year is better than not

giving anything. The key is “showing appreciation,” and this should be part of your culture to getting employees to actively seek out prospective talents to join your team. In the end, the savings and benefits of lower employee turnover and better hires will more than compensate for the incentives paid out.

The Talent Community Having an updated list of those who have expressed interest in working with your organisation is a excellent way of maintaining a talent community that you can tap into occasionally. Normally, it takes 40 to 45 days to fill an open position; with a talent community, it can take significantly less time to find the right candidate.

The challenge is to engage the talent community by putting in place a communication plan so that these prospective employees are kept in touch with what is current in your organisation.

The relationship you invest in will go a long way towards building a resource that will help move your company forward.

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Current employees understand your company culture and will refer those within their social and professional networks whom they see as fitting into the company without too much adjustment. Considering that a bad hire can cost a company as much as the hire’s annual salary, it is not surprising that employee referrals can lead to significant savings in training and replacement costs.

Not leveraging on this network means missing out on one of the best recruiting option available to you.

a referral programme. The programme should be accessible to all employees and promoted as an important part of the company culture. Ensure that employees understand how the programme works and how it can impact the future of the organisation. The objective is to turn each employee into an ambassador, potentially promoting your organisation within their respective networks.

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Employee referrals account for most external hires, in fact, referrals now outnumber hires from company career sites, social media sites, and big job boards. It has been shown that referred employees stay almost twice as long as candidates recruited into any company through other methods.

But many companies are not tapping their employees’ social and professional network as part of their talent management strategy.

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Entrepreneurial Culture Building a company around a compelling vision or idea never fails to arouse excitement, and there has never been a better time to do that. Increased visibility, easy access to resources, scalable platforms, and access to funds has resulted in exponential growth for many new startups. This leads to a growing demand to attract and retain the best talents within your industry.

To attract exceptional talents, you need to rely on current employees to spread the word. You need them to tell their network what a wonderful place your organisation is. Employees must feel that they are not just employees but participants contributing to a meaningful enterprise. Employees must believe that they are also entrepreneurs.

These 3 conditions are critical in building an effective employee referral programme. Without meaningful incentives for employees working within a entrepreneurial culture, and constantly nurturing a talent community, it is difficult for companies hoping to attract the best talent to join their teams.

communication from your competitors, and usually does not have the patience to jump through too many hoops. Outdated tactics such as “Let’s wait for a few days so he doesn’t think he’s all that special” are counterproductive to the purpose and intent of talent management.

To design an effective and responsive hiring process for your employee referral programme, here are some relevant questions that you need to ask yourself: • If you had to, would it be possible for your recruiters to respond rapidly?

• If no, why not?

• Do you have internal recruiters who are constantly seeking out talents to join your team?

• Do your recruiters have the time or resource to find talented candidates?

Or are they overly burdened with paper work and policies?

• Are you clear on what the ideal candidate looks like? Do you notice it when an ideal candidate knocks on your door?

An obsolete recruitment process Nothing can be more frustrating for both hiring managers and candidates than the hindrances and blockage created by an obsolete hiring process that does not meet the needs of today.

Gate keepers and obstacles One way of testing the effectiveness of your recruitment process is to put in an application and see if you receive a personal response from the hiring manager. For key positions, this may be the CEO or the Dealer Principal contacting the applicant personally for an interview.

An effective recruitment process must be designed to admit talent quickly and efficiently. It is responsive, and not burdened with red tape or excessive approval process. A highly sought after candidate receives numerous offers and

It is unfortunate that for many companies, applications are usually filtered by the HR department, and subsequently filed or lost. Once lost, candidates, no matter how good they are, may never be found again.

Protect your business from unfair dismissal claims.

Are you keeping proper records of your employees performance appraisal? Are you able to establish behaviour with supporting documents when you need to? Do you still rely on a paperbased, manual appraisal system? To find out how Revuu can protect your business, call 1300 807 177 for a free demo now.

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Keeping the process simple Simplicity is the key. To attract the best candidates, organisations sometimes deter candidates with unnecessary and unproductive processes and policies.

Some organisations use the latest pre-screening examinations or require prospective candidates to submit innovative essays and work plans too early in the process. These exercises, while they have a place much later in the recruitment process, can deter candidates in the initial stages and become obstacles for identifying and engaging talented employees.

When it comes to attracting talents to join your team, speed is always more important than perfection. Trying to put together a perfect system could lead to companies taking too long to hire.

Re-engineering your recruitment process to incorporate referrals and put in place a process that is simple but effective will go a long way to ensure that your organisation is ready when the right candidate comes along.

Are you losing customers over the phone?

Shocking Statistics For the audit, we created an ideal process as a benchmark to measure how dealerships respond to our Mystery Phone Shopping-type calls. We then hired a professional shopper to call these dealerships over 5 months, recording the call and the experience. Here are some statistics that you probably would not know about the automotive industry:

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Yet, although customers might not buy a vehicle directly over the phone, the buying process usually starts there. The enquiry is an expression of interest, and properly handled enquiries create a positive impression of the dealership in the mind of the customers. When a customer enquires, they are also

short listing the products as well as the dealerships. Mishandling the phone enquiry often extinguishes all hope of the customer ever walking into the showroom. That is why it is important for dealerships to see the phone call as a precursor of an opportunity, and ensure that prospective customers do not fall through the gaps of a poorly managed sales process or phone system.

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Did you know?

Recently, Op2ma did a phone audit on 12 leading automotive brands covering more than 60 dealerships in Australia.

The purpose was to discover how dealerships, in general, handled the phone enquiry. Based on our experience, the phone enquiry is usually not regarded as important as the walk-in enquiry merely because the opportunity of a sale is more apparent in a walk-in customer than in someone who called to ask about a vehicle.

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Do you know why 50% of all phone enquiries never made it to the sales department?

First Impressions This part of the audit measures the first impression when a call is made to the dealership. Against a checklist of about a dozen items, the shopper measures how long it took the dealership to answer the call, was the call managed through an automated system, was the call successfully transferred to the sales department, and how did the sales department receive the call if the transfer was successful.

Most calls were answered successfully by the receptionist, though occasionally calls are directed to the sales department through an automated system. Most receptionists did a good job answering the phone; the disappointment usually occurs when the call reaches the sales team.

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• Only 62% of the dealerships could answer the call in the sales department within 3 rings.

• Close to 50% of phone enquiries did not reach the sales department – they were either dropped or the customer was told to call back because all the sales staff were too busy to handle the enquiry.

• 70% of calls that do make it were handled professionally and in a friendly manner.

• Dealerships with dedicated call centres or telemarketers able to answer enquiries were more successful

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and consistent in recording the information of the customer for subsequent follow-up.

Core Process This measures a key process of how the salesperson answers the enquiry.

Each call is recorded and checked to see whether the salesperson did the following: • Did they introduce themselves?

• Did they get the name of the customer right?

• Did they answer the enquiry?

• Did they ask for a contact number to follow up?

• Did they give the customer a good reason to visit the showroom?

• Did they attempt to close for an appointment?

The Findings • 80% of sales people never ask the customer for an appointment to visit the showroom. Considering this was the key purpose of answering a phone enquiry, merely asking the customer to visit the showroom would have increased opportunities significantly.

• Almost 100% of sales people did not mention the benefits of buying from their dealership or confirm if the customer knew the location of the dealership. By first not asking the customer to visit the dealership, there

is no occasion to mention why they should buy from your dealership.

• About 65% do a fairly good job of introducing and answering the enquiry but only 45% asked for the customer contact details to follow up.

The impression was that most sales people are courteous and helpful, and able to provide the answers to the questions asked. However, the interaction stops there, and for most customers, it would just be confirming the details of the vehicle that they found on the website first. The phone call failed to bring the customer closer to the sale.

• For rapport building, only 54% were rated as having successfully built rapport over the phone with the caller. This means they were pleasant and friendly enough to create a positive impression on the caller, and considering that each customer will make more calls than visits to the showroom, the appointments naturally go to those able to build rapport over the phone.

Our research showed that most calls were handled as enquiries rather than as opportunities to invite prospects to the showroom, therefore, moving the customer up the sales process.

We believe that most sales employees are not ready for the phone enquiry when it comes through because, in many

dealerships, all calls were transferred to the same line regardless of the caller.

Closing for an appointment This was the most important sign of a successful outcome. Dealerships made the effort to generate enquiries so these can be converted to a walkin appointment. Dealerships are not running information hotlines; they are setting up opportunities to make initial contact with prospective customers.

What we discovered was • Only 26% of all phone enquiries that made it through to the sales department ended with a confirmed appointment. This means that for every 100 phones enquiries, only 50 make it to the sales department.

50 calls were either dropped, not answered, or customers were asked to call back because there were no salespeople available to answer the enquiry. 22 of the 50 customers were asked for their contact details for follow up. And of the 50, only 12 ended with an appointment.

Follow-up This final part measures the effectiveness of the process after the appointment is made. Did the salesperson call to confirm the appointment because we know from experience that a follow-up call increases the odds of the customer showing up significantly? Did the salesperson call when the shopper did not show up?

This again increases the odds of a customer coming into the showroom if the salesperson can get the customer to commit to an appointment. The shopper then rates the quality of the follow-up on a scale of 1 to 10.

• We discovered that only 14% of appointments made were followed up

before the appointment. That is just a mere 3 out of the initial 100 phone enquiries!

The Phone or Internet enquiry is the start of the buying process Properly handled enquiries create a positive impression of the product in the mind of the customers, setting the stage for a sales opportunity. It is the start of the buying process and should be given the same care as a walk-in customer.

Our audit suggests that most sales employees do not regard the phone enquiry to be as important as the walk-in enquiry because the latter is usually more advanced in the buying process, and therefore more ready to buy. This mindset misplaces potential sales enquiries that comes through the dealership phone each day into time-wasting distractions.

More is not always a good thing Advertising can only be effective if a company responds quickly and professionally to the enquiries that it generates. Often, companies focus too much on generating volume in enquiries without putting in place a system of managing these enquiries effectively. It is such a waste that when the customer eventually calls or visits the showroom, there are not enough trained sales employees to engage with these customers. This leads to extensive wastage as prospective customers get lost in a poorly designed sales process, creating the equivalent of “bailing water out of a sinking boat.”

A dedicated line for sales enquiries Having a dedicated phone line for customer enquiries means that when the phone rings, the salesperson is at least psychologically prepared for the call. Usually, we discovered that when a salesperson knows in advance that

the call coming through is a customer, the quality of engagement improves significantly. At the same time, sales people will not be interrupted by internal or external calls not relating to sales.

In dealerships where there is a dedicated team answering phone enquiries, we realised that not only were these calls answered well, the call centres are usually trained to provide information and more important, convert the enquiry into an appointment for the sales team. These calls are recorded in to a system and managed systematically.

The importance of a well-managed sales process Customer enquiries play a crucial role in the development of business and accelerating sales performance. They constitute a return on investment from the advertising invested to generate awareness. Unless a dealership has put in place the mechanism to process and manage these enquiries, most can get lost in the day-to-day running of the business, leading to wastage and inefficiencies.

Although our research features only phone enquiries, a dealership that does not have a proven sales process in place will lose not just call-in customers but walk-in customers as well. Our experience tells us that walk-in customers not acknowledged or attended to is one of the biggest challenges for automotive dealerships everywhere. A busy weekend or a bored sales employee and the prospective customer is lost. Given that it costs the typical dealership up to $535 to generate a walk-in enquiry, can anyone afford to be careless about managing the sales process?

The CSI is not just a number It’s about customer retention and loyalty. And while Fusion’s CSI Coaching Programme is about helping you improve your CSI score, our focus is really about creating satisfied and loyal customers who keeps coming back. That’s the real purpose afterall, isn’t it?

Call 1300 807 177

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COACHING STAFF FOR HIGHER PERFORMANCE

Most employees underperform in both productivity and profitability. Coupled with large staff turnover, managers in automotive dealerships must learn cutting-edge coaching skills to turn this situation around.

POWERFUL 1-DAY MANAGEMENT WORKSHOP In this intense 1-day session, you learn skills and tools that will help you take underperforming staff and move them to another level. Topics include:

Investment $495 plus GST

• Increasing employee engagement • Running effective Performance Appraisals • How to coach staff on and off the job • Strategies to reduce your unfair dismissal risk • Leading-edge tools to grow performance

Book now at www.fusionbusinesscollege.com to reserve space or call 1300 807 177 MANAGEMENT May 2013

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“Increase Profit and Reduce Unfair Dismissals”

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