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IMI Magazine

STAFF RETENTION - Yes, pay is the biggest ‘hook’ after all

The issue of high staff turnover is a matter of continuing concern for dealers and manufacturers. Typically, the cost of replacing an employee ranges between £5,000 to £15,000, with sales executives and technicians featuring at the top of this range.

In addition to the impact on profitability, there is the hidden strain on team morale and, in customer-facing roles, the negative effect on customer loyalty. Customers do not like to see lots of new faces every time they visit, and at a time of lengthening service intervals, dealers need consistency in the customer relationship. However, apart from anecdotal speculation, there is little hard evidence of actual staff turnover rates, and the motivators that encourage employees to stay in their jobs.

These concerns prompted automotive consultants rts, in consultation with the IMI, to undertake detailed research to discover the facts. The research was conducted during March and April with staff and managers in dealerships representing five leading groups across 18 franchises.  Dealerships were chosen to include a range of manufacturers and encompass a wide geographical area of England.

Every employee, including managers, completed a detailed questionnaire asking them to list their top six motivators for remaining in their job. General managers and department managers completed a questionnaire asking them what they thought motivated their staff to stay. Face-to-face interviews were conducted with a sample of managers to further probe their responses and identify examples of best practice retention strategies.

Managers in the darkThe survey revealed that the average attrition rate (staff turnover) was 23%. This is high compared with other surveys (18% - Sewell’s Pay Guide 2004) and other UK industry sectors (16% - CIPD survey 2004, average of all sectors).Broken down by department, the research revealed:Sales – 29%Service – 19%Parts – 25%**Interviews with managers suggested this is due to particularly high turnover of van drivers.

RTS researcher, Rob Jefferson said: “The most worrying aspect of this part of the research was that most managers did not know what their staff turnover rate was. In the main, there was no systematic recording and no setting of targets for turnover.”

Analysing the results from all staff, the most significant motivator in determining whether staff are likely to stay with their present dealership is stated as pay, with 51% of all staff (managers and non-managers) selecting pay as their primary (number one) motivator.

“When the results first started coming in, the rts research team were very surprised. Tradition has it that pay is not so important to people, providing that other motivators are being satisfied,” states Jefferson. “However, the message was overwhelmingly clear.”

There was a wide gap between pay and other primary motivators with job security (15%), training and development (7%) and ‘good team spirit’  (6%) stated as important.

Jefferson comments: “We decided to look at individual groups. This showed that, apart from managers, all staff selected pay as their number one motivator.”

Pay figured more strongly for males than females.  Good team spirit achieves second rating for females, whereas for males it is job security. “This was less surprising,” says Jefferson. “Where males are still probably the main bread winners in a lot of households, you would expect job security to come higher up their agenda.”

The rts team went on to look at other comparisons such as department.Jefferson comments: “It quickly became obvious that, whilst pay was the main primary motivator for all staff, the order in which other primary motivators appeared for different groups of people varied.”

Pay is by far the most important issue for younger staff.  Job security and work life balance was shown to be more important as age increases. Training and development is seen as less important as age increases, and is hardly mentioned as a motivator by the over 50 age group.

What managers said“From the questionnaires and from the face-to-face interviews,” said Rob Jefferson, “we found managers were the only group who did not cite pay as their primary motivator. They stated job security.”

Jefferson adds: “Interestingly, managers thought that recognition of achievement would be a significant motivator for their people. However, staff rated it as less important than their managers.” When asked what other motivators were important for their teams, managers cited development and maintenance of good team spirit, an open management style, the need for staff to be recognised and rewarded for their achievements, and the importance of treating people as individuals rather than as an homogenous group.

RTS managing director Richard Wells said of the findings: “I know that pay as the majority primary motivator came as a surprise to others, as it did to us. However, it is important to recall that our research was conducted against the backdrop of high personal debt, slowing consumer spending and concern about interest rates.

“When asked for the main reasons for selecting pay, a high proportion of the questionnaires contained words such as ‘survival’ and ‘purchasing power’. So, I don’t think we should be so surprised.

“The comments on questionnaires and the interviews with managers suggested that the fairness of pay and transparent structures were also a vital consideration.

“If pay cannot be tackled head on, managers need to address other key motivators and make sure they are fully aware of these and their impact on the different groups with their teams.”

The rts findings were the subject of a recent seminar with industry executives at Fanshaws. The full report is published this month at a cost of £49.50 inc P & P. For a copy, contact Julie Marshall or Claire Negus on 01249 445622 or email enquire@rts-uk.co.uk with your name and address.