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NADA 2008 Highlights: What makes a great leader? (Part 3)

If you missed NADA 2008, this series of articles recaps the major issues covered at this year's event.

The National Automobile Dealers Association represents 19,700 new car and truck dealers. Every year, NADA organizes the world's largest convention for auto dealers, where thousands gather to see the latest products and services geared to dealerships, attend workshops on best practices, and hear industry leaders. 

This year's event was in beautiful San Francisco and spanned 80,000 m2 (700,000 square feet), included 700 exhibitors and 36 workshops, and received 24,000 attendees from all over the world.

Focus on Leadership

A major focal point of the NADA 2008 workshops was leadership, more to the point: what it means to be a leader, and how we can foster a suitable environment within our company so that leaders can flourish.

Several straightforwardly applicable lessons stand out:

Lesson #1 was: Be slow to hire, quick to fire

Lesson #2 was: Our people can and will drive growth

And today...

Leadership Lesson #3: What great leaders do

One of the keys to successfully run companies is the leader’s ability to build teams, and to motivate the entire workforce.

Great leaders are a wellspring of positive energy, and naturally inspire all those around them. Uninspired leaders breed uninspired employees, a “sleepy” culture, and tend to focus on “maintenance” issues instead of “momentum” issues.

Great leaders know that they need all hands on deck in order to get things done, and are convinced of the need to tell everyone where they're going and why, and what each person needs to do in order to get there.

Great team leaders have a vision for their department, something specific and measurable, and in line with the company’s objectives.

Great leaders sustain momentum after the initial launch of key initiatives, persistently keeping everyone energized and focused on the right issues.

Great leaders renounce excuses, and don't allow their team members to use them to explain why things don get done.

Great leaders are catalysts and enablers, not micro-managers. They facilitate decision-making, encourage risk-taking and insist on bi-directional feedback.

Other NADA Highlight posts:

• DMS Panel
• Should I change my DMS? (Part 1)
• Should I change my DMS? (Part 2)
• What makes a great leader? (Part 1)
• What makes a great leader? (Part 2)
• What makes a great leader? (Part 3)

Tags: leadership, hiring, training, NADA 2008

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NADA 2008 Highlights: What makes a great leader? (Part 2)

If you missed NADA 2008, read this series of articles that recap the major issues covered at this year's event.

This year's event was in beautiful San Francisco and spanned 80,000 m2 (700,000 square feet), included 700 exhibitors and 36 workshops, and received 24,000 attendees from all over the world.

Focus on Leadership

A major focal point of the NADA 2008 workshops was leadership, more to the point: what it means to be a leader, and how we can foster a suitable environment within our company so that leaders can flourish.

Along this vein, among the standout courses were Paul Cummings’s “The Halo Effect of Powerful Leadership” and Dave Anderson’s “Identify and Develop the Eight Must-Have Qualities of Effective Leaders”.

Several straightforwardly applicable lessons stand out:

Leadership Lesson #2: Our people can and will drive growth

Successful companies are the ones that fulfill these six basic needs that people in general all have:

Certainty. We all want to experience a sense of safety, of security, at the company we choose to work in. Possible pitfalls: certainty can sometimes breed complacency, as well as boredom.

Excitement. We also like to be surprised, which helps energize us to rally around common goals and projects.

Significance. We want to be recognized for what we do, and to feel that what we do truly matters. No one likes to feel starved for recognition.

Connection. We all want to feel cared for by, and connected to, the company where we've chosen to work. This also holds especially true, and especially so, regarding the people we work with everyday.

Growth. People need to grow, as do companies. Do we, as a company, have a growth program for our people? If we do, does everyone know about it? Is the plan incrementally defined?

Contribute past ourselves. The best people (and if eve taken the time to choose correctly we will have the best people) have a natural tendency to go above and beyond the line of duty. But that will happen only in an environment where everyone feels that the previous five conditions are being met.

Other NADA Highlight posts:

• DMS Panel
• Should I change my DMS? (Part 1)
• Should I change my DMS? (Part 2)
• What makes a great leader? (Part 1)
• What makes a great leader? (Part 2)
• What makes a great leader? (Part 3)

Tags: leadership, hiring, training, Paul Cummings, Dave Anderson, NADA 2008

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NADA 2008 Highlights: What makes a great leader? (Part 1)

If you missed NADA 2008, read this series of articles that recap the major issues covered at this year's event.

The National Automobile Dealers Association represents 19,700 new car and truck dealers. Every year, NADA organizes the world's largest convention for auto dealers, where thousands gather to see the latest products and services geared to dealerships, attend workshops on best practices, and hear industry leaders. 

This year's event was in beautiful San Francisco and spanned 80,000 m2 (700,000 square feet), included 700 exhibitors and 36 workshops, and received 24,000 attendees from all over the world.

Focus on Leadership

A major focal point of the NADA 2008 workshops was leadership, more to the point: what it means to be a leader, and how we can foster a suitable environment within our company so that leaders can flourish.

Along this vein, among the standout courses were Paul Cummings’s “The Halo Effect of Powerful Leadership” and Dave Anderson’s “Identify and Develop the Eight Must-Have Qualities of Effective Leaders”.

Several straightforwardly applicable lessons stand out:

Leadership Lesson #1: Be slow to hire, quick to fire

Companies need to take ample time in finding and selecting new personnel.

It helps to standardize the entire recruitment process. If we can determine the ideal talent and skill sets for every role to be filled, and then perform tests, interviews and other steps in the process accordingly, we have a much greater chance of hiring the right person for each position.

One of the bigger mistakes managers make when hiring is not taking enough time to interview potential employees. If you think about how along people will be with us, this initial investment is time well spent; we should make the effort to do it right instead of trying to push through it as fast as possible.

Once someone is chosen, we need to have a plan in place to train new hires adequately and consistently not only at the beginning of their careers, but for their entire lifetime within the company. This has multiple positive effects beyond professionalizing our team: it is a great motivator, and creates loyalty to the company because people understand that they are cared for.

As a corollary, we need to be as swift as possible to fire someone when we detect that they do not fit within the company's mission, values and standards. Most companies tend to put this of as long as possible, which is natural given the negativity involved.

But is firing a negative act?

Firing quickly is a positive step for the company, true, but it is also good for the employee. Someone stuck in a job they are not right for cannot be happy: they don't like what they are doing, and they know that they will not be able to advance within the company.

Unhappy people suck the energy from those around them, and lower morale across their department. Letting them go gives them the chance to find a job they can perform with enthusiasm and dedication.

Firing quickly also sends a message that team leaders are on the ball. Not doing so tells people that leaders are either unaware of the problem, or are too wishy-washy to do anything about it.

Other NADA Highlight posts:

• DMS Panel
• Should I change my DMS? (Part 1)
• Should I change my DMS? (Part 2)
• What makes a great leader? (Part 1)
• What makes a great leader? (Part 2)
• What makes a great leader? (Part 3)

Tags: hiring, training, Paul Cummings, Dave Anderson, NADA 2008

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Details help Toyota to #1

Toyota recently took over the world #1 spot from GM, and in 2008 they want to sell an ambitious 10.4 million units which would put them well ahead of the pack.

We've all heard of the Toyota Way, the company's management philosophy. Toyota's production system receives the most focus, but a very big part of their success is their attention to detail, and how they communicate with and train employees in Toyota best practices.

Toyota thinks this is especially vital as they enter a new stage of growth and continue to expand across the world:

“It’s extremely important to have the same common Toyota Way infiltrated to employees in all corners of the world,” said Katsuaki Watanabe, the company’s president. “But on the other hand, in each corner of the world, in each region, there are inherent characteristics that need to be respected.” (New York Times).

That's why Toyota is putting a big focus on training centers: they currently have one in Motomachi, Japan, another in Kentucky, USA, and are planning more.

At their Motomachi plant, 3,000 assembly line tasks have been translated into video manuals, showing  "everything from the correct way to hold a screw to the best way to hold an air gun so that a worker’s hand will not tire in a few hours".

Of course Toyota is not immune to falling labor costs in low-cost countries such as China and India. And at the same time, Toyota takes care of its own. As NYT explains:

"... new ideas do not apply only to the trainees. At Toyota’s Tsutsumi plant, which builds the hybrid-electric Prius, Toyota has overhauled the way it delivers parts to the assembly line. The top floor of the plant, built in 1970, has been emptied and turned into a sprawling parts warehouse.

Workers on the plant floor used to choose the parts they needed to install on each vehicle from bins next to the assembly line. Now, a crew of workers upstairs loads the required parts into containers. The bins are placed inside the empty car bodies. Workers need only reach for the appropriate parts. After use, the bins are collected and sent upstairs to be refilled. The process...  has cut Tsutsumi’s labor costs by 20 percent, said Osamu Ushio, general manager for the final assembly division, for two reasons.

First, cutting out the need to pick out parts shortened the training time for temporary workers, who make up one-third of the work force at Tsutsumi.

Second, older Japanese workers who are guaranteed lifetime employment by Toyota but can no longer handle the physical tasks of building cars can shift to loading containers.

That allows Toyota to deploy younger workers, often the temporary ones, who can work faster than their elders at lower wages. They earn about two-thirds of what permanent workers do, or as little as $10.50 an hour, with few benefits. Said Mr. Ushio: “We have to adapt to the changing environment.”

Tags: Toyota, Toyota Way, auto industry, automotive industry

NADA 2008 Highlights: Should I change my DMS? (Part 2)

If you missed NADA 2008, the world's premier event for auto dealers, read this series of articles that recap the major issues covered at this year's event.

This year's event was in beautiful San Francisco and spanned 80,000 m2 (700,000 square feet), included 700 exhibitors and 36 workshops, and received 24,000 attendees from all over the world.

Should I change my DMS? (Part 2 of 2)

Renowned DMS expert Sandi Jerome held of one of the more interesting workshops at NADA 2008, focusing on how to dealers can validate the change to a new and better dealer management system.

In part one we talked about why technology typically fails, reasons why a dealer should look at changing their DMS system, and how to know if a new DMS system pays for itself.

The top five issues dealers look at in a DMS

Reason 1: Cost

In general DMS systems are going up 5-10% every year.

But newer DMS systems are beating out the older DMS systems not only with lower monthly software charges, but also because they include many of the services and extras that the older players charge for.

Newer DMS systems don't charge for proprietary hardware or supplies, as they run on off-the-shelf PCs, servers and printers that most dealers already own. Nor do they have “click” charges for laser printing. In the examples analyzed, a new DMS system can cost up to 65% less than an older system.

A note: One of the big differences with how dealers are staffing their stores is that not too long ago they had no IT staff, whereas today that is not the case anymore, and larger dealers even find the need for an entire IT department.

Reason 2: Manufacturer integration

Dealers need to understand how integrated they really need to be. There are up to fifteen different points of integration between a dealer’s DMS and the manufacturer, depending on the OEM. These include financial statements, parts orders, warranty submissions, recalls, delivery reporting. Manufacturers are working with smaller DMS providers, not just the big two.

Reason 3: All the modules you need

Along with the traditional Parts, Service, Sales, and Accounting/Financials, dealers need a good CRM module as well as F&I. Regarding Payroll, it might be better to look for a third-party solution as you get many more features. And of course, all modules in a DMS need to be integrated.

Reason 4: Multi-company

This is a feature not found in all DMS solutions. A good DMS system will have multi-company functionality in order to allow:

• Individualized and consolidated reporting across all departments

• Individualized and consolidated views of parts, vehicle and customer information

• Parts transfers

Reason 5: Third-party integration

Dealers using third-party add-ons should make sure they can “speak” with their core DMS software.

Dealers have low technology budgets

In general, auto dealers spend much less on technology than other industries. For example, the tech budget of a 200 unit per month, eighty employee dealership will be one third the budget that other industries assign to this area.

Other NADA Highlight posts:

• DMS Panel
• Should I change my DMS? (Part 1)
• Should I change my DMS? (Part 2)
• What makes a great leader? (Part 1)
• What makes a great leader? (Part 2)
• What makes a great leader? (Part 3)

Tags: DMS, dealer management systems, auto dealer software, NADA, NADA 2008

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NADA 2008 Highlights: Should I change my DMS? (Part 1)

If you missed NADA 2008, read this series of articles that recap the major issues covered at this year's event.

The National Automobile Dealers Association represents 19,700 new car and truck dealers. Every year, NADA organizes the world's largest convention for auto dealers, where thousands gather to see the latest products and services geared to dealerships, attend workshops on best practices, and hear industry leaders. 

This year's event was in beautiful San Francisco and spanned 80,000 m2 (700,000 square feet), included 700 exhibitors and 36 workshops, and received 24,000 attendees from all over the world.

Should I change my DMS?

Renowned DMS expert Sandi Jerome held of one of the more interesting workshops at NADA 2008, focusing on how to dealers can validate the change to a new and better dealer management system through a simple step-by-step process:

1. Evaluate current technology
2. Create a technology budget and calculate ROI
3. Understand available technology, mainly newer DMS systems and CRM tools
4. Reduce costs with technology budgets and by avoiding mistakes

Why technology fails

The main reasons surrounding DMS system letdowns at dealerships are staff talent and training, the inability (or perceived inability) to afford a new system, the lack of goals when deploying a new system, and problems with the technology itself.

When a new DMS software solution is deployed, everyone needs to be on board. If just one key manager is not on the same page, the project will fail.

Some of the main drawbacks with traditional DMS systems are their slowness, mainly caused by Windows interfaces grafted on top of old systems, and overall lower productivity compounded by the fact that dealers have more employees than before.

Why a new DMS system?

In addition to today’s imperative of reducing monthly costs, there are many reasons dealers invest in a new dealer management system.

But before making any decisions, dealers should be very clear about what they would like out of their new system. They may want to increase vehicle sales, increase service business, improve customer service and satisfaction, increase staff productivity, and improve collections.

A list should be made, and DMS alternatives graded accordingly in order to find the best fit for the dealership

Special care needs to be taken with staff training as each member has their own unique knowledge and special needs based on their experience. Hands-on on-site training, that is sitting next to the user as they use the system themselves, looks to be the best way to train users. Class training is a less effective method.

Most DMS providers are currently focusing on improving and diversifying their training initiatives.

A new (and good) DMS system pays for itself

Dealers need to learn two vital things:

How to budget for a new IT investment

A new DMS system has initial software costs (licenses and training) plus several associated costs such as hardware upgrades, increased Internet bandwidth. DMS monthly costs include software support; new staff needed to fully leverage the DMS, such as a CRM Manager; and increased printing and phone costs related to increased marketing activities.

How to calculate the ROI on a technology investment

Ms. Jerome provided a blueprint to help dealers understand in what areas they could expect increased revenue thanks to a new and better DMS system, in order to compare against the fixed and initial costs discussed before, and thus calculate the estimated return on investment. The speed with which a dealership can recoup its investment in a new DMS system was eye-opening.

Next: The top five issues dealers look at in a DMS

Other NADA Highlight posts:

• DMS Panel
• Should I change my DMS? (Part 1)
• Should I change my DMS? (Part 2)
• What makes a great leader? (Part 1)
• What makes a great leader? (Part 2)
• What makes a great leader? (Part 3)

Tags: DMS, dealer management systems, auto dealer software, NADA, NADA 2008

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Accountability

´Nuff said.

Reprinted with permission from Savage Chicken.

Tags: accountability, Savage Chickens, Doug Savage

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NADA 2008 Highlights: DMS Panel

This post is part of a series that will present a brief recap of the major issues highlighted at this year's NADA (National Automobile Dealers Association) Convention and Expo, held February 9-12 in beautiful San Francisco. This is the largest event in the world held specifically for automotive dealers.

The day before the event, accounting and advisory firm Dixon Hughes and industry magazine Ward's Dealer Business hosted a panel titled "Choosing your DMS: What You Need to Know", where the major North American DMS providers answered predefined questions, and even a few from the audience (which put a couple of providers on the spot).

In a nutshell, the DMS scenario in North America looks like this: on the one hand you have Reynolds & Reynolds (recently merged with ex-#3 UCS) and ADP as the clear and historical leaders. On the other you have all other DMS providers, though some seem to be a bit ahead of the pack, like AS/400 based Arkona (now owned by DealerTrack) and ACS (current #1 in customer satisfaction). 

Reynolds (some 10,000 clients) and ADP (around for 35 years) are enormous companies with systems that have been around for a while, which is to their advantage regarding stability and acceptance. But their systems are not Windows-based, and there are some database issues that work to their disadvantage.

The newer players, in my opinion, have a hard time differentiating among themselves: it's not very clear why (if) one is better than the other, or how they position themselves against each other.

Major issues discussed in the DMS Panel

Third party access to data.

The issue can be reduced to a simple question: to whom does a dealer's data belong? Some DMS providers are seen as not very cooperative when it comes to letting a dealer give access to data to third parties. DMS firms who do this say they are just protecting data integrity, and reminded that they have paid third-party certification processes in place to address this issue and safeguard dealer data. Pull vs. push strategies were discussed.

Contract terms.

Reynolds and ADP typically have long (60 month and more) term contracts. Some of the newer players have zero month obligations. Of course both sides defend their position on this issue: the former cite client preference for longer terms, better terms, and the "stability" factor; the latter highlight flexibility and confidence in their product that allows them to provide shorter contracts.

Pricing.

Everyone was put on the spot by the panel moderators to cite pricing for a "typical" dealership (200 units a month), though somehow ADP suavely managed to sidestep the issue :).

There is a marked difference between the top two (Reynolds & Reynolds, ADP) which can reach $10,000-15,000 per month , while for the rest it was mostly in the $1500-2000 range. As was expected, all sides cited the justifications and benefits of their pricing models.

DMS contract disputes.

What happens when a dispute between a DMS provider and a dealer reaches an impasse? Some providers cut off the system. Some smaller providers took the opportunity to state that they do not.

Dealers are not taking advantage of their DMS system.

This is an extremely important issue, though it was not addressed at length as it was not really the focus of the panel.

The Dixon-Hughes moderator, Wayne Fortier, stated that dealers on average feel they use about fifty percent of what their DMS has to offer. From our own experience, this problem holds true all around the world, though I'd say dealers probably take even less advantage of their DMS system outside North America.

Reynolds and ADP stressed their training capabilities via CBT (computer based training) and virtual classrooms, plus their armies of people in the field.

The Windows-based DMS providers focused on their ease of use and thus shorter learning curves (which I think is in many ways true, but can be argued both ways), and some mentioned specific measures they take to improve utilization, such as annual or bi-annual visits to each dealership, plus online help tools.

Final comments.

Each DMS supplier was asked to close out the panel with their final thoughts, prompting a marked difference between how the old and the new players feel about their position, and how they position themselves in the marketplace.

As expected, Reynolds and Reynolds and ADP's closing remarks were based on their longevity and stability. "Customers have been with us for 20 years," said ADP's Robert Karp.

Meanwhile, the common thread that ran through the other DMS's final comments was "There are alternatives."

Other NADA Highlight posts:

• DMS Panel
• Should I change my DMS? (Part 1)
• Should I change my DMS? (Part 2)
• What makes a great leader? (Part 1)
• What makes a great leader? (Part 2)
• What makes a great leader? (Part 3)

Tags: DMS, dealer management systems, auto dealer software, ADP, Reynolds and Reynolds, Reynolds, UCS, ACS, Arkona, DealerTrack, Dixon-Hughes, NADA, NADA 2008

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Lexus and quality

When Toyota began its Lexus initiative in 1989, their overriding goal was to stress quality and customer satisfaction above all else.

But many of the people who would be tasked to carry out this project, in fact the ones who would be directly in touch with Lexus customers, would not be working directly for the automaker but for dealerships.

The solution was an extremely stringent dealer selection process that focused mainly on the dealer's customer satisfaction performance: out of 1,500 existing Toyota dealerships, only 80 (that's 5 percent) made the cut.

Today Lexus dealers are widely known for providing exemplary customer service. The flip side is that Lexus dealers are by far the most satisfied of all dealer groups according to NADA's annual dealer attitude survey.

Tags: Lexus, Toyota, customer satisfaction, best practices

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Eleven rules of choosing business management software: Rule 10

Continuing with our suggested list of eleven "rules" to help guide small and medium sized companies when they evaluate potential suppliers of business management software...

Rule 10: Be cautious of hidden costs

The deployment of a new DMS solution at your dealership will include a significant investment in effort, time and money.

In addition to the charges you will pay your supplier for software licenses and the deployment itself, there are other types of costs that will influence the system’s total cost of ownership throughout its life-cycle within the dealership.

These “hidden” costs can be significant in the short and long term, and it is smart to analyze them before committing to a software supplier.

Here are the main hidden costs that you need to look at:

Hardware
Modern systems are Microsoft Windows®-based and thus work with standard, off-the-shelf hardware that you can buy at any computer shop.

This includes user PCs, servers and printers.

Some suppliers require their customers to purchase proprietary hardware, which is sometimes leased by the supplier themselves. This type of equipment is more expensive than off-the-shelf hardware.

Training
A software system developed for the Windows platform offers a simple and user-friendly interface, one that users are already familiar with.

This not only makes training simpler, but also means a faster learning curve for new employees. In today’s world any new employee you hire will most likely already know how to use Windows.

Extra charges for using the system
Some suppliers charge extra fees the more you use the system, such as transaction or printing charges. Be sure to ask your supplier about this.

Posts in this series:

• Rule 1: Make sure the new system can accompany your company’s growth

• Rule 2: Does the system stay up-to-date regarding fiscal compliance?

• Rule 3: Attend a demo

• Rule 4: The system should be flexible

• Rule 5: Training is essential

• Rule 6: Choose a supplier that provides more than just a system

• Rule 7: Ask how technical support is handled

• Rule 8: Be wary if the system is too simple

• Rule 9: Discounts can be pyrrhic victories

Tags: Autologica, DMS, ERP, SMB, SMBs, dealer management systems, auto dealer software, automotive, auto industry, automotive industry, auto dealer, auto dealers, car dealer, car dealers, motor vehicle dealer, motor vehicle dealers

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