The Importance of Employee Engagement
While a lot of focus is placed on dealerships retaining customers—and rightly so—employee retention should be equally important when reviewing how to improve your store’s profitability. The data is clear: engaging and retaining employees is a must for any successful business.
But how can dealerships improve this part of their operations? It starts with understanding the importance of employee engagement and retention, and what today's workers need to connect to their jobs in a way that benefits them and you.
Employee Engagement, Retention Pay Off
While the concept of retention is easy to understand, engagement can be harder to pin down. Essentially, an engaged employee is one that has an emotional connection and commitment to their company’s work, mission, or goal(s). These employees care about the organization and its success and feel that their work has meaning for them personally. For businesses that achieve a high rate of employee engagement, it can literally pay.
According to data from Towers Perrins, companies with engaged employees have 6% higher net profit margins and have been shown to increase operating income by nearly20% over a 12-month period. Employee engagement affects multiple key metrics that can help—or hurt—a business’s bottom line, such as turnover and absenteeism, customer satisfaction, and productivity and profitability.
Additional research from The Corporate Research Council found that engaged companies grew their profits as much as 3 times faster than organizations without an engaged workforce. Furthermore, highly engaged employees are up to 87% less likely to leave their jobs. By contrast, an unengaged employee could cost their employer as much as $3,400 for every $10,000 of salary.
Engagement Is Bigger Than Sales
In order to keep employees engaged and retain them long-term, dealerships—like any business—need to offer them more to care about than sales goals or simply not losing their jobs. While staff performance is an important part of a successful business, it isn’t the first step on the road to employee engagement or retention. Instead, research from both McKinsey and Gallup has found several critical areas that can make or break a business’s employee engagement and, down the line, retention rates.
In short, the metrics bear out that today’s employees want and need to feel that their contributions are acknowledged—and rewarded—by their leaders, that the business’s purpose or goals align with their own, that their workplace is welcoming, functional, and collaborative, and that they are offered opportunities to learn, grow, and advance.
While these concepts may sound nebulous, they are very applicable to dealerships. If you invest some time and energy into understanding your team’s needs and making a few changes to actively engage them, your store will see the results in both employee retention and overall profitability. Stay tuned for our second post in this series, which will cover steps you can take to engage and retain your dealership employees.
For even more information on dealership employee engagement, check out the video of our latest Fixed Ops 5 episode by clicking here. FO5 host Corey Smith chats with Strategic DX CEO Steve Apicella on how to increase employee engagement and satisfaction metrics at your dealership. And be sure you're subscribed to Fixed Ops 5 on Spotify, Apple Podcasts or wherever you listen!