As we know, many meetings are a waste of time but what is not immediately apparent is that they are a waste of money as well. The management meeting is one of the most costly event on any given work day; and the opportunity cost of having managers from different departments, away from work, in a meeting can run into thousands of dollars unless the meeting is carried out effectively.
But what does an effective meeting look like? How do you know that the investment in time and resources to gather is worth it?
These meetings are conducted to drive profit.
How To Run Productive Management Meetings?
A well-structured meeting makes effective use of management time, and should focus on planning for the next 30 days while reviewing what happened in the last 30 days. It should be fact-based and result-oriented. Here are some important tips on how to get the best out of your next management meeting:
- Issue a report on last month’s results ahead of the meeting so that managers can utilise their time in the meeting to discuss issues of value.
- Department managers should submit a 1-page report ahead of the meeting covering last month’s results and identifying the issues requiring action.
- The meeting should be kept as brief as possible, usually no more than 2 hours.
- Detailed minutes with actionable tasks, with deadlines, should be recorded and allocated.
- To minimise interruption to operations, conduct the meeting out of work hours, if practical.
- An external independent facilitator may be invited to formalise the process, chair the meetings, and ensure that the agenda is adhered to.
Meeting Process and Agenda
Limit key performance indicators to 5 for each department. Department managers should provider a 1-page report on these indicators to the Dealer Principal prior to the meeting with a clear ‘due date’. Diagram 1 above provides a sample of a departmental on page report.
|Last 3 Months|
|KPI||June||July||August||August Target||+/- Target|
|Total Labour Gross V Target||55,000||52,000||56,000||58,000||-2,000|
|Retail Labour Sales
|Effective Labour Rate
(Total labour sales/Tech Hrs paid)
|Labour GP per tech V target||8,765||8,678||8,870||9,250||-380|
|Profit V Target||9,315||8,600||10,350||12,000||-1,650|
|Retail labour sales missing target
last 3 months
|All retails invoices <105% eciency to be
signed o‑ by service manager before invoicing
|Pre-delivery turn around has been an issue on back of Junes sales||Investigate the cost of after hour PD to avoid retail labour mix being reduced following large sales
Ensure that each department’s report is included in the meeting agenda or information pack. During the meeting, focus on reviewing the previous month’s action plan items, and identify what worked, what didn’t, and why. Then each department presents their action plans for the next 30 days, and identify their objectives and how they can be achieved. This allows the department managers to work together towards a common goal. It is important that interdepartmental co-operation is encouraged and facilitated during such meetings so that objectives can be met.
The Minutes of the meeting should be comprehensive, and include key action plan items, with responsibilities and deadlines clearly identified.
So what should we measure?
Big Picture Financial Health Checks
Start the meeting with a big picture financial health report of your dealership. This is indicated by the parameters below, and a good way to provide the background for the Management Meeting (Based on Industry Standards):
- Present the total gross profit for the dealership based on per employee per month. This indicator should be greater than $9,000 per employee, per month.
- Present the net profit for each employee per month. This should be greater than $1000 per employee, per month.
- Present the total Staff expenditure, salary & wages (Net of super, FBT, and Payroll tax). This should not exceed 40% of your total gross profit (including F&I profit).
New and Used vehicles
Inventory is a major driver of dealership profitability, and the first report to be discussed should be aged inventory. Report on the value and number of units that have been in stock over 90 days. This should be presented and an amount assigned for “liquidation” since having excessive aged stock will ultimately impact profitability.
The performance of the sales team also plays a critical role in driving profit. Measuring and analysing the relative productivity of each sales person by identifying gross sales generated less their remuneration and on-costs, you can rank the sales team by profitability; rewarding top performers and working on those requiring training.
|Issue||Supply of bull bars for XTV vehicles
delayed, 6 waiting tment before delivery
|Action||Call all 6 customers to determine if happy
to take delivery and have bull bar fitted at
|Responsibility||Sales Manager (John Smith)|
|Issue||Turnaround time for inventory to be workshop tested and detailed now averaging 8 working days – this is too long and causing issues. The issue is detailing, not service reconditioning.
|Action||Advertise for additional detailer online today. For immediate start|
|Responsibility||Used Manager / Service Manager|
Next, discuss the pipeline inventory for the dealership. What stock is coming in and what implications can we expect? Based on current sales run rates, what will this mean for our inventory position next month? For next quarter? Which vehicles coming in maybe an issue? Do we have used vehicles with values that are not in-line with the current market prices? Or declining sales for models that are arriving in the next shipment? Answering these questions, and taking relevant action ahead of time, will impact the dealership’s performance.
Advertising and marketing spend must be an item on the agenda given the significance of this cost. You should have a comprehensive marketing plan in place and not just an overview. Report and discuss key components such as advertising, online and social media strategy and CRM expenditure.
Review sales incentive campaigns against progress, are you are on budget? Is your advertising effective?
Do you need to increase or decrease investment for each campaign? Review the enquiry log against sales ratio, and determine the cost per lead source to ensure a fair return on investment against marketing expenditure.
The Finance and Insurance Department
Primarily, we want to be able to quantify opportunity costs between current penetrations and income per contract against industry benchmarks. If we are below benchmarks, we want to develop plans and initiatives for an incremental 5% improvement. If we are above those benchmarks, we want to determine what we are doing right so we can do more of it.
Assuming we have a water-tight process that introduces all sales to the F&I department, any sales not introduced should be reviewed during the meeting. Why were these not introduced? Are there gaps in our process? How do we avoid or minimise such instances in the future?
Insurance is another key income generator so we want to focus on penetration and renewal rate. How can we improve both? How are we presenting our F&I products? What is the average “writing rate” compared to industry benchmarks
During the meeting, discuss the level of income paid to F&I Managers in the context of penetration rates and income per retail unit. The objective is to identify rate of return for individual managers so as to ensure an equitable but competitive compensation package.
THE SERVICE DEPARTMENT
During the meeting, present and discuss the effective labour rate (Calculated as Effective labour rate = total labour sales ÷ technician hours worked). This is the true measure of the productivity and efficiency of your service department. You may have a “nominal” retail rate of $100 per hour, do you know what the department is producing for every hour paid to a technician? This is the most important profit indicator for the service department.
Present, in monetary terms, what is the impact of a 5% increase in Gross Profit, and then identify areas within the Service Department that can deliver that growth. For example, you may have identified “Wheel Alignments”, as an opportunity, or a complimentary service health check for customers who have not returned for more than a year, the idea is to take practical steps to achieve your 5% goal.
To drive selling gross above 60% ensure that non-productive staff costs are in line with Gross Profit being generated, or review open RO balances and report on any that may have been open for more than 5 days.
Another important area for the Service Department the value of re-work and unapplied time as a percentage of available hours and then convert it into “unsold retail hours”. For example, 20 unsold hours is equivalent to $600 in prime cost BUT is actually $2500 in lost profit if based on $125 per hour retail rate. Therefore, initiatives to reduce re-work can have significant impact on profitability.
Finally, the Service Department should also report on upsell performance. Items such as wiper blades, alignments, light and bonnet protectors, dent repairs can add significant profit to your bottom line, and since the customer is already here for the service, these are additional profit opportunities with little or no cost to implement.
Note: Always present labour sales on per day basis for the month against sales targets, and review each service advisor on labour sales per day against targets. This is an effective way to track progress and productivity at the same time.
THE PARTS DEPARTMENT
The parts department should focus by reporting the following
- What is workshop parts sales to retail labour sales ratio and how does this compare to the target? Also, quantify, in monetary terms, what a 5% increase can do for the dealership. This is an excellent way to provide context to the effort that you will require from your team
- What is the value of parts inventory over 45 days old? Stagnant inventory is a negative indicator and, if not monitored, can balloon into a huge problem. Initiatives to reduce stagnant inventory should be presented and discussed during the meeting.
- Provide a list of wholesale customers with Gross Profit below 18% and what is generated in dollar terms against the overall cost of servicing each of these customers
- Review profitability of top 20 wholesale parts customers since these tend to have the greatest impact on overall profits.
- Split the costs of operating a wholesale business and allocate it to wholesale gross so as to focus on maintaining the required Gross Profit (in percentage) to make the department profitable.
- During the meeting, review all manufacturer programs and progress, quantifying the value in monetary terms for each
Finally, review all manufacturer and supplier incentives and identify our progress towards these incentives. This is to ensure that we have maximised profit opportunities for these programmes.
Each department should also discuss staff-related issues, especially employees requiring help or attention, and getting feedback from other managers on their interactions with these staff.