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5 things you can do to prevent good employees from leaving your dealership.

Article Highlights:

  • Replacing an employee costs on average 150% of their annual salary.
  • According to NADA, average turnover is 43% annually.

One of the key struggles I continue to hear from dealers is the inability to attract and retain employees.

Turnover has become a normal part of the industry, but many sources report employees aren’t leaving for better pay—they are looking for better technology, coaching, training, and opportunities. Take a look around your dealership: Who do you think will still be with you in a year? More importantly, why are they leaving?

Losing employees has a surprising impact on your overall business. Did you know replacing an employee costs businesses on average 150% of their annual salary.

Let’s dig into that a little:

  • According to NADA, average turnover is 43% annually (with a much higher rate coming from the sales department).
  • If the average yearly salary for a dealership employee is $55,000, that translates to $82,500 to replace each employee.
  • In F&I, which has one of the highest salaries and is one of the most profitable departments, DrivingSales found an average dealer will spend $1.6 million each year in personnel replacement costs for employee turnover. If an F&I Manager walks out tomorrow, how much money will you spend to replace them? Can you even replace them?

Think of that same F&I manager. Maybe they excelled in their position and left for another job. Maybe they worked really well with others, knew your business in and out, and gave the best customer service. You may have filled their role quickly, but how difficult was it to replace the work they did in that role? Do you ever wonder what you could have done to keep them from leaving? Would more money or a title change have been enough? Is there something else they were missing in their job experience?

Another thing to keep in mind is your employees are how your customers experience your dealership. Customers may not remember the name of the person that delivered the bad experience, but they’ll surely recall the name of your dealership. It’s no secret that customers want a great buying experience. According to Deloitte, customer experience is three times more important than the vehicle design when making a purchase. Are you bringing your A-team to the customer’s experience or have those employees moved on to new jobs? Is your team ready when they have that one shot to make a great first impression or are you forced to rely on employees coming off the bench?

To keep employees engaged and customers happy, work environment is crucial. Here are a few ways you can start to create a world-class dealership experience for both customers and employees:

Updated technology will have a significant impact on your business. Employees can be more efficient, more engaged, and provide better customer interactions. Additionally, you’ll see a decrease in employee turnover, saving you money and keeping good employees at your dealership. What’s not to love about a better way to do business?

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Director, Product Planning, DMS, Reynolds and Reynolds

Scott Worthington is director of product planning at Reynolds and Reynolds. With more than 28 years of automotive industry experience, Scott leads the team responsible for product strategy for the company’s ERA® and POWER dealership management system platforms. He also manages product strategy for Reynolds eWorkflow, DMS reporting tools and analytics, and a number of other product areas.

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