Up in Benton, IL, F.B. McAfoos & Company has instituted incentives based on parts department profitability. This has helped keep individual employees honest, and the entire team of employees working together—which would not be the case if incentives were based purely on sales.
F.B. McAfoos recently hired its fourth full-time parts person. Two of the other three have been with the dealership for six and eight years; they handle most of the management duties, in addition to ordering and sales. One does the bulk of the dollar sales volume—wherein lies the problem.
“The guys doing the receiving and dealing with all those small-dollar parts are just as important to the department’s success,” McAfoos points out. “Furthermore, controlling expenses, charging out freight and keeping inventory accurate are all important functions that can be overlooked if you only focus on sales volume.
“We do departmentalized accounting, so it’s been fairly simple to put an incentive program together that’s based on monthly net operating profit,” McAfoos continues. “We always discuss asset management and margins each month before I pass out the checks. We’re still making adjustments as we go along, but this program keeps all employees involved in everything—and that makes the department profitable.”
Poor performance results in no incentive. Fortunately, the “departmental profit” basis of the program keeps parts staff policing each other. “If we were to have an employee who wasn’t carrying his weight, the others have a vested interest in correcting the situation,” McAfoos says. “Since all sink or swim together, there is plenty of reason for each of them to want the others to succeed.”
A Checklist to Creating Accountability
- Establish clear goals and expectations – Always set standards for performance, and put policies and procedures in place.
- Make sure you’ve got accountability leaders within the organization. These will be those managers who challenge the drive and performance of other employees and measure the results.
- Transparent, honest communication enables people to provide feedback about their performance and limit the opportunity to hedge around an issue.
- Develop and implement a follow-up system of accountability, which allows for regular meetings that measure and track performance, productivity and results.
- Focus on the vital few instead of the trivial many when setting company goals. Do the same for individual goals set by each employee.
- Put the proper rewards and recognition in place. These don’t always have to be monetary in nature. Verbal praise, both in the private and public setting, is highly appreciated and motivating.
- Define ownership of each new process and procedure you establish.
- Develop the leadership pipeline. Accountability starts at the top of the organization and works itself down. Owners and managers must strive to perfect their own leadership skills and accountability before expecting others within the organization to do the same.