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Creating and Cultivating LOYALTY

Creating and Cultivating LOYALTY

July 1, 2016

6 minute Read

As every small business owner knows, getting good help and keeping it almost seems to require a crystal ball.

That can be triply true for the car wash entrepreneur. The front-line staff has a hard job in poor conditions and depends on tips for pay incentives while losing days of pay to bad weather. Just the type of job the average worker might keep until he/she can find a steadier gig.

And the managers, usually “grown” from the more promising front-liners, can easily washout too. And that is expensive. Every manager needs to be trained, and it may take two years to get the experience to ensure the store is where it should be in terms of profitability.

Just ask Miles Johnson, owner of MILES the Autos Spa and MILES Express in Franklin, Tennessee, who has been routinely 50-percent down in staff on a monthly basis for the past couple of years.

That is happening at a time his business has boomed by about a third – from 7,000 to 8,000 cars a month two years ago, to 10,000 to 11,000 a month now.

Call it the curse of an improving economy: more disposable income for professional detailing, but more jobs available for the labor pool.

“That means more overtime opportunities, and that is both good and bad. They get paid more, but it wears them out, especially in this weather,” Johnson said. “We have seen a real economic boom in the area, so the wages have become more competitive and this is a hard job. It is 100 degrees with a heat index of 110, and you get one car done and turn around and there is another one.”

Providing $200 retention bonuses for new employees after three months on the job and $200 referral fees to staff have helped some, but not enough. He is running regular ads on Hispanic radio and TV, which has helped temper the staff storage, but it is a constant battle.

Retention has its roots in the right hire — more than the right bonus

Carl Howard, the owner of the Autobell Car Wash chain across North Carolina, Georgia, South Carolina, Virginia and Maryland, contends there is no solution to the front-line employment issue except constant hiring, since most front-line employees last six to 12 months.

His 73 stores try to address that by heavily recruiting in high schools and colleges. They will provide scholarships from $500 to $2,500, which employees can apply to books, rent or practically anything, to tuition-only reimbursement for employees studying something applicable to the business.

Howard says the system ensures his stores stay fairly fully staffed despite having an 80 percent annual turnover rate.

The bigger issue, he says, is losing managers, because of the time investment needed to develop a good one. “It is difficult to give you a dollar figure, but a first-year-manager is expensive: they are learning… they are not as productive,” Howard said. “It is the third year where he really kicks into gear. So if you have managers with more than three years of experience, you are going to really benefit.”

A decade ago, his turnover rate with managers was 50 percent. They couldn’t get productive enough to make enough incentive pay, which has provided – at least until new Department of Labor rules kick in – the bulk of their pay.

“We’re at 15 percent turnover now,” he said. “Quite frankly, before we were making bad picks. We just spend a lot more time now picking the right players.”

His upper-management staff started using a personality assessment test to see how potential hires matched up to a profile they had created of their ideal manager, based on their top 20 percent of performers, and put a bigger emphasis on interviewing.

Then they instituted better training. The whole process took about seven years to whittle down the turnover rate, Howard says.

“It got us to focus on what makes managers successful,” he said.

The next level of incentives: Too much or just enough?

Crew Carwash in central Indiana has decided to go all-in on a new incentive plan to keep its college students as managers after they graduate: subsidizing their student-loan payments.

It launched a program in July and estimates that 50 team members at its 27 locations will take advantage of the $100 monthly payment.

The subsidy is paid directly to the lender and can reduce the manager’s loan costs by 25 percent, allowing him or her to pay an average student debt of $30,000 in eight years instead of 10.

Crew sees it as a natural extension of the tuition incentive of up to $2,500 a year they had been offering to employees in college.

“We want our team members to know we are invested in their future,” said Bill Dahm, CEO of Crew Carwash. “This initiative is something we’re really proud to offer to our team members, and it will also help us to continue to attract and keep top talent.”

The increased and special benefits should help because they are what millennials are often seek when looking for a job, said Jennifer Deal, co-author of “What Millennials Want from Work,” contributor to the Wall Street Journal’s expert panel on leadership and a research scientist with the Center for Creative Leadership and at the Center for Effective Organizations at the University of Southern California.

Bob Schrum, owner of Flagstop Car Wash in Virginia, is skeptical about how broadly a student loan repayment assistance plan can be applied across the industry. Or rather whether it needs to be.

“It is not like we’re getting a bunch of people rolling in here with huge debt,” he said.

At least 75 percent of his managers at his eight locations have been with him for more than a decade, and he credits two things. They have been earning good pay, experienced ones averaging $50,000 to $60,000 with some earning substantially more. And the fact that the company takes a personal interest in them can benefit them in other ways.

Schrum, who started his business career as a land developer and landlord, says he has good relationships with a number of small bankers. So he counsels managers on home purchases and, in some cases, rental property that allows them to multiply their actual wealth.

Then he vouches for them at the small banks where he knows the executives. “I don’t know that we have a manager who doesn’t own their own home right now,” Schrum said. “We not only have business relations with the banks but we have a friendship, and typically I’ll call up and say my manager is getting ready to buy his first house. I don’t know of one who has been turned down as long as his credit is OK.”

Deal’s research indicates that Schrum’s personal touch can be effective at creating loyalty from managers or staff. Johnson says his company realizes communication and flexibility in hours are paramount for a good work environment. So is letting staffers know their ideas count.

“We try to treat employees very, very fairly – they are like family,” he said. “Every employee is encouraged to feel like they have the empowerment to fix the problem.”

Feeling appreciated both as a person and as an employee is important for retention because Deal, the workplace guru, says that according to her research, 40 percent of staff do not feel appreciated.

Her research also shows employees who do not feel appreciate are much more likely to leave, and, as Howard noted above, losing mangers can be an expensive problem.

“The good news is that it is a fixable one,” writes Deal. “Managers at all levels need to remember that while striving for excellence is important, showing that you appreciate the hard work of your staff is fundamental engagement and retention. We find that employees need to be told they are appreciated more often than they are currently hearing.”

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