In a recent article in Reader’s Digest, the readers were advised to contact the Internet manager at a dealership to get a good deal. I was pleased to see the recommendation since I’ve been a long time proponent of this as a management position and happy to see the title, “manager” instead of salesperson.
When I recently visited a dealership and was gathering some information for a pay plan analysis, I was surprised to find the Internet manager was paid using the same pay plan as the salespeople. This manager didn’t have a staff to manage, so it appeared that the title was only a title. When I asked the controller, she said, “He’s not a real manager.” That makes me wonder, “What constitutes a real manager in a dealership?”
My first management job in this business was another non-real manager; the F&I manager. I had some of the perks of being a manager; a demo, an office and a small base salary. I didn’t attend managers meetings or manage a staff. Two things defined me as a manager: the base salary and my control over the computer system. Computers were just starting to arrive and my self-declared expertise of the computer system helped elevate me over my prior F&I managers that were considered glorified sales people. This was a long time ago – before everyone had truly “bought in” to the need of F&I managers. When Internet managers complain to me about their treatment and pay, it is easy for me to understand their situation since I went through it over 30 years ago. The two things that I ask are, “Do you have a base salary and what do you do to earn it?”
Over the years, I’ve worked on getting dealerships to adopt my tri-method of developing pay plans. It starts with the burden on the employee. Each employee should be able to define how much they think they should earn and how they will earn it. Using the tri-method of salary, commission, and bonus; my salary as a controller had all three elements: I had a large salary since I did over 265 tasks to earn it. I know this because I recently developed a product, Redbook that counts and manages how many tasks we do in the accounting office. E-mail me if you’d like a list.
My commission was 10% of the savings that I could find. This was key to my motivation. Rather than being focused on the month end close, I was obsessed on new ways to save the dealership money and earn my 10% commission. Using a download from our DMS, I developed a spreadsheet that grouped expenses by the item rather than account number. This enabled me to find these individual items to reduce.
The third part of my pay plan was based on customer satisfaction and was dealership-wide. Those three things – salary, bonus, and commission should be in each pay plan; thus the tri-method.
Every manager, including an Internet manager should have these three things in their pay plan. It is easy to determine commissions; most Internet managers are paid a percentage of the gross on the deal. Hopefully they already have a bonus based on some objective for their department — closing ratio, response time, net profit for the department, or customer satisfaction.
The tough part is to determine a fair salary. It is important not to get this mixed up with a guarantee. A manager might say, “I want a guarantee of $5,000 because I’m worth it,” but you should be able to get past that guarantee with an effective pay plan. I use in my pay plan a spreadsheet to rank how much of that $5,000 should be commission, bonus, and salary. For a highly task-based job like a controller, the salary is about 90%. A sales-based position like an Internet manager would see a much lower percentage based on tasks.
If you’re looking for a higher base salary, it is time to determine what tasks you can do for the dealership to earn it. There are hundreds of things that can be done to increase profit and protect the dealership involving technology. An Internet manager might have the perfect skill set to take some of these over and earn that base salary and be on the way to becoming a “real manager.”