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Let’s look at the Law of Diminishing Return as a measuring tool to use in the decision to hire more people, regardless of the department in your dealership.  I would certainly search Google and read as many examples as you possibly can on this economic law. Let me give you an example. Let’s say you have an acre of land and you want to plant apple trees there. You hire a young kid to help you plant these apple trees. He comes in the first day plants two apple trees in this one acre of land. The next day he comes and he brings a friend with him you also hire him. Each of them plants two trees and you have four trees for that day. The next day they bring another friend and you got three kids planting these apple trees and they each plant two for a total of six apple trees planted for that day. The next day they bring  a fourth person, they go to work planting  apple trees, the first three kids plant two each but the fourth kid only plants one and then you hire another and another and another and at some point the number of trees being planted by each person is going to diminish. Your return is going to diminish based on the output from the  workers that you put in that one acre of land so what does this have to do with hiring people in the car business? Here’s our opinion there are three stages in the Law of Diminishing Return,  input increases output, input  equals output , input decreases output. Most dealers never get to that third stage, what we refer to in the car business as flooding the floor.

I’m not advocating flooding the floor at all, however I want to make my decision on when to hire and how many to hire is based on economics not based on any other formulas, not based on traffic count {Who is REALLY counting the traffic?} not based on “number of desks or offices I have available” or “that’s what we normally run with”. The physical layout of your property or size is a factor that doesn’t change; the only factor that’s going to change is the number of people that you bring in to do their jobs, to sell, to work in BDC, Internet, Service, Body Shop, Parts, Admin, etc. Every department uses the same economic law, now when all the factors are the same and the only factors that change are the number of people that you hire at some point this is obviously when the output will start to diminish. You’re going to see that the morale goes down, sales go down, so you’re going to want to change a factor or  two  that will increase your sales and service revenues . How to vastly increase sales and revenues without buying more land or breaking the bank with additional costs and promotions will be covered in my next blog about #automotiverecruitment .

ABS….Always be Staffing My Friends

Craig Lockerd

Founder/President; AutoMax Recruiting and Training

President; AutoMax Hire

V.P.; Recruitment HQ


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