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How management affects business finances, employee satisfaction

Tuesday, October 3, 2017 - 07:00
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In the last issue of the ABRN MSO Supplement we discussed the importance of establishing leaders in your MSO business (Leadership: Pass it on, July 2017). I covered the difference between management and leadership. Briefly, management is about strategy and organization and coordinating. Leadership is about social influence of others in accomplishing tasks. The difference is in ability to influence the hearts and minds of people. It is what that person feels inside that can be such a great motivator, caused by the words and/or actions of the leader. I established that leaders can be born and they can be developed or a combination thereof. I covered some practical applications of identifying and creating leaders. I suggested that you become a “coach” to help turn some of your managers into leaders. Because this is such a powerful topic and so very relevant to the performance of your MSO, as well as our lives in general, let’s take a deeper look.

What difference does it make? Why bother?
In 1997, Gallup was asked by an extremely successful retailer to measure the strength of their work environment (as reported in “First, break all the rules,” by Marcus Buckingham.) The retailer employed 37,000 people across 300 stores. Each of the stores was designed and built to provide the customer with a consistent shopping experience. The building, colors, product positioning and every detail was honed to give the same brand identity in different markets across the country. Of the employee base, 28,000 chose to participate in a 12-question survey regarding the quality of their work experience. Questions included phrases like, “I know what is expected of me,” “Opportunity to learn and grow,” “Supervisor/Someone at work cares,” “Co-workers committed to quality,” and touched on topics including materials and equipment, what employees do best and the mission/purpose of the company. Answers were on a 1-5 scale.

The results indicated two major categories of performance with startling differences; let’s call them “Stores A” representing high scores and “Stores B” representing low performers. Whatever the company was trying to do for their employees from the center, at the store level, these initiatives were being communicated and implemented in radically different ways. Stores A must have offered a much more engaging work experience. Fifty-one percent of respondents in Stores A strongly felt (score of 5) cared about as a person, yet only 17 percent did in Stores B. Fifty-five percent in Stores A indicated with a score of 5 that they had a chance to do what they do best every day, yet in Stores B only 19 percent gave a 5. “Do your opinions count?” scored strongly with 36 percent in Stores A, but only 10 percent in Stores B. Even though stores were equipped the same, 45 percent in Stores A felt strongly that they had the equipment and materials to do their work properly while only 11 percent felt that way in Stores B. Conclusions were that each store’s culture was a unique creation of the managers and supervisors in the field!

When compared to the store’s performance, the results were compelling. Stores in the top 25 percent had sales 4.56 percent over their budget, while the bottom 25 percent were .84 percent below budget, or a difference of $104 million per year between the two groups. Profit/loss comparisons reflected by the top 25 percent was 14 percent above budget, and the bottom 25 percent missed their profit goals by 30 percent. Employee retention followed the same pattern. Each store in the top 25 percent retained, on average, 12 more employees per year than the bottom group. The cost to the company was estimated at $27 million for the low performers.

This example is a powerful illustration of what many of us know intuitively: that businesses with the best management/leadership perform significantly better in terms of financial results as well as perceived quality of the work environment.

Within our own industry, I-CAR performed research on shop performance before and after a number of shops had their staff participate in I-CAR training classes. They discovered those shops that had environments that contained a culture of learning experienced a very measurable increase in many key performance indicators after training. Those that didn’t have such a culture, ones where people complain and resist training and don’t have the encouragement of management, did not see the performance increases. Again, the difference was in the management and leadership of the shop. Leaders who create such a culture enjoy the benefits of better shop performance.

Leadership style

What makes some managers better performers than others when it comes to leadership ability? I will refer to the attributes and behaviors as “style” because these are the traits that are visible to the observer. Here are my top 10:

1. A real leader listens firsts and acts second.
Someone who jumps to conclusions without first seeking to understand has made a fatal error — for themselves and their team. In order to lead people effectively, you have to take the time to listen and see things from their perspective. Good listening skills can be among the most powerful attributes of the leader.

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