ROEI, That’s Return on Employee Investment
There has been little change when it comes to the functions necessary for dealership workforce management over the past 20 years. Understanding the costs of workforce management can help dealers determining the ROI of employees. Recruiting, employee training, and performance management remain the most resource intensive management activities in the average daily efforts for managers at dealerships and service centers.
Employee Costs Are a Significant Investment
The top ten most expensive daily management activities average thirty-eight cents per employee per day. The cost of replacing one employee making $17.00 per hour is $10,500, and costs are more than double the annual salary for replacing employees making over $50,000 per year. Total employer compensation costs for private industry workers averaged $31.53 per hour worked in September 2015, with wages and salaries accounting for 68.6 percent of these costs, while benefits accounted for the remaining 31.4 percent according to the Bureau for Labor Statistic. No matter how you measure it dealerships are investing a considerable amount of money in managing and compensating their employee. The question for many dealerships is “are we getting a good return on that investment?” and “how can we improve the ROEI?”
What Factors Should be Considered for Improved ROEI?
For dealerships that want to improve their return on employee investment and ensure that for every dollar invested they receive the best return there are two key areas to consider:
- Improving staff efficiency
- Attracting and retaining high quality employees
How Can HR Software Help Measure Employee Efficiency?
While the functional areas of workforce management have remained constant there has been a major shift in the tools available with multiple options for HR software. Just like a mechanic needs the right wrench for certain repairs, the right HR software is a tool that HR staff, managers and employees use to become more efficiency in task management. HR software should also provide the ability to measure improvements in staff efficiency with reporting on areas such as time to hire, turnover and employee performance. These are critical metrics but only half of the equation of improving ROEI.
How Attracting and Retaining Affects ROEI
Where HR software can really offer improvement in ROEI is in attracting and retaining high quality employees. This starts with streamlining and improving the hiring process so that dealerships can attract sufficient high quality applicants and provide those applicants with a good impression of the dealership throughout the hiring process.
Dealerships are competing for talented employees just as much as they are competing for customers. If Dealership A requires an applicant to come into the dealership to fill out a paper application and then it takes days to schedule interviews, process background checks or receive a job offer the best applicants with become the best employees at Dealership B. Dealership B who offered an appealing career center on their website, online employment application process, ongoing communication through the hiring process and fast decision making through the use of automation of assessment testing, interview scheduling and background checking. Once an employee is hired they need to be engaged and optimally productive for a dealership to realize maximize ROEI.
Engaged Employees Improves ROEI
Employees who have access to the information they need, whether it is information on available benefits to policies and procedures report higher levels of job satisfaction. Employees who receiving ongoing training and performance feedback report higher levels of engagement. An "engaged employee" is one who is committed to and enthusiastic about their work and so takes positive action to further the company’s reputation and interests.
Employees who are both satisfied and engaged are the most productive employees, the type of employees that dealership that dealership want to retain. Satisfied and engaged employees are also more likely to remain with their current employer. Dealerships that can not only hire top talent but keep that talent satisfied and engaged with always see the biggest return on employment investment. Dealerships that have the highest return on employee investment are those dealerships with the best bottom line results.