2016 - Orange County Automobile Dealers Association OCADA

1st Quarter 2016, Volume 58, Issue 1
T H E O F F I C I A L P U B L I C AT I O N O F T H E O R A N G E C O U N T Y AU TO M O B I L E D E A L E R S A S S O C I AT I O N
PAGE 6
AN INTERVIEW
WITH 2016 OCADA
PRESIDENT JOHN OH
PAGE 12
JOIN YOUR FELLOW
AUTOMOTIVE LEADERS
ON MARCH 16TH FOR
DEALER DAY
PAGE 24
NADA FORECAST: A
RECORD 2016
F E R R UZZO & FERRUZ Z O
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Negotiating and Drafting Buy-Sell Agreements
Negotiation of Computer Software, & Hardware agreements
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Negotiation of Executive Compensation
Agreements and Buy-Ins


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Estate Planning for Dealers
Negotiating Capital Loan and Lender Agreements
Relocations
Negotiating Government Loans and Incentive Agreements
Dealings with Manufacturers
Litigation Support



Protests before the New Motor Vehicle Board
Customer Dispute Resolution including lemon law claims
Hearings Before DMV, AQMD, RWQC, OSHA,
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Litigation in all State and Federal Courts
Represented Dealerships in seven of the Arbitrations in
California regarding the GM Bankruptcy
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CONTENTS
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11
12
14
15
19
21
23
24
26
28
AN INTERVIEW WITH 2016 OCADA
PRESIDENT JOHN OH
NADA DEFENDS DEALERS AT HOSTILE
FTC PANEL
CNCDA DEALER DAY
MARCH 16, 2016
GET TO KNOW YOUR LEGISLATOR:
ASSEMBLYMEMBER TOM DALY
OCADA IN THE DISTRICT
NADA PAC: NEW NAME, SAME GOAL
OCADA WELCOMES KIM MCPHAUL
MEMBER SERVICES MANAGER
IN MEMORIAM: ROGER MILLER
NADA FORECAST: A RECORD 2016
THE “LOYAL” NON-PERFORMER
OCADA WELCOME TO OUR NEW
ASSOCIATE MEMBER
OC DEALER is a Publication of the OrangeCounty Automobile Dealers Association
3737 Birch St., Suite 220
Newport Beach, CA 92660
www.ocada.org
Phone: 949-428-5050
Fax: 949-428-5054
OCADA
3
BOARD OF DIRECTORS
PRESIDENT
John Oh
Calendar of Events
March 16, 2016
Lexus of Westminster
VICE PRESIDENT
K.C. Heidler
Kia Depot
Tom’s Truck Center
TREASURER
Ben Rodenkirk
March 31-April 3, 2016 NADA 2016 Convention
and Expo
Las Vegas, NV
April 3, 2016
AIADA Annual Meeting
and Luncheon
Las Vegas, NV
May 10-11, 2016
AIADA International Auto
Industry Summit
Washington D.C.
June 6, 2016
52nd Annual OCADA
Golf Tournament
Mission Viejo Country Club
Norm Reeves Acura Mission Viejo
AUTO SHOW CHAIRMAN
Allen Moznett
Toyota of Orange
DIRECTORS
Cliff Allen
Allen Cadillac GMC and Hyundai
Miles Brandon
Capistrano Volkswagen
Capistrano Mazda
Michael Kitzmiller
Ford and Mazda of Orange
James Renick
Renick Cadillac Subaru
David Simpson
Simpson Buick GMC
Simpson Chevrolet of Garden Grove
EXECUTIVE
DIRECTOR/SECRETARY
John Sackrison
©2016 Orange County Automobile Dealers Association | The newsLINK Group, LLC. All
rights reserved. OCDealer is published four times each year by The newsLINK Group,
LLC for the OCADA and is the official publication for this association.The information
contained in this publication is intended to provide general information for review and
consideration. The contents do not constitute legal advice and should not be relied on
as such. If you need legal advice or assistance, it is strongly recommended that you
contact an attorney as to your specific circumstances. The statements and opinions
expressed in this publication are those of the individual authors and do not necessarily
represent the views of the OCADA, its board of directors, or the publisher. Likewise, the
appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. OCDealer is a collective work and as such some articles are submitted by authors that are independent
of the OCADA. While OCDealer encourages a first print policy, in cases where this is
not possible, every effort has been made to comply with any known reprint guidelines
or restrictions. Content may not be reproduced or reprinted without prior written permission from OCADA or The newsLINK Group, LLC. For further information, please
contact The newsLINK Group, LLC at: 855-747-4003.
4
OCADA
CNCDA Dealer Day
Sacramento, CA
Interesting
OC Auto Fact:
192,263 new
vehicles were
sold in Orange
County in 2015.
4120 Concours, Suite 100
Ontario, CA 91764
Phone 909.948.9990
Fax 909.948.9633
www.gyldecauwer.com
An Interview with 2016 OCADA
President John Oh
General Manager,
Lexus of
Westminster
Did you always aspire to be part
of the automotive industry? Give
us a brief history.
I started selling cars in college
as a way to pay for college, and
discovered what a great industry
it was to be in. I have been in the
business ever since.
Describe your background. What
did you study in school? Have
you always lived in California?
I have been a California resident
since I was three. I attended
California State University,
Fullerton, where I studied
political science.
What’s the most rewarding part
of your career?
The rewarding thing is
6
OCADA
excitement of not only our
customers, but also our
employees. Some of the most
innovative and hardworking folks
are in this industry. They have a
lot of passion for the business.
Are there any individuals that
have inspired you over the years?
I am inspired by my Dealer
Principal, Bob Longpre, who I
have worked with for 23 years.
Bob has been in the automotive
business for nearly 50 years.
What challenges have you faced?
Challenges I have faced come
from working in a constantly
evolving business in terms of
what consumers want from cars,
and the way they want to receive
their information. I think moving
forward, this is still going to be
a great industry where people’s
cars exemplify their personalities.
Other challenges include things
out of our control such as the
economy and the cost of goods.
Where do you think the auto
industry is headed in the short
term, and the long term?
In the long term: Manufacturers
will be dealing with both larger
and smaller retailers.
In the short term: Challenges due
to things out of our control such
as interest rates and generally
what’s happening with the
economy. I am optimistic about
the signs out there. Auto sales in
2016 should be as good as 2015,
which was an all-time record for
the industry.
What keeps you involved in
OCADA? What inspired you
to serve as a leader in the
Association?
I think you need to have
involvement at the very least, to
protect your business interests,
and to stay informed as far as
where the government and the
buyer are going to go. It’s really
a defensive move to say we
need to further the industry. I
believe dealers wield a lot more
control than they think they do,
and that we collectively have a
lot more strength. It’s important
for all of us to stay involved not
only with OCADA, but with our
state association. There are a lot
of groups working against us,
and we need to show them how
JUST PUT IT ON
THE COMPANY
CARD…NOBODY
WILL NOTICE.
THEY’RE WORRIED
ABOUT OVERTIME.
I’M JUST WORKING
OFF THE CLOCK.
important our business is to the
state.
What will OCADA do to
continue uniting dealers and
strengthening the voice of the
industry in the coming months?
To share with the world all
the good things we do in the
community, such as providing
scholarships. We need to
collectively tell our legislators
(especially those in-state) how
our interests align with the
interests of the state. I believe
the more successful the auto
industry is, the better things are
for the state in terms of revenue
and employment. The industry
provides great paying jobs.
What do you think makes OCADA
membership invaluable?
I think the average member may
not realize how involved OCADA
is in protecting the industry. One
of our challenges is to keep our
members informed about how
much work is going on in the
background.
Describe your all-time favorite
ride (it can be one you’ve owned,
or something on your wish list).
That’s a tough question. We had
a Lexus LFA Nurburgring edition.
There were only 50 of these cars
made. I still have a little seller’s
remorse from selling it.
Tell us about your family.
I have one son, Connor, who is
3-1/2-years-old. My wife, Sonia,
and I have been together for 20
years.
What’s your favorite way to
spend your free time?
I spend most of my free time with
the family. I do however try to
play as much golf as possible!
What you don’t hear
can still hurt you.
YOU’RE REALLY
SHOWING OFF
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2/1/16
OCADA
7
11:39 AM
C E R T I F I E D
P U B L I C
A C C O U N TA N T S
“Automotive Accounting Specialists”
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Compliance and accuracy
10
OCADA
NADA Defends Dealers
at Hostile FTC Panel
By Jeff Carlson
I
t has been no secret that while some government
regulations are necessary, many have adversely
affected local dealerships. In the course of a year,
NADA leaders and industry allies met with elected
officials and federal regulators to discuss mutual
concerns. And a recent Federal Trade Commission (FTC)
panel showcased that dealers have a tough job ahead
of them.
On January 19, the FTC held a one-day workshop in
Washington, D.C., on the topic of auto distribution
and the state laws that regulate it. Unfortunately,
the proceeding was not a balanced one. Many of
the FTC speakers, as well as the supposedly neutral
academics and economists invited by the Commission
to participate, brought preconceived attitudes that
were hostile toward the franchise system—and
counterproductive to the dialogue. The panel quickly
revealed an imbalanced agenda that resulted in an
exceedingly one-sided discussion.
Still, that did not deter NADA and those speaking
on behalf of our franchise system. The dealer
representatives who were permitted to speak,
including NADA President Peter Welch, were very well
prepared and ready to openly engage with the FTC.
They all presented informed, credible and effective
counterarguments to every point raised by the FTC and
its manufacturer invitees.
Respected auto analyst Maryann Keller, the managing
partner at Maryann Keller & Associates, cited empirical
evidence showing that intra-brand competition
significantly lowers new-car prices. The valuable
input rebutted claims that a direct-sales model
would benefit consumers. Keller also explained the
importance of franchise laws to the preservation of
intra-brand competition. Moreover, NADA’s media
relations team did a stellar job of balancing out the
coverage by generating a series of positive articles
about the franchised dealer system.
The process now moves to the written comment stage.
To combat this FTC action, NADA will be preparing
and submitting a comprehensive set of comments.
We will continue to work closely with ATAEs, dealer
lawyers, dealer accountants, and other third parties to
ensure that the record is both balanced and reflective
of the reality of the retail-auto industry. NADA is also
developing an appropriate Congressional oversight
strategy and will continue to engage with the media
so that the truth about the benefits of the franchised
system is what the public hears.
It falls on our shoulders to educate government
officials about the dealer business. While regulators
may have good intentions, they cannot enact ‘good’
rules that benefit our customers unless they are
informed and willing to listen. NADA will continue
to work on a multi-platform, multi-faceted effort to
engage the FTC in the future, and challenge false
information that comes out of any agency in the
federal government.
When it comes to harmful regulations, know that
NADA is poised to defend its dealers nationwide while
upholding the integrity of our valued franchise system.
Jeff Carlson is NADA chairman and a Ford and Subaru
dealer in Glenwood Springs, Colo.
OCADA
11
Be a Leader and Join the OC
Delegation at Dealer Day
O
ur legislative success is driven by dealers
who meet with the elected officials who
write and pass the laws we must operate
our dealerships by. Dealer Day is our
opportunity to educate them on the retail automotive
industry, the issues that make it difficult for us to do
business and make them aware that we are engaged
and organized.
Our State Senators and Assembly Members take
notice when a group of industry leaders take the time
12
OCADA
to travel to Sacramento to meet with them, so it is a
worthy investment of your time. OCADA believes so
strongly in the importance and effectiveness of Dealer
Day that we provide private air travel to minimize the
challenges and time for dealers to participate.
Please join your fellow automotive leaders on March
16th and travel with us to Dealer Day. Your leadership
is needed to protect and advance our industry!
Dealer Day
March 16, 2016
Get to Know Your
LEGISLATOR:
Assemblymember Tom Daly
69th Assembly District:
Includes the cities of Santa Ana, Anaheim, Garden
Grove and Orange
Committee Membership:
Insurance – Chair
Appropriations – Member
Governmental Organization – Member
Transportation – Member
Veterans Affairs - Member
Personal:
Assemblymember Tom Daly has three children and
resides in Anaheim with his wife, Debbie.
Biography:
Assemblymember Tom Daly was born and raised
in the 69th District. He first sought public office in
1986, winning election to the Board of Trustees of the
Anaheim Union High School District. Since that victory,
Daly has won nine consecutive elections, including
serving as Mayor of Anaheim from 1992-2002 and
Orange County Clerk-Recorder from 2002-2012.
As Mayor of Anaheim, Daly oversaw major public
and private investments in the City, including the
14
OCADA
expansion of the Resort Area, leading to the creation
of thousands of jobs. At the same time, Daly also
served on the Board of Directors of the Orange County
Transportation Authority, where he helped oversee a
$3 billion dollar improvement program for road and
transit projects in every community in Orange County.
Later, as the elected countywide Clerk-Recorder, Daly
opened two branch offices for the convenience of the
public, saving the office's customers over one million
miles of driving every year.
In the State Legislature, Assemblymember Daly is
focused on ensuring a balanced budget with a healthy
reserve, maintaining and improving our statewide
infrastructure, and reducing bureaucratic red tape
while promoting government efficiency. Daly
currently serves as Chair of the Assembly Insurance
Committee.
District Office Contact Information:
2400 East Katella Avenue, Suite 640
Anaheim, CA 92806
Tel: (714) 939-8469
Fax: (714) 939-8986
Website: http://asmdc.org/members/a69/
Email: Assemblymember.Daly@assembly.ca.gov
in the District
Senator John Moorlach – 37th Senate District
From L to R: Brian Maas, Stephen Brown, Dave Conant, Paul Conant, Frank Romano, Craig Whetter, Senator John Moorlach,
Jim Robins, George Saad, John Oh, John Sackrison, Paul Swim
Focused
on YOU
Focused on your:
• Accounting
• Taxes
• Audit
• Review
• Bookkeeping
• Internal procedures
• Cash flow
• Consulting services
Put our experience to work for you.
Donald Slater, CPA
Automotive Services Partner
donald.slater@lslcpas.com
Mike Mangold, CPA
Automotive Services Partner
mike.mangold@lslcpas.com
David Myers, CPA
Automotive Tax Partner
dave.myers@lslcpas.com
Since the 1940’s we have provided a complete range
of services to the owners of dealerships and other
automotive related businesses.
www.LSLCPAS.com
Orange County (714)672-0022
Silicon Valley (408) 573-6360
Temecula Valley (951) 304-2728
OCADA
15
FACT:
FACT:
LA Times print subscribers spent
LA Times print subscribers spent
$3.3
BILLION
$3.3 BILLION
on car purchases in the last 12 months
on car purchases in the last 12 months
LA
in Orange
OrangeCounty
Countyalone
alone
bought
LATimes
Times subscribers
subscribers in
bought
20,808 VEHICLES
VEHICLES
20,808
in the
the past
pastyear
yearwith
witha aretail
retail
value
in
value
of of
$537MILLION
MILLION
$537
Times
NOW
has
theability
abilitytotoblind
blindmatch
match our
our valuable
against
official
LA LA
Times
NOW
has
the
valuablesubscriber
subscriberdatabase
database
against
official
POLK
DMV
auto
registrations.
Based
on
our
subscribers’
vehicle
purchasing
habits
we
can
now
POLK DMV auto registrations. Based on our subscribers’ vehicle purchasing habits we can
now
more
accurately
align
our
dealers’
advertising
with
auto
buyers
through
our
zoned
print
editions.
more accurately align our dealers’ advertising with auto buyers through our zoned print editions.
When
it comes
spendingon
onautos:
autos:LA
LA Times
Times subscribers
purchasing
power.
When
it comes
toto
spending
subscribershave
havemassive
massive
purchasing
power.
Don’t miss out and book your ad today.
Don’t miss out and book your ad today.
Put the LA Times to work for your dealership:
Put the
LA Times
to work for
dealership:
Contact Carrie
Brown
@ 213-237-5391
or your
carrie.brown@latimes.com
Contact Carrie Brown @ 213-237-5391 or carrie.brown@latimes.com
Source for auto purchases and spending: Share Lift/IHS Polk for the time period Nov 2014 – Oct 2015. New and used
vehicle retail values; NADA Data Report Annual Financial Profile of America’s Franchised New-Car Dealerships 2014.
Source for auto purchases and spending: Share Lift/IHS Polk for the time period Nov 2014 – Oct 2015. New and used
vehicle retail values; NADA Data Report Annual Financial Profile of America’s Franchised New-Car Dealerships 2014.
Stop letting your
write-offs ride off.
Is your dealership taking advantage of all the tax deductions
and deferrals it’s entitled to claim? From new tangible
property regulations to changing state and local tax incentives,
opportunities abound for you to ease your tax burden and keep
more of your money.
Put our knowledge to work for you.
(949) 221-4000 W W W. M O S S A D A M S . C O M /A U T O M O T I V E
Tax
Audit
Fraud Detection & Prevention
Dealership Valuations
Management Succession
Ownership Transition
How Federal Rules Burden
Local Auto Dealerships $182,754
$3.2 billion
Annual average cost for dealerships to comply
with a subset of 61 major federal regulations
Total annual costs to dealerships
for federal regulatory compliance
Percentage of before-tax net profit equal to average
dealership’s federal regulatory compliance costs
21.7%
Regulations_infographic_Proof3
$2,400
Per employee costs equal to average
dealership’s regulatory compliance cost.
Number of vehicles the average dealership must sell
to recoup its annual regulatory compliance costs
106
10,550
75,000
$10.5 billion
Number of employees not hired at dealerships
due to annual regulatory compliance costs
Number of economy-wide jobs lost as
a result of federal dealership regulations
Annual lost U.S. economic output due to
dealership regulatory compliance burdens
Each $1 spent on dealership regulatory compliance
costs results in $3.28 in lost output in the U.S.
economy and a net loss to the U.S. Treasury of $0.44.
$3.28
Local
Motors
Source: 2014 Center for Automotive Research (cost estimates 2012)
Copyright National Automobile Dealers Association 2014. All rights reserved. www.nada.org
NADA PAC:
New Name,
Same Goal
N
ADA is excited to announce it has changed
the name of its political action committee
from the Dealers Election Action
Committee—or DEAC—to NADA PAC.
The name change was driven by an association-wide
rebranding at NADA and a desire to more strongly tie
our political efforts to NADA’s efforts on Capitol Hill.
more than $850,000 to candidates for Congress for the
2016 elections.
NADA PAC is an important element of NADA’s success
on Capitol Hill, helping to elect to Congress qualified
individuals who understand the needs of new car and
truck dealers. In the 2014 election cycle, NADA PAC
was credited as being one of the nation's top three
largest trade association political action committees
in terms of both total fundraising and contributions to
federal candidates. NADA PAC supports candidates for
Congress based on the recommendations of state and
local dealer leadership, and has already contributed
NADA PAC’s structure requires that dealerships sign
a permission form in order to receive information
regarding NADA PAC. NADA will be sending
information to dealers without this form on file and
it will allow them to connect with as many dealers as
possible for Orange County’s NADA PAC campaigns. If
you would like more information regarding NADA PAC
or these federal permission requirements that apply to
NADA PAC, please call the national NADA PAC office at
202.627.6755.
Accelerate Your Dealership Profits
Dealership Development Programs • Automotive Training Academy • Compliance Programs • F&I Products
OCADA
19
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20
OCADA
OCADA Welcomes Kim McPhaul
Member Services Manager
K
im McPhaul joins your
OCADA team after
working for California
New Car Dealers
Association (CNCDA) for over a
decade. Over the years she has
held various positions at CNCDA
and most recently was their
Director of Program & Member
Services. In this role she managed
and organized statewide events,
educational seminars and CNCDA’s
membership programs including
their Scholarship Foundation. She
is thrilled that in her new job at
OCADA she will be able to continue
to work with dealers and looks
forward to continuing to build
upon those relationships with all
OCADA members.
Kim is originally from Placerville
and graduated from California
State University, Sacramento with
a degree in Government. In her
free time she enjoys preparing for
athletic obstacle races and loves
to try new restaurants. She looks
forward to experiencing all of the
wonderful restaurants, beaches,
hikes, and activities that Orange
County has to offer with her
husband and two daughters.
Your business is built on service. So is ours.
For over 40 years, BBVA Compass has provided auto dealers with the flexible and affordable commercial
financial solutions they need to operate a successful dealership:
For your dealership
• Floorplan & real estate financing
• Equipment financing & leasing options
• Inventory & parts receivables management solutions
For your customers
• Competitive retail financing options
• Quick credit decisions & reliable funding
Dan Noack • West Region Dealer Services • 602-317-9379
Eugene Gonzalez • Relationship Manager, Orange County Market • 949-214-0071
Our experienced professionals are committed to helping you make your business more efficient and more
profitable — all with the added support of top-level customer service.
Give us a call today.
All credit and accounts are subject to approval, including credit approval. BBVA Compass is a trade name of Compass Bank, a member of the BBVA Group. Compass Bank, Member FDIC.
OCADA
21
In Memoriam: Roger Miller
R
oger John Miller passed
away peacefully in Rancho
Mirage, California, on
January 30, 2016 at the age
of 81. He is survived by his wife, Ruth,
of 40 years. He was born on January
9, 1935 in St. Paul, Minnesota. During
the late 1950s, Roger was a pitcher
with the Brooklyn Dodgers. He later
owned 14 car dealerships in Orange
and Riverside Counties. In the midnineties Roger was instrumental in
bringing light to the widespread
Honda bribery scheme run by top
Honda executives at the time, who
were allocating significant inventory
in return for over $5 million in bribes.
Many dealers appreciated Roger’s
bravery for filing the lawsuit and
bringing national attention to this
shameful practice.
Roger will best be remembered for
his caring, kind, generous and loving
ways. He also had a passion for golf
and tennis. He and his wife were
world travelers. Roger will be greatly
missed by all his friends and family.
In lieu of flowers, donations can be
made to Roger's favorite charities
including: Eisenhower Medical
Foundation, CHP 11-99 Foundation,
Loma Linda Medical Center Children
Foundation, University of California,
Irvine Foundation or the National
Parks Children's Foundation.
Serving the Dealer Industry
for over 28 years
Environmental Compliance:
•
•
•
•
•
•
•
•
Review Of Hazardous Waste Management
Hazardous Waste Cost Recovery Program
Storage Tank Compliance Audit
Hazardous Materials Release Response Plan
(CERS)
Spill Prevention Control & Countermeasures Plan
(SPCC)
Air Quality Management Audit
Safety Management:
•
•
•
•
Safety Inspection & Meetings (IIPP)
Respiratory Protection Program
Safety Training
Online Access to Safety Data Sheets (SDS)
DOT Required Training for Hazmat
Shippers & Receivers
•
•
Training & Certification for Dealership Employees
Providing a 24 Hour Support Phone Number As
Required By DOT
Representation in OSHA/EPA enforcement cases. Periodic
Newsletter on emerging EPA/OSHA issues as they impact
dealers. See www.epaoshablog.com
PENALTIES, FINES AND INCREASED
INSURANCE COST MORE THAN
COMPLIANCE
We have Certified Safety Professionals on staff with decades
of experience in working with dealers.
Up-to-the-minute Dealership
Transaction News
➠ Weekly dealership M & A articles written by industry experts
Succession planning, acquisition strategies, valuation,
➠ environmental
issues, compliance, etc.
➠ Use our Resource Center to find industry experts and dealerships
Marketing Opportunities - reach professionals in
➠ Targeted
the Automotive Buy Sell industry
➠ Targeted readers
➠ Subscribe to our weekly Report
➠ FREE listing in our online directory
Sam Celly, BChE MChE JD
Certified Safety Professional
Member OCADA, NCDA, SMCDA, AIChE & AIHA
444 West Ocean Blvd., Suite 1402
Long Beach, CA 90802-4517
Phone: 562.704.4000 Direct: 562.716.6100
Email: sam@cellyservices.com
www.AutomotiveBuySellReport.com
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23
NADA Forecast:
A Record 2016
U
.S. sales of new cars and
light trucks will set an
all-time record in 2016,
said Steven Szakaly,
chief economist of the National
Automobile Dealers Association.
“More than 17.7 million new light
vehicles will be purchased or leased
this year, about a 2-percent increase
from 2015, and setting back-toback records,” Szakaly said. “It will
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be the seventh consecutive year of
auto sales growth.”
Low gasoline prices and rising
incentives are among the key
factors that will sustain the newvehicle sales momentum in 2016,
cited Szakaly. He also explained
that, in the battle for market
share, automakers are expected
to increase incentives this year to
manage increased manufacturing
capacity, and to offset the effects
of a slowing global economy,
especially in emerging markets.
“If we we’re looking at a market
with stable global growth and no
increases in manufacturing, auto
sales might actually fall in 2016,” he
said. “But we have a situation where
plants have been built, demand
is slowing, and the U.S. market
remains the most profitable in the
world. Growth in places like Mexico
will offer some temporary reprieve,
but it won't be sufficient to offset
falling demand from Brazil, South
Africa and other emerging markets.
This means incentives will rise to
stoke demand.”
Sustained sales momentum in 2016
is also dependent on expectations
that auto financing rates will
More than 17.7 million
new light vehicles will be
purchased or leased this
year, about a 2-percent
increase from 2015, and
setting back-to-back
records.
remain competitive, with interest
rates rising modestly - by less than
1 percentage point - by the end of
2016; wages will grow about 2.5
percent this year; and the economy
will add more than 2 million net
new jobs in 2016, Szakaly added.
Source: NADA
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25
The “Loyal” Non-Performer
By Dave Anderson, President of Learn to Lead
Learntolead.com
rationalization to justify your defense
of mediocrity roll this publication up,
hand it to the nearest person and
ask them to smack you in the head
with it. Frankly, if you dare fathom
the perpetual cost and misery that
accompanies keeping a “loyal’ nonperformer you’d agree a simple
whack on the head is getting off
lightly.
“I know I should probably get
rid of the guy, but he’s been
with me twenty-five years;
he’s loyal.”
If you’ve ever managed to whine
out a lame version of this “he’s loyal”
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For any of us who have had access
to a dictionary during the course
of our lifetimes, there is no excuse
for confusing a word like loyal with
concepts like “seniority”, or “tenure”.
The following three definitions
may help you discover that people
you’ve labeled “loyal” do indeed have
seniority and tenure, but are far from
being loyal employees:
Seniority: status obtained as the
result of a person's length of service.
Tenure: the length of time in a
position or office.
Loyal: faithfulness to one’s duties and
obligations.
The truth about loyalty is found in
its definition: “faithfulness to one’s
duties and obligations”. This indicates
that not only does the person
show up to work, but he or she
steps up while there and performs
well. Based on this definition, you
could also say that one of the most
disloyal things someone can inflict
on an organization providing their
paychecks is to stop getting results.
At the end of the day, to maintain a
healthy organization loyalty must be
assessed as thus: not solely by the
amount of time someone puts in, but
by what someone puts into the time;
continued performance worthy of
your organization.
When I discuss this topic in my Up
Your Business 2.0 Super Leadership
Workshop the discomfort amongst
attendees is palpable; especially from
tenured employees representing
their organization. Thus, I should also
clarify something very important:
if you have long-time employees,
and they continue to perform well,
they are your “A” players. You need
to take good care of them, because
you can’t really ask for more than
performing consistently well over a
long period of time. But, if you have
to choose between performance
and tradition; performance and
sentimentalism; performance and
old-time’s sake, you need to do what’s
right for the entire team, your culture,
standards, momentum, morale,
personal credibility, and the customer
experience and either get the “loyal”
person better, or get a better person.
If you’re still hung up on the “but
he’s been with me X years” excuse,
consider this: if a couple is married
for forty years, an outsider might
comment that the gentleman must
be a loyal husband to have stayed
married for so long to the same
woman. But, if in the course of
those forty years he was detached,
indifferent, selfish, and had multiple
affairs you’d probably change your
assessment that he was loyal. The
time he put in would be subordinate
to the fact that the behaviors he put
into the time were unacceptable, and
sometimes egregious.
As much as we may appreciate
long-time service, the sad truth is
that tenure can become a license
for laziness. This is not a certainty,
but is a real possibility and is in
evidence in positions where seniority
rules: college campuses, certain
government jobs, and the like.
Whenever one takes something
for granted he is likely to become
lazy in that area: take your health,
kids or marriage for granted and
you may be compelled to abandon
sound disciplines that you once paid
attention to in those arenas. A job
is no different. When one starts to
take it for granted, which is common
amongst those employed there for
many years, they are prone to let
up, believe rules or standards others
must meet don’t apply to them, and
start to expect that their tenure,
experience or credentials should
somehow substitute for results.
Incidentally, if this happens, shame
on YOU, for perhaps also taking your
tenured employee for granted and
failing to continue to invest in his
development, stretch her with new
challenges, or allow performance and
behavioral expectations to become
vague over time.
Another point to consider is that if
you’re going to use the time someone
puts into a job as your primary criteria
to crown one as loyal, that would also
mean the new star employee who
has only been with you six months
but is outperforming everyone in his
department couldn’t be considered
as loyal because he hasn’t been with
you very long. That’d be a ridiculous
way to look at things, wouldn’t it? But
it’s actually no sillier than claiming
loyalty from an employee simply
because he or she has cashed your
paychecks longer than anyone else.
My short-list of traits that helps
determine loyal employees is simple:
1. They perform in a manner that
meets, and often exceeds your
expectations for the position.
2. They add value to others in the
workplace.
3. They share and live the company
core values.
4. They create exceptional customer
experiences that build your brand
and increase customer loyalty.
5. They represent the organization
well away from the job, through
their behaviors and by speaking
well of it.
If you have a “loyal” non-performer,
don’t get trigger-happy after reading
this piece and overact by firing him;
at least not yet. Chances are that
you’ve got a lot invested in that
person and should do all you can to
turn their performance around before
letting him go. I suggest you do the
following if you desire to keep him in
the position he’s in:
1. Have a frank and specific
conversation with him
concerning his performance.
2. Take responsibility for allowing
him to veer so far off track on
your watch, but pledge to do
your part to define expectations
immediately.
3. Redefine what you expect and by
when. Put it in writing.
4. Affirm that you’ll do what you can
to help him get there and that
you’re pulling for him to make it.
5. Pre-establish an appropriate
consequence for him
not reaching the desired
performance level.
6. Know that if you must remove
him because he didn’t perform
adequately, that you will not have
caught him by surprise, and take
solace in the fact that you gave
him an opportunity to right his
course. While you were firm with
him, you were also fair.
7. Move on.
Now, look reality dead in the eye and
deal with it.
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27
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28
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12
Save the Date!
Monday, June 6th 2016
Mission Viejo Country Club
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29
Your Success...
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