I went to my local car dealer on Sunday to get an idea of the cost of an electric car. When I arrived, the receptionist asked me to take a seat as all the sales people were with customers. Looking at the four men chatting in the office, I wondered how true that was. Five minutes later my patience ran out. I asked why the people in the office weren’t attending to customers too. It turns out they were ‘managers’. Their job is to confirm negotiating positions, authorise deals and transfer orders from showroom tablets to the back-end ordering system.
Once I got to speak to a sales person, it was quickly clear I could never talk to any other member of the sales team. My first contact would risk losing his sales commission. I liked the guy so went along with his pleas to book a test drive only when he wasn’t on leave. But it got me thinking how overhead and bureaucracy get in the way of customer-centricity.
How much bureaucracy do you really need?
Minimum viable bureaucracy (MVB) is the least amount of management or process needed to ensure customer-facing teams deliver what the organisation needs them to. Crucially, teams implement any necessary bureaucracy themselves rather than having it imposed on them. (Thanks to Laura Thompson from Mozilla who first introduced me to this term). A well-known exponent of this approach is Buurtzorg, a pioneering healthcare organisation with a ratio of 45 HQ staff to 9,000 community nurses. The nurses plan and agree together how they’ll deliver services to their own community, agreeing rosters, sickness and vacation cover. These self-organised teams provide much higher levels of care much more cost-efficiently than other nursing providers. Their overheads are ultra-low and their nurses are empowered and motivated.
Could this thinking work for my car dealer?
Say the car dealership network has 27 managers across nine showrooms. Their main role appears to be to avoid customer interactions if possible – allowing time for organising the sales force, agreeing sales commission payments, processing car purchases and financing schemes, and liaising with the manufacturer. Sales people are paid at or near the minimum wage with individual commission linked to car sales. Receptionists – two in each showroom – greet prospective buyers but can only ask customers to take a seat or introduce them to a sales person. Nothing else. A dealership HQ function adds another layer of management together with centralised HR, finance, procurement and supply chain functions.
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My top MVB recommendations:
Here’s how the dealership could make the whole operation more customer-centric through adopting an MVB mindset:
Make commission team-based not individual
Individual commission stops organisations being truly customer-centric and negotiating commission for individuals wastes time. With team-based commission, sales people would be able to direct customers to whomever is available and even online without fear of losing their sales relationship and in turn their commission.
Train everyone to add value and empower decision-making
Without sales commission getting in the way, all staff (including receptionists) could be retrained to do more for customers. Get rid of any management position that doesn’t involve interacting with the customer. Hand decision-making authority to salespeople with an appropriate level of sales training.
Automate the sales process
Buying a car isn’t a particularly complex transaction. Invest in automation so that sales people can complete the transaction in front of the customer without any management intervention – and eliminate an expensive overhead.
Let teams agree rostering
Not everyone can work standard working hours. Push responsibility for agreeing cover to the team, even for fielding out-of-hours calls from customers.
Make teams responsible for collective personal development
Give teams a budget they can use collectively to train and develop new skills; teams can use this to keep on top of the latest models or improve their negotiation technique.
Make teams responsible for promotions
Make the criteria for career progression transparent and push promotion decisions to the team to improve buy-in and reduce politics. With a flatter organisation structure team members progress according to merit and avoid having to wait for their manager to move-on (the 'dead-man's-shoes' trap).
Get rid of management meetings
Give sales teams responsibility for driving sales and managing the showroom. This will promote a sense of ownership in running the organisation. HQ leadership attend the showroom to find out what's going on, not the other way around.
Get HQ teams to support the showroom teams
Make sure HQ teams are focused on removing impediments to efficient customer service. That should be their prime role, rebranding the HQ as the Showroom Support Centre would send a powerful message.
I’d encourage you to expose the bureaucracy in your organisation. See overheads and centralised processes for what they often are – waste that stops teams from doing their best for customers. Run some experiments to see what you can remove and watch customer satisfaction improve along with employee motivation.
Now, let me think – when would be the right moment to send this article to the dealership’s CEO?