Motor Dealership Acquisition

An established motor distributorship acquired an independent group of 14 dealerships with a similar range of franchises.

The acquisition went smoothly. The old top team left and the new dealerships were headed up by a senior manager (Mike) from the established distributorship.

The distributorship had a well-established devolved culture in which general managers were given a broad set of annual targets to achieve. How they did this was up to them. Mike worked to the same ethos.

Within three months, it was obvious that 4 of the newly acquired dealerships were all were grossly underperforming. Two were quickly sold off. A further 3 had a borderline performance. The remaining 7 were OK.

Mike took time to talk separately to each GM to see what was going on. It seems that this group believed they were second class citizens compared to the distributorship GMs. They were not invited to the distributorship's sales conference. Some felt that Mike had neglected them as he was very difficult to track down. Some felt isolated as they had little contact with others in the group. Under the old regime they had GM meetings every two weeks. Perhaps the most negative attitudes among the GMs was the fear that they would be next in the "great sell off".

Mike concluded that several of the GMs were overly anxious, but nevertheless he instigated monthly GM meetings. He gave them a reassurance that they all had a great future and offered them any help and support they wanted. No one asked for any help other than for sales training for their staff. They got it.

Over the next three months, Mike took a greater interest in building a new identity for the dealerships. He: brought in the training department to help them; gave them a high profile in the distributorship' company magazine; lifted the pay scales; made numerous promises on the back of improved performance. In general, things got worse.

By month 9 he put a further 2 businesses on the market when their performance became totally unacceptable. They sold very quickly.

Morale, by now, was dropping fast as all the GMs' fears seemed to be coming true. Various specialists came in to look over the business. They made many recommendations, most were adopted.

By the end of the first year business was bad and getting worse. Mike felt the only thing was to replace 4 or 5 of the GMs. HR suggested all the GMs attend a Leadership Programme, that had previously been run for all distributorship GMs. Mike agreed and decided to give the worse performing GMs one last chance.

As part of the programme the ten remaining GMs completed an MCOQ questionnaire. The pattern of strengths and weakness among the managers was fairly strong. This suggested that these GMs were operating to a different "mind-set" to the distributorships GMs.

In view of this it was decided that all 58 of the dealership department managers were also to complete an MCOQ, so a thorough understanding of the company's management capacity could be assessed. The results were very clear.

All 68 managers were high on:

Company Commitment. This means they strongly identified with the company (original dealership, not distributorship), its franchises, products and its management.
Commercial. They were strongly commercially minded. Constantly concerned about new sales, profitability, costs and so on.
Action. This means they all had a strong sense of urgency. They were quick to react to challenges, worked very hard and worked long hours. If anything needed doing it was done.

However, they scored low on:

Analysis. This involves the rigorous search for, and use of, relevant and good quality data with which to manage the business, to identify trends and come to accurate conclusions on what is wrong and what was to be put right.
Control. This involves the constant monitoring of what is going on in the business. It may involve formal control systems as well as informal methods for understanding the health of the business, people and the organisation. It also includes taking corrective action to ensure objectives and activities are back on plan.
Risk. This involves having courage and making decisions in the face of difficulties, uncertainty and ambiguity, without waiting for permission or relying on precedent.

The strengths show that the culture of the business, and its management, put much emphasis, energy and attention on promoting and achieving a strong company identity, and pursuing commercial activity and objectives.

However, the weaknesses show this was done without any real data, a low level of scrutiny of the business and its people, and with a low level of courage or risk taking in decision making.

It could be concluded that these managers mainly relied on habit and experience to manage their businesses. They were very busy people working hard and long, but unable to break through their narrow, experience based, perspective on management. Without real data, courage, and a thirst to grab the business by both hands, their approach became less relevant and potent over time.

This analysis prompted the senior management from the distributorship to look into the old dealership management style in detail. They discovered that the old management kept close control over all the business. The senior management were in daily contact with each business and it was they who made all the relevant decisions, took all the risks, and directed management to take the necessary actions.

The GMs and their managers were in effect mere implementers or doers. Senior management were the thinkers, problem solvers and decision maker in all key areas.

This culture of dependence on senior management was in direct contrast with the distributorship GMs who were largely autonomous, made their own key decisions and managed their own businesses.

The assumption by the distributorships top management to treat the dealership managers the same as their other managers was flawed and nearly cost them the whole dealership business.

Once this analysis was completed the solutions were quick to implement and positive results followed.

The ten dealerships were split into two divisions. Each division had a senior manager and accountant whose roles were to give daily support and direction to the management, so filling the void left by the previous senior management.
All the GMs were given one to one coaching on the distributorships planning and control system and a Dealership Development Programme. Department managers were put on a management development programme to broaden their general management skills and cover analytical and control skills in depth.

Three of the GMs left within six months as they couldn't adapt to the new more rounded GM role. Six of the businesses are now performing well and the other four are off the critical list.

The main learning point here is that all managers have a sub-conscious "mind-set" that defines their role and what constitutes successful management. This mind-set drives the managers' thoughts and behaviour mostly automatically. If this "mind-set" is not aligned with business direction then the business can never prosper, possibly never even survive.

Relying on observation or even having discussions with managers will rarely identify this "mind-set" or what really drives the individuals, because they are often unaware of it themselves. Only an objective assessment tool like the MCOQ can do this. If it had been used on the newly acquired managers when they first came into the wider business then an enormous amount of time, money, effort and anxiety would have been saved.

For an initial discussion on how we can make this service work for you call 01608 644144 and ask for David Stone.

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