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For nearly a decade now, the use of a “dashboard” as a management tool has become quite common. This is using a picture, a graphic image, perhaps a traffic light, as a signal that things are going well or not so well. Not only is this a great tool, but it is one that can be used on a daily basis throughout the month, not just after the month has been completed.

Let’s go back to some basics. Through AED, our industry has a series of operating and financial standards against which you can compare your performance. These standards are expressed in the parts and service departments through the Product Support Handbook and other publications. They are taught in the classroom and through webinars offered by AED throughout the year.

These standards cover gross profit, sales per employee, inventory performance and customer retention as an example. They are also expressed in various performance levels: standard, low performance, high performance and other levels. The table below provides an example of the performance standards from the parts department.

	Critical	Low Performance	Standard	High Performance	Dangerous
Sales/Employee	$450,000	$480,00	$600,000	$720,000	$750,000
Net Income/ Employe	$112,500	$120,000	$150,000	$180,000	$187,500
Gross Margin %	25%	27%	30%	33%	35%
Expenses
Personnel	5%	6%	7%	8%	9%
Operating	3.5%	3.0%	2.5%	2.0%	1.5%
Fixed	2.5%	2.0%	1.5%	1.0%	0.5%
Total	13.000%	12.00%	11.00%	10.00%	9.00%
Expenses % of Gross Margi	45.0%	40.0%	35.0%	30.0%	25.0%
Net Income % of Sale	15.00%	17.50%	20.00%	22.50%	25.00%

This is a terrific tool if it is used properly. Jack Welsh talked about managing GE using dashboards and how he did it in his book “Straight from the Gut.” It is still a worthwhile book to read. He determined that if his signals – using traffic light imagery – were green, everything was fine. If the light was yellow, then he needed to watch carefully, and if the signal was red, he was waiting for the manager in charge to call him with a plan to get back on track. It was instantaneous and it was every day. It is very simple and rather universal in application.

The trick to all of this is that every day all of the business for the day needs to be processed completely. All invoicing, all receiving, all ordering and all record keeping – it is in keeping with the philosophy that we will complete all of the work done today, today, before we go home. Without that discipline this type of management falls apart. You must be able to manage the business on a daily basis as the month is progressing, not after the month has been completed. At month-end, it is too late to make a difference in the results for the month. They are all done and are now history.

What we are trying to get at is that you can control your business but you have to do it on a daily basis – every day. If the team knows that sales are not on target they have a choice to do something to get back on track, or not. This is what management is all about.

The Pursuit of Performance

You can obtain the standards for service and the other operating departments. With a table like the one shown for each department you are ready to implement this type of management in your dealership.

Are you ready to manage your business? Do you want to work on the business or in the business? Obviously, the choice is yours, but the benefits of a wise choice will reflect on the results of your department.

Good luck with it, and I hope you take full advantage of the annual AED Summit near Washington, D.C. See you there.