One of the greatest problems facing any dealership in enforcing and maintaining compliance is employee turnover.

I can think of no other business entities, aside from automotive dealerships, which combine absentee ownership with high employee turnover in both management and line employees.

Add the stress of moving units in a slowed down market environment, and a limited attention span to compliance can be damming. Any MBA student is familiar with the term “Bounded Rationality,” which is defined as “cognitive limitations that constrain one’s ability to interpret, process, and act on information.” In short all business decisions are imperfect as businesses cannot endlessly analyze, and must move forward with imperfect information and limiting time & resource constraints. However, bounded rationality must meet minimal fiduciary and due diligence.

Sadly, in the automotive industry that is often not the case, and “check-the-box” approach is used. It is not uncommon for a compliance plan to be haphazardly pieced together, usually by an hourly employee with no subject matter premise, and then be put on a shelf and forgotten.

However it doesn’t have to be that way.

I recently revisited a store for which RedFlagsMadeEasy had done a turnkey plan within the past six months and was pleased to note that our integrated training had worked. Some key personnel, as well as a number of line employees had turned over; but because of our comprehensive plan and integrated checklists, human resources had been able to document that terminated employees had been removed from key systems, and that they had not taken any sensitive data (such as credit applications) to their new dealerships. The store had also documented the transfer of some key compliance responsibilities to the new desking managers. In short, proof that compliance can live on despite turnover.

Given the current market challenges, forced closing of stores by the manufacturers, and civil litigation environment, dealer principals can no longer afford a detached overview management style and must work towards both continuity and integrated compliance controls.