Your employees are your greatest asset. Do you treat them as such? Do you offer them benefits? At the very least, do you offer them medical insurance?
Seventy percent of you offer medical coverage to full-time employees, according to a recently conducted online survey by Modern Tire Dealer. Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO) plans account for 83.3% of the coverages. Comparatively, PPO plans are more expensive but less restrictive.
Some of the other medical coverages include a consumer directed/high deductible health plan (8.1%); traditional/indemnity insurance (6.5%); and a narrow network, or preferred provider, plan (0.5%).
Regardless of the plan, the average premium cost per month is $400 for employee-only coverage and $756 a month for family coverage. Employers pay the premiums 70% and 54% of the time, respectively.
What about the 30% of you who don’t offer medical insurance? When asked to list two main reasons for their lack of coverage, 94% of the respondents said they could not afford the costs of offering benefits. The second most common answer was a lack of administrative capacity to offer health benefits (40%).
One quarter of you said your employees prefer higher cash compensation instead of benefits.
Close to 18% of those who don’t offer medical insurance said they are at least “somewhat likely” to do so in the future. The remaining 12% may not understand the cost of losing an employee.
The average yearly turnover at an independent tire dealership is 11%, according to our survey. Although large, that number compares favorably to the national average for all businesses, which ranges from 12% to 15%. For aftermarket distributors, the Automotive Aftermarket Industry Association places the figure at 18%.
In the fast-food industry, the turnover rate is close to 300%! So you probably won’t see your favorite drive-thru employee for more than four months (at least not at the same fast-food restaurant).
Quarterly workforce indicators compiled by the United States Census Bureau rank Arizona and New Mexico as the states with the highest turnover rate at 14.4%. Louisiana is third at 13.8%, followed by Florida (12.9%) and Alaska (12.4%). Wisconsin has the lowest turnover rate for all sectors at 8.9%.
It’s hard to determine the actual cost of a departing employee. Dan Bobinski, CEO and president of Leadership Development Inc., says the cost of replacing an employee in the U.S. averages $17,000. “Those making over $60,000 per year will cost you more than $38,000 to replace.”
Other sources put the cost anywhere from 30% to 200% of an employee’s annual salary. The Department of Labor says the cost is 75% to 100% of a new employee’s salary.
“If managers want to see an increase in productivity and a positive impact on the bottom line, then focus on retention,” says Gregory Smith, author of “Here Today, Here Tomorrow.”
Retention starts at the hiring stage. For an in-depth look at how to strip the guesswork out of hiring, check out the first of a two-part story on interview essentials by former tire dealer Tom Gegax, beginning on page 92.
Medical insurance is by far the most offered benefit. No other benefits were listed by even half of the respondents:
• life insurance, 40%.
• dental insurance, 33%.
• 401(k) plan, 32%.
• short-term disability, 26%.
• long-term disability, 19%.
• vision insurance, 19%.
• pension plan, 11%.
Dealers continually tell us that one of their main problems is finding good technicians. The median total cash compensation for a senior or lead tech is $39,520, according to the Tire Industry Association’s “2006 Tire Industry Compensation Survey.” For an intermediate tech, it’s $28,080.
Are those salaries alone enough to keep them happy? There are 28,000 independent tire dealerships nationwide. They keep 112,000 techs on their payrolls.
That’s a lot of employees. And that’s a lot of potential for turnover. ■