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Crafting a Productive Dealership Management Pay Plan Strategy that Works

Updated: Dec 7, 2023

In the world of business (and especially the car business), the key drivers of success are the productivity and motivation of your management team. A well-designed management pay plan strategy is crucial in achieving this. It should be structured not only to reward performance but also to align with the company's goals and values. Here's a guide to creating a management pay plan that boosts productivity and fosters a positive work culture.


Align with Business Objectives:


The pay plan should be directly tied to the overall business objectives. This alignment ensures that managers are working towards the company's goals. For instance, if customer satisfaction is a priority, include it as a metric in the pay plan.


Balance Fixed and Variable Components:


A mix of fixed salary and variable incentives (like bonuses or commission) is ideal. The fixed component provides financial stability, while the variable part drives performance. Ensure the variable pay is significant enough to motivate, but also achievable.


Clear, Achievable Targets:


Set clear and realistic performance targets. Managers should feel that their efforts can realistically achieve these goals. Ambiguity or unattainable targets can be demotivating.


Encourage Long-Term Thinking:


Consider incorporating elements that reward long-term success and loyalty, such as stock options or deferred compensation. This encourages managers to think beyond short-term gains.


Regular Reviews and Adjustments:


The business environment is dynamic. Regularly review and adjust the pay plan to reflect current market conditions and business priorities.


How to Make It Work for You:


An effective management pay plan structure is a blend of strategic alignment, balanced compensation, clear targets, long-term incentives, and adaptability. By carefully structuring your pay plans, you create a motivated management team that is aligned with your business objectives, driving your company towards success.


It all sounds like great theory for a classroom, but how to you actually put all of the above into an actionable process for making pay plans perform as expected for your dealership?


Check out what DealersEdge Subject Expert Contributors have to say about building winning pay plans for individual dealership management titles…







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