Methodology and Statistics
The 1,985 dealerships
that participated in the 2020 NADA Dealership Workforce Study submitted more
than 426,000 payroll records that were individually screened, classified and statistically analyzed.
During the extensive data review process, many dealerships were successfully
contacted to correct discrepancies or collect additional information needed for
proper data classification. Questionable data that could not be resolved
through dealership contact were excluded to maximize validity of the Study.
A portion of the submitted
records (less than 5 percent) were excluded from the Study for one or more of
the following reasons:
•
W-2 (annual) compensation records were excluded if the hire date and/or termination
date indicated a full-time employee did not work for a full year in 2019.
•
W-2 (annual) compensation records were excluded if employee status was part-time.
•
W-2 (annual) compensation and hourly pay records were excluded if they didn’t meet
state or federal minimum wage requirements.
•
W-2 (annual) and hourly compensation records were excluded if there was no
department or job title that could be used for job classification.
• Employee
records with hire dates after December 31, 2019 were excluded.
•
Employee records with termination dates before January 1, 2019 were excluded.
Description of Compensation Statistics
Compensation statistics in this
report are broken down or filtered by geographic regions, by franchise type
(non-luxury vs. luxury) and by dealership size, based on new retail-unit sales
volume. The following statistics are reported for each unique combination of
filters to allow dealerships to compare their average compensation levels to a
similar peer group:
Average: This is the sum of all
compensation records divided by the total number of records. It is also
referred to as the simple arithmetic mean.
Percent
of National: The
average for each peer group is compared to the national average by dividing the
peer group average by the national average.
For example, if the Pacific regional average for sales
consultant annual compensation is $71,066 and the national average for sales
consultant compensation is $68,926, then the regional average is 103 percent of
the national average. In other words, sales consultants in the Pacific region on
average earn 3 percent more than the national average.
Lower
25% (bottom quartile): Quartiles are values that divide the set
of data into four equal parts when the data are ranked from highest to lowest
values on a distribution curve. The lower 25 percent or bottom quartile
statistic indicates the value that separates the bottom 25 percent from the
upper 75 percent.
For example, a bottom quartile value of $43,852 for
sales consultant compensation means that 25 percent of the sales consultants in
our Study earned $43,852 or less.
Median
(50th percentile): The median or 50th percentile is the value
that divides the set of data into two equal parts when the data are ranked from
highest to lowest values on a distribution curve.
For example, a median value of $59,717 for sales
consultant compensation means that 50 percent of the sales consultants in our
Study earned less than $59,717 and 50 percent earned more than $59,717.
Upper
25% (top quartile): The upper 25 percent or top quartile statistic
indicates the value that separates the bottom 75 percent from the upper 25
percent.
For example, a top quartile value of $81,963 for sales
consultant compensation means that 25 percent of the sales consultants in our
Study earned more than $81,963.
Top
10% (90th percentile): The
top 10 percent or 90th percentile statistic indicates the value that separates
the bottom 90 percent from the top 10 percent.
For example, a 90th percentile value of $110,811
for sales consultant compensation means that the top 10 percent of the sales
consultants in our Study earned $110,811 or more.
The following chart depicts the frequency
distribution (bell curve) for sales consultant compensation data and how these statistics relate to one
another.
Please note: Compensation bell curves tend to be
skewed toward the lower end of the scale. As a result, the average compensation
is higher than the median compensation.
Description of Retention and Turnover
Statistics
Annualized Turnover: The
annualized rate of turnover is calculated by dividing the total number of
terminations reported for the 2019 calendar year by the total active head count
reported as of December 31, 2019.
One-year Retention is reported as the percentage of
active employees (as of December 31, 2019) who completed at least one full year
of employment at the dealership.
For example, a one-year retention rate of 71 percent means
that 71 percent of the active employees were hired before January 1, 2019 and 29
percent were hired in 2019.
Three-year Retention
is reported as the percentage of active employees who completed three full
years or more of employment at the dealership.
Research shows that the three-year retention rate is
highly correlated to employee productivity and dealership profitability.[1]
On average, employee productivity as measured by gross profit production
reaches a peak after three years—i.e., an employee performs at his or her best
after three years’ experience on the job.
A higher three-year retention rate = higher
monthly gross profit per employee.
Average Tenure: Employee hire
dates are used to calculate the service tenure of each active employee. The
average tenure of all actives is reported as years in decimal increments.
Median Tenure of Actives is the
value that divides the tenure of your active workforce into two equal parts
when tenure is ranked from highest to lowest values.
For example, a median tenure of 2.4 years means that
half of your employees have worked for you less than 2.4 years and half of your
employees have worked for you more than 2.4 years.
Median Tenure
at Termination is measured by comparing the hire dates and termination
dates of all employees you reported as terminated in 2019. This is an important
metric for workforce management, because it can help identify potential root
causes of employee turnover.
If your median tenure at termination is significantly
lower than national or regional averages, it usually means that your
recruiting, screening and hiring processes are less effective than other
dealerships’. If your median tenure at termination is significantly higher than
national or regional averages, it usually indicates employee engagement and
retention issues.
Minimum Data Requirements
One of the primary objectives of
the NADA Dealership Workforce Study is to provide compensation and workforce
management data on a more granular level than previous studies. To provide
granularity while assuring data validity and anonymity, we defined minimum data
requirements for all levels of reporting.
In calculating the average and
median values for each job title, we require valid records from a minimum of five
rooftops and a minimum of 10 data points (payroll records) for each job title
in those five rooftops.
In the case of primary job titles like sales
consultant, service advisor, service technician and parts counterperson, five
rooftops will normally provide more than 10 payroll records (valid data points)
for each primary job title. Job titles with one position per dealership
(general manager, office manager, service manager, parts manager, warranty
administrator, etc.) will normally include payroll records from at least 10
rooftops to meet the requirement of 10 data points.
To calculate the lower quartile,
upper quartile and top 10 percent values for each job title, we require a minimum
of five rooftops and a minimum of 30 data points (payroll records) for each job
title in those five rooftops.
Note: If the available
records for any job title do not meet our minimum data requirements, we will
display three dashes (---) indicating insufficient data.
Your Dealership Statistics
For each job title in this
report, we calculated your average and median statistics if you submitted
payroll information for that title. The accuracy of these dealership averages
and medians depends totally on the accuracy of the payroll data as submitted.
For example, if a service porter is incorrectly classified as a service writer
in the payroll system, then the average service writer compensation we report
for “Your Dealership” may be significantly lower than it would be otherwise.
Average and median statistics are
displayed on the line labeled “Your Dealership.”
•
We only need one record for a job title to display an average for your dealership.
•
We need at least nine records for a job title to display the median for your dealership.
•
We do not calculate lower quartile, upper quartile and top 10 percent values for job titles at the dealership level.
If you did not submit at least one record for a particular job title, your dealership statistics will display three dashes (---) indicating insufficient data