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10 Warning Signs Your Dealership’s Culture is Toxic

by Mike Esposito

Company culture is a hot topic recently, and with good reason. Companies with a great workplace culture enjoy increased employee and customer retention rates, as well as higher profits.

But how do you know if your dealership’s culture is helping or hurting your bottom line? Take a look at this list and see if any of these warning signs are pervasive at your dealership.

1. Low employee morale

If your employees are often in a bad mood, unmotivated or walk around with glum faces, you probably have a morale problem. If the majority of your employees are happy at their jobs, the general work atmosphere will be one of enthusiasm, joy and camaraderie.

2. Lack of work-life balance

It’s fine to expect employees to go the extra mile on occasion. It’s not okay to expect it all the time, at least not without proper compensation and/or appreciation. Besides, studies actually prove that the more hours employees work, the lower productivity goes.

Many employees don’t feel like they can set boundaries to have a healthy work-life balance, so it’s up to the dealership principals and managers to develop this initiative and culture. Encourage employees to attend important family events and to use their vacation time.

3. Many new hires are unqualified

Does nepotism rule at your dealership? In a rush to fill an empty seat, do your principals and managers hire the first warm body they interview, without regard to the person’s qualifications? If so, a toxic culture can develop due to resentment from other employees who now have to pick up the slack for a favored employee.

It’s okay to hire family and friends, as long as they are well qualified. In a healthy culture, family and friends will start at the bottom and work their way up like everyone else. In fact, they may have to work twice as hard to prove themselves, because they will be under close scrutiny from fellow employees who are looking for signs of favoritism.

4. It’s the boss’s way or the highway

In a healthy culture, principals and managers ask their employees, “How do you think we should proceed?” and “How should we solve this problem?” In a toxic culture, the boss makes all the decisions with little input and doesn’t care about others’ opinions or experience.

5. Secrets and gossip are pervasive

I’ve long advocated that it’s important to share company news and be transparent with employees. If you don’t tell employees what’s going on with your business, they’ll start making stuff up. I recommend holding “town hall” type meetings on a monthly basis where you share your company vision and goals, setbacks and successes, and challenges you’re dealing with. Ask employees for input and suggestions. This will help to eliminate gossip and secrets, and your employees will feel valued.

6. Employees are walking on eggshells

Do your employees live in fear of getting yelled at or criticized by their managers or co-workers? If your employees don’t perform well, are they put down or fired without trying to address the reasons? Does your culture ignore bullying, lying, smear campaigns and other demoralizing tactics? If your employees are walking around on eggshells, trust me, they’ll be walking out the door–permanently–the first chance they get.

7. Employee turnover is high and nobody cares

I realize there are probably a few dealers and managers out there who have the attitude that employees are expendable, and one is as good as the next. But the vast majority of managers do not really believe this. A great employee is worth their weight in gold and turnover is very expensive. If your employee turnover is high, I recommend conducting exit interviews to find out what the real problem is.

8. Low customer loyalty and retention rates

Happy employees take better care of customers. Empowered employees take better care of customers. Your customers will never love your company unless your employees love your company. Period.

9. Employees who use questionable tactics to achieve goals are praised as long as they perform well

Have you ever received complaints about one of your top-performing salespeople, managers or service advisors? Have you ever dismissed these complaints because the employee is a top-performer? Or perhaps you reprimanded the person, gently, but could not seriously consider letting them go because you believe they’re irreplaceable.

Toxic employees can create toxic workplaces. They make their co-workers miserable, which lowers productivity, increases employee turnover, hurts customer loyalty and in the long run, reduces profitability. If an employee doesn’t reflect your dealership’s core values, they should be let go, regardless of how well they perform.

10. One or more managers do not set a good example

If your dealership management team promotes good communication, trust and teamwork, they must walk the talk. If your managers can’t or won’t live by your values, they shouldn’t be in that position. If you have a manager with poor communications skills, a bad attitude, or who points the blame at employees for their own under-performance, it’s time to look for a new manager.

Do you really, truly care about your business and employees? If so, you should do everything in your power to create a healthy, happy and productive workplace culture.

Turning a culture from toxic to terrific takes hard work and patience. If you’re not sure where to begin, I outline a process in my eBook, “The Auto Dealer’s 10-Step Guide to Creating Customer Loyalty.”

Have you ever worked in a toxic culture? What are other warning signs of a toxic culture?


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