It may be customizable to each person’s needs whether it be retirement income or widow/family income needs or both. If your company is truly looking to retain and reward your best employees you must offer the following qualities in your golden handcuff plan:Ī True Benefit: You must offer something to your employee that they cannot receive cost-effectively anywhere else.Ĭustomizable: It must provide the employer a cost-effective way to provide a benefit to only key employees. Golden handcuff plans can be offered to the selected key employees to the exclusion of all others. Plans may be designed to provide a specific amount of retirement income or equity-based valuations to determine benefits triggered by sale, retirement date or death are available. This planning allows a company to provide a retirement income and permanent life insurance benefit to your top employees and will either be cost neutral or provide a positive return for the employer. A handcuff plan utilizing life insurance, with its tax benefits and corporate pricing, is the preferred program for both employees and dealerships. For example, if a dealer typically sells 450 loyalty cars per year at an average 4,000 gross per vehicle, totaling 1.8 million in annual gross, a 10 hit to their loyalty rate will cost them 400,000 in gross revenue. Provide full cost recovery for the dealership including a projected rate of return on the company’s participation in the planning.Ī golden handcuff strategy provides a key employee benefit that a competitor cannot easily or even possibly replace. To weigh their opportunities, dealers need to calculate the cost of their loyalty customers.Protect the company against the risk of losing customers, employees or trade secrets should an employee who has those relationships and information leave.Provide a benefit that cannot be matched by competitors.Reduce the risk that top employees leave prematurely or unexpectedly.Dealerships that design and implement effective golden handcuff plans can accomplish the following important outcomes: Golden handcuffing is a method to help retain and reward key employees. Retaining your key employees with a “golden handcuff” arrangement using life insurance, which primarily provides retirement income and death protection, may be an effective way retain your key executives. You may think offering bonuses sounds like your best option, however, you are only as good as the last bonus, or the ability of a competitor to match or exceed a competitive bid for your employee. It is essential that your company put in place the proper arrangements that will ensure your key players stay where they belong: with you. Ironically, few dealerships take the proper steps to minimize the risk of losing top employees. A company that cannot hold onto its best and brightest employees will suffer some costly consequences including the loss of gross profits. By identifying trends and forecasting customer behavior, predictive marketing allows dealerships to align their inventory with real-time market demands. High-performing employees are often the most valuable asset of the dealership. Dealership success often hinges on effective and efficient inventory management. Retention is beneficial for the dealership as well as the employee. Usually, these models will receive no maintenance, cleaning, or anything else. For most dealers, wholesaling a car means sending it to an auction where the highest bidder takes it. The first is a nice way of saying your car is a piece of junk. "There's a lot of power for someone who currently owns a vehicle.Employee retention is a process in which the employees are encouraged to remain with the dealership for the maximum period of time or until the completion of a project. There are two things the dealer does with your trade-in based on whether it is wholesale or retail. "You actually stand to make money in that situation because supply is just so drained," Drury said. Since used-car values are so astronomical right now and many people haven't been putting as many miles on their vehicles, those who are able to part with a lease stand to make a killing selling it to a dealer or online retailer, he said. The supply crunch is so dire that Drury has heard of people who are less than a year into a three-year lease being contacted by dealers. They're willing to make those payments, pay that buyout price, and get that piece of inventory back." "Dealers are very desperate for inventory. We'll pay all your payments and hand you a check on top of that," Drury said. "They're being contacted right now and being told: 'You can sell that. It often indicates a user profile.ĭealers are so strapped for inventory that they're calling up lessees - no matter whether they sold the vehicle or not - and offering to buy leased vehicles for high markups, Ivan Drury, senior manager of insights at Edmunds, told Insider. Account icon An icon in the shape of a person's head and shoulders.
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