Employee compensation and benefits are among your most significant expenses and yet having a motivated and skilled staff is critical to your business success. How do you find the right balance? NADA Compensation Study 2009 serves as a resource to help you assess your situation and balance those needs. Please note two valuable additions to this year's guide:
For purposes of avoiding misunderstandings with employees, the importance of legally-sound pay plans cannot be overstated. Moreover, dealers must pay close attention to the rules relating to wage and hour law, which can be deceptively complex. The Fair Labor Standards Act is the primary federal law in this area, but some states have rules that are different from or stricter than the federal.
A typical dealership uses a variety of pay plans. Some of these, such as those for employees primarily compensated on commission, revolve around complex accounting concepts involving a defined "gross" or "profit." In part, dealers use pay plans to motivate employees to exert their greatest efforts-and subsequently to reward them for doing so. For example, salespeople paid on a commission basis receive a portion of the "gross" or "profit" on each vehicle sold. Most dealership salespeople clearly understand that they are being paid on a commission basis and that their compensation is tied directly to their production. However, unless key details are spelled out with well-defined terms in a legally-sound pay plan, salespeople may not fully understand all of the parameters of their compensation.
While NADA Compensation Study 2009 provides an overview of the basic concepts that should be covered when drafting pay plans, it cannot cover all of the details needed to craft a legally-compliant pay plan and it does not constitute legal advice. Dealers are strongly encouraged to have their compensation plans reviewed by competent counsel for compliance with federal, state, and local law.
This article is adapted from NADA Compensation Study 2009. The printed guide, provided free to all NADA members, will be mailed at the end of December. Please note, this is the last guide that will be printed and mailed. All future DRIVEN guides will be published online at NADA University (launching in February 2010).
To order additional copies of the guide through January, please visit www.nada.org/mecatalog or call NADA at 800-252-NADA, ext. 2. As of February, you will be able to access the guide online at www.nadauniversity.com (site will not be active until launch in February).
-Source, ATAE
