Methodology and Statistics

The 2,350 dealerships that participated in the 2017 NADA Dealership Workforce Study submitted more than 451,000 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 2016.

  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, 2016 were excluded.

  Employee records with termination dates before January 1, 2016 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 2016 calendar year by the total active head count reported as of December 31, 2016.

One-year Retention is reported as the percentage of active employees (as of December 31, 2016) 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, 2016 and 29 percent were hired in 2016.

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 2016. 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



Questions? Email WorkforceStudy@nada.org or call 800.557.6232

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