employee turnover WHEN I meet the HR managers or senior leaders of motor companies, I often askif the company is experiencing a higher turnover of staff particularly service manager, service advisor and technicians.

Almost all the time, the response will be that, “We are within industry benchmark”.

Probed further, they would mostly answer “about 2 per cent but when I ask if this turnover rate was for the month or year and then I start to get the feeling that I may be treading on “no entry” territory of the organisation.

Suffice to say that many managers do not recognise the impact of employee turnover to the bottom line. Yet more than half franchise dealers said they have experience difficulty in finding service advisors and technicians.


Car owners who frequent their preferred service centres are the best judges. How often do you find, your preferred service advisor no longer behind the desk atyour service centre. Look around him and you will notice many newly recruited employees.

Hanging on to employees is just as important to the financial well-being of the company as profitability and sustainability.

"I fret when an employee waits outside my office wanting to meet with me with an envelope in hand. My shoulder goes heavy just knowing this is one of my top employees,” laments a service manager at a leading brand.

“This has become the norm as more and more new dealerships are opening up in the Klang Valley and poaching of staff has become prevalent.”

It is anticipated that at least 20 franchise dealers will be opening for business or expanding their present capacity in the final quarter of this year alone.

Invariably then, the talk amongst many staff during the lunch break is about a friend who has just got an employment offer from the latest Audi dealership in Mutiara Damansara (an example) and why is it that the other has not got any response from the HR Department yet.

While stronger demand bodes well for the Malaysian motor industry, the necessity to retain and up-skill staff is now more important than ever.


There is a huge underlying problem when an employee leaves an organisation. Costs are often intangible and companies have difficulties ascertaining the true monetary impact.

There are many indirect costs that most managers would rather avoid analysing and it’s no wonder why. Determining the figure could be time consuming and complicated.

But ignoring the cost and reasons are a costly mistake many organisations cannot afford. It displays a lack of foresight on the HR department and the senior management team.

Many are not able to recollect the exact turnover rate neither by category of staff nor over a 2-3 year period.


When an employee lea-ves, there is often a sigh of sadness on the remaining members. Not because a comrade will soon be departing but what immediately preoccupies their mind is the additio-nal workload one is laden with, having to cope with the added responsibilities.

In the case of a service advisor, he will be attending to more than the average service customers per day due the higher number of customers per advisors and the follow-ups required.

Engagement time with customer is also reduced as a result, as the service advisors need time to attend to the other waiting customers.

Nine out 10 service advisors leave a trail of destruction when they leave an organisation with outstanding chores such as unmet customer promises, unprocessed warranty claims, unclaimed parts back-orders and incomplete documentation of insurance claims.

Up to 5 per cent of such cost (often in five figures) are usually discovered, unrecovered and are eventually written-off.

Team morale is deflated and it is not uncommon that medical leave consumed by remaining employees climb during these trying times,which only
“fuels” the situation further.

The service advisor is one of the most critical contact persons at the dealership. A “break” in the service flow has a direct impact on the service operations and customer service levels.

Loyalty to the brand which is enhanced with relationships service advisors have often built over the years, immediately takes on a new experience starting with a new recruit again.

When you consider that customers want transparency, choice, options and honest advice, the expectations have to be fulfilled soonest by an inexperienced new advisor.

Consider the same thing happening at the back-end when a couple of technicians decide to throw-in their notice of termination on the spot and the front office will be left with little choice but react by booking in fewer cars into the service centre.

This is due to the limited capacity both in the workshop and car park area, which will quickly fill-up with repairs in progress. As a result, lead time for service increases and customer satisfaction suffers in the longer term.

Brands that pride themselves with processes and systems in place in order to cushion the impact of employee turnover, often do not realise that the name of the game in the service business is the ultimate focus on customer rather than on production.


Regretfully, salaries of service advisors and technician have not risen in tandem with inflation in the last 20 years despite the increasing demand for this category of staff.

Starting salaries of most service advisors or technicians with a Diploma in Automotive Engineering at franchise dealerships start between RM1,200-1,400. Graduates of Malaysian Skills Certificate Level 1-3 are offered between RM900 and RM1,100. This is low considering market conditions today.

Many see job hopping around as a good way to move up rapidly in title and pay. In Frederick Herzberg’s Theory of Motivation, he put forward that factors such as pay, relationships with the boss and working conditions if not present, can demotivate and cause dissatisfaction.


Decision makers are mostly oblivious to the reality that top independent non-franchise workshop,out-bid franchise workshops on competitive cost, convenience and flexibility; they are already attracting these graduates with a minimum attractive payof over RM2,000 per month.

If you feel that franchise dealers would normally have the upper hand on staff benefits like medical, contractual bonus and the likes, think again as the majority of independents are already providing these non-salary benefits as well and more.

Many leaders in franchise dealerships are likely be owners themselves and therefore put profits and facilities ahead of people and happiness, compared to the independent non-franchise workshops.

Cars have become increasingly more complex thorough the years, with the addition of highly advanced electronics, are expected to be engineers with the ability to operate complex diagnosing tools and workshop equipment.The crux of the issue is that young people are still not being drawn towards our industry.

We have to reverse this image of being low-tech and dirty. A minimum pay scale of RM1,800 is therefore justified as a starting point.


Employee turnover is the number of employees you have leaving your organisation over a particular measured period (usually a year). The total turnover rates in the retail motor industry in Britain is around seven per cent , and aftersales staff turnover rates alone remain in the double digit region.

It is also estimated that the cost of technician turnover is conservatively around 50 per cent of the employee’s annual compensation, regardless of the wages paid to them. This cost is significantly higher (over 50 per cent of annual compensation) for managerial positions.

To put this into local perspective, let’s assume the average starting salary of technician witha diploma is RM1,800 or RM21,600 per year. Taking the cost of turnover at 50 per cent of the annual salary, the amount is RM10,800 per employee who leaves the company.

For the small-sized company or a service dealer point of five technicians who has a 20 per cent annual rate of employee turnover (a rather conservative figure), means the dealer theoretically replaces the entire technician pool every five years.


  • Costs due to person leaving (administrative, removing records and passwords,exit interviews)
  • Replacement costs (advertising, recruitment, screening applicants)
  • Management time (interviews and checking references)
  • Training/orientation for the newcomer
  • Overtime cost of other technicians to manage workshop from the limited capacity remaining


  • Coping with unfinished work in the in the workshop with the reduced manpower
  • Loss of productivity from the departing technician, notwithstanding the negative influence he has on the remaining since serving his notice period
  • Immediate effect on customer satisfaction when a staff leaves without completing long repair and overhaul jobs
  • Reduced morale on other staff with what seems to be a net outflow of competent technicians among the team members
  • Negative effect on customer service levels and appointment lead time until the replacement is fully as productive as the departing staff
  • Warranty claims potentially going bad due to poor process compliance in the remaining days handled by the departing employee
  • Loss of special tools and proprietary information if the employee exit is not managed carefully

The “soft costs” are more nebulous. They are the “hidden” cost as a result of a customer following the service advisor to his new place of work.

When you consider all potential cost involved, 100 per cent of the employee’s annual salary (in this case RMRM21,600) is significantly the real cost of a technician leaving the organisation.

The above example is only for a young technician leaving the organisation. When you consider experienced technicians and managerial staff, the numbers will rise in proportion to their salary.


Fewer young people are joining our industry. If they join, they don’t remain. And unless the drain on staff is reversed, in time to come, get used to seeing foreigners working at your preferred dealership.The problem is going to get worse.

We’re quick to gripe about young workers lack of commitment and tendency to job hop but how many leaders sincerely interact, let alone engage with this group of employees. Most of them aged between 20-30 years, form up to 30 per cent of the dealership workforce.

Generation Y as they are referred to, place importance of personal growth and fulfilment when choosing between jobs. This was revealed in a recent report by Kelly Global Workforce Index 2012.

Taking an interest in your staff is the first positive step in the engagement process. Employers have to find ways to harness employee strengths to retain and gel them into the Vision of the company.

It is very cost effective for a company to invest in the retention of its staff and developing people within the organisation. The return on investment on staff development and retention can range anywhere from 30 to 70 per cent.

Leaders must encourage managers to make their work teams more contented and motivated enough to stay on the job. The workplace must be less rule-restricted and enjoyable; not forgetting more forgiving when new mistakes are made.

There seem to be many exceptions and positive stories shared by employees during my trainings which paints some hope that there is a shift in management attitudes, emerging just in time or maybe a little behind time.

A study conducted by a leading compensation and retention consulting firm in the US surveyed 2,472 dealerships to identify successful practices in managing and retaining employees.

The study revealed that “customer retention correlated to employee retention”.

It concluded that it takes about three years for an employee to become fully trained and to develop his skills.

Devindran is a veteran in the Malaysian automotive industry, and is now the principal of his own company, ACS AsiaPac Sdn Bhd, focusing on aftersales training, consulting and raising the overall image of the aftersales stakeholders. For information on upcoming programmes, log on to www.acsasiapac.com

Fotolia 80062612 M1 sidebar

Unemployed Graduate Trainee Program 2016

Click here for more info!


Parts Management Program

Click here for more info!


Our Principal Consultant

dev b

Devindran draws upon his vast 24 years Motor industry experience and exposure to different brands. As Managing Director and Principal Consultant of his company, Devindran has the passion and knack for turning Dealerships fixed operations into profitable, performance oriented and a sustainable business pillar through his own style and approach to life.