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Sharpe BMW Case Study: Team Analysis

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on 26 September 2013

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Transcript of Sharpe BMW Case Study: Team Analysis

Sharpe BMW Case Study: Team Analysis
Sharpe BMW: Case Study Introduction
Service Dept. revenues and the dealerships customer satisfaction
index (CSI) ratings are down
Todd Dunn has been hired as the new Service Manager
Service departments are an integral part of the revenue stream for
auto dealerships
Bob Deshane, the service director, says:
“The average auto dealership service department maintains about an 82 percent absorption rate. This means that the profit from the service department pays 82 percent of all of the dealership’s overhead. Good service departments are close to 100 percent, leaving all dollars from car sales as pure profit. We currently fall between the average and 100 percent" (Cummings and Worley, 2009, p. 498).
Deshane feels the way to correct the problems is to change the way
service technicians are compensated
Sharpe BMW:
Proposed Compensation Plan

Monthly bonus to be paid to a service technician if the
technician's individual CSI ratings are > 91%
The bonuses range from 2-3% of the hourly wage
Deshane says:
"Though this does not seem to be a significant amount of bonus money paid, it is a radical change for Sharpe BMW and one that is not very common in the industry. The bonus plan shows dealer commitment to CSI results" (Cummings and Worley, 2009, p.502).
Question 1: What do you see as the pros and cons of the proposed bonus plan?
Question 2: Based on the information in the case, prepare an implementation plan for Dunn to follow.
Bruce Brown, Jennifer Goelzer, Jessica Fadel & Kanioa Grager
University of Incarnate Word
Compensate a technician for doing a good job, regardless as to whether it's a warranty repair or a non-warranty repair
Motivate technicians to provide quality service every time
Help increase the scores of the CSI, which brings in new models and flexibility with the manufacturer
Improve technician morale
Without any ability to change or impact the systemic issues which created this situation (BMW Guide vs. The Mitchell Guide), the monetary reward system is a good tool to further provider incentives for employees for the good of the employee through higher salary and ultimately the dealership through higher CSI scores

"46% of companies' support representative compensation practices are influenced at least somewhat by measures of customer satisfaction" (Rains, 2012, p. 4).
Begin by explaining why the changes are being implemented with good communication and management buy-in
CSI for Sharpe BMW needs to be fine-tuned. 100% = Excellent, 80% is good. This is a wide range of the quality of work and should be more detailed.
Transparency and fairness built into the distribution of work assignments
Adjust raises to 5-6% to make more of an incentive
Conduct quarterly reviews and adjust raises after 3 high-yielding quarters.
Possibility of a holiday bonus
Continue to support the Jr. technicians in their continued education
Provide a feedback and analysis mechanism to review the results
Provider customer service training to increase CSI
"While basing salaries and bonuses on customer satisfaction may encourage some employees to provide better service, training support staffs and modifying practices based on the assessment of customer satisfaction is the key. Measurement alone will not improve customer satisfaction. When a company’s revenue depends on satisfied customers, taking action and making research-based modifications is critical to its survival" (Rains, 2012, p. 5).
Factors of CSI are beyond the technician's control
Difference is skill sets between technicians will affect CSI rating
Disparity between warranty and non-warranty pay doesn't appear to be changeable
Doesn't address the fairness aspect that comes into play with distribution of jobs
No additional customer service training provided

Cummings, T.G. & Worley, C.G. (2009). Organization
Development and Change. Mason, OH: South-Western
engage Learning.

Rains, J. (2012, October). Measuring customer satisfaction with
support services. Retrieved from http://www.thinkhdi.com/~/
Full transcript