More than replacing non-performers or hiring overachievers, the success of the sales department is really a manifestation of the dealership culture that is in place and the psychological climate that permeates the department. Unlike other meaningful departmental benchmarks, however, dealership culture and sales department climate defy easy explanation and routine and repetitive calculation.

While climate may vary from department to department and will be the subject of next month’s column, culture is generally a dealership-wide phenomenon and will be the focus of this column. Culture refers to the shared beliefs, norms and values that exist within the dealership, and for purposes of this column, the sales department.

Dealership culture is invisible and intangible, but is nevertheless instinctively known by every employee. Dealership culture is the means by which internal and external opportunities are explored and exploited. In sum, dealership culture is “the way things are done around here.”

A strong, positive, healthy culture does not just magically appear, but instead, is a function of three carefully related components. Positive cultures stress leadership over management; develop a motivating environment that solicits employee input and judiciously recognizes employee output; and, carefully align individual goals and objectives with the goals of the department and the mission of the dealership. On the other hand, unhealthy cultures emphasize management over leadership; have an ingrained arrogance; and have an antipathy to change and innovation.

Edgar H. Schein, one of the leading writer’s on the subject of corporate culture, once wrote that “a given organization’s culture is ‘right’ so long as the organization succeeds in its primary task.” The following scenarios illustrate only a sample of the type of cultures that may be in play throughout North American equipment dealerships.

Scenario 1: A dealer who consistently arrives late to his management meeting unprepared and then spends the entire time playing with his Blackberry. A culture of hubris that fosters a high employee turnover.

Scenario 2: A CEO who uses fear and intimidation during management meetings while flagrantly smoking cigarettes in violation of the company’s non-smoking policy. A culture of intimidation that results in an exodus of qualified people leaving only those who either (a) can’t find employment elsewhere; or (b) are close to retirement.

Scenario 3: A dealer who will drive all over the state/province to save $200 on a company vehicle while simultaneously castigating his customer base for being nothing but “a bunch of ungrateful price shoppers.” A culture of hypocrisy that leads to satisfying a self-fulfilling prophecy of low margins.

Scenario 4: A dealership where meetings are non-existent, employee recognition is an after-thought, and performance pay is unheard of. A status quo culture where change and innovation are foreign concepts and sales and bottom-line performance are market driven rather than marketing driven.

Scenario 5: A dealer who charters a plane and takes his entire employee base to an all-expense paid weekend getaway to reward them for their previous year’s efforts. A culture of reward and recognition that fosters teamwork and esprit de corps.

Scenario 6: A dealer who implements multiple sales compensation packages in an effort to keep everyone “happy.” A culture of indecision and managerial abdication.

Scenario 7: A dealer who challenges his employees to establish meaningful goals and objectives, implements benchmarks by department, and then, measures individual and departmental performance by comparing outcomes to benchmarks, and finally, rewards on the basis of goal fulfillment. A culture of expectation and performance.

A dealership culture is incredibly difficult to change. In fact, it has been noted that “80% of attempts by companies to change their corporate cultures end in failure.” That’s the bad news! But should dealers nevertheless seek to change their culture?

In a study that they cite in their book, Corporate Culture and Performance, authors John P. Kotter and James L. Heskett, both of the Harvard Business School, found that over an 11-year period, businesses that had a strong, positive culture, increased their revenues by an average of 682% and their bottom line by 756%, while companies that did not have a strong culture increased their revenue by an average of 166% and their bottom line by only 1% for the same period.

Similarly, a study conducted by Apasu, Ichikawa and Graham and documented in an article entitled “Corporate Culture and Sales Force Management in Japan and America,” found that value congruence not only influenced sales performance, but also, the job satisfaction of salepersonnel in the U.S.

Clearly, with these performance-enhancing results, dealers interested in improving the overall performance of their sales department would be wise to ambitiously embark upon a journey that would ensure a strong, healthy, and positive dealership culture.