There are many ways of executing research projects and our preference is to utilise telephone surveys. We like to go directly to the horse's mouth and obtain our information first hand. In other words we don't guess anything; we use so called 'primary research'. If necessary we will phone up and interview hundreds of people or businesses. However the sample so obtained has to be representative. In the case of franchised dealers, for example, the profile data always include total staff employed and might even include a breakdown of staff employed by department. And thereby hangs a tale.

When completing a telephone survey you don't obtain an interview from every call. But for franchised dealers we usually complete an interview for every two or three contacts. We call this our 'hit rate'. Lately out 'hit rate' for franchised dealers has fallen from one interview per two or three calls to one in six and the reason is fairly clear - redundancies combined with holidays. The downturn, and dramatic fall in new car sales, has hit franchised dealers hard and they have been forced to act on staffing levels and the average number of staff employed has fallen by over 10% from a year ago.

Digging deeper, we note that car sales executives and service technicians have been affected most by either 'natural wastage' or redundancies. Given that two-thirds of the staff in dealerships work in these positions, it is hardly surprising. But as sales executives and service technicians are responsible for generating sales, are cuts here a sensible choice?

Obviously every franchised dealer has to act swiftly and responsibly to economic conditions otherwise they could join the burgeoning list of failures. Our point, though, is that it might be better to cut jobs in non-productive areas and/or ask employees to accept fewer hours, and therefore less pay, or simply reduce pay rates. This might seem controversial, but other industries and retailers are implementing such options successfully.

Preparing for our forthcoming service report update, we have investigated the effects of the recession on franchised dealer service department revenue and the fall in service sales is around 12% - accounting for both retail and internal (new car preparation). The average dealership employs just short of six technicians so by making one technician redundant, or not replacing one who leaves, the productive capacity is reduced by 17%. The shortfall has to be made up by the remaining five technicians through increased productivity, thus increasing bonus, or overtime working. More than that, we have found a large number of dealers disinclined to take on apprentices, who almost always contribute to overall productivity.

The upshot is that the savings are nowhere near as large as might be expected and it is a similar story in the sales department especially as salaries are highly-geared to commission. Clearly every case is different, but it is well worth considering all the options with staff before acting.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in July 2009. (See www.auto-retail.com for subscription details.)