Chapter 17
Gus's Garage

By Jake Snyder

It took only two weeks for the attorneys and accountants to finalize the deal for Gus's purchase of Hometown Chrysler's autobody operation. Since the agreement was essentially already made, shop hand-off and integration had begun two weeks prior and has now been underway for 30 or so days.

Both Gus and Tom, the existing general manager at the new shop, have been busy with insurers and employees. Gus is very pleased with Tom's support and buy-in. Gus has not lost a single employee from the new store, and gives Tom all the credit for keeping his people focused and seemingly undeterred from distraction caused by the acquisition.

Although Hometown Auto-body had about 25 percent of sales revenue driven by DRP accounts, Gus is still hoping not to lose a single insurer referral customer.

Of Hometown's five DRP insurer partners, the largest insurer averaged ten cars a month with an average ticket of about $2,500, amounting to about $300,000 in sales over the past 12 months.

The other four DRP insurers combined for about the same amount of revenue. Individually, they refer anywhere from one to five cars monthly. Luckily, Gus's Garage is also a DRP provider for the other four insurers.

Tom and Gus have appeared to overcome the ownership and name change challenges with the existing DRP insurer accounts.

Since it was Tom who acquired and maintained the original Hometown DRP accounts, insurers were willing to maintain their referral agreements as long as service levels and process compliance remained the same with Cherock Collision.

We were also aware of the name change and the possible confusion to the claims, brokers, and agent staff that previously referred claims customers to Hometown Autobody.

Gus, Tom and I developed "word-track" to use as scripting for insurers, Hometown customers, and employees (both dealership and both auto body shops) to announce the details of the ownership change.

The basic word-track of the announcement was used four ways:

• Dealership staff: Fred issued an internal memo with suggested employee word-track for customers to address the name and ownership change.
• Past bodyshop customers: Direct-mail announcements on Hometown stationery were sent out to all previous body shop customers over the past two years.
• Insurers: Direct-mail an-nouncements were also sent to insurers and their claims and sales force, with a request to forward the announcement to insurers' claims call-centers.
• General Public: Home-town's radio commercials were revised to let the public know that Hometown still provides autobody services, with the same management and staff, but under a different name.

Gus paid for the direct mailings, and the revision to Hometown's radio commercials did not cost anything more.

The basic message was consistent with new word-track and advised radio listeners Hometown has undertaken a new strategy to provide even better autobody service for its dealership customers.

We had also given much thought to assuring that the acquired store and its employees felt part of the new organization. Gus understood immediately that if Tom felt threatened or left out of the process, he would not be able to effectively manage the transition.

Gus decided to include Tom in our monthly meetings. Tom has proven to be instrumental in reassuring his people that there are no threats due to the acquisition.

It was important to maintain morale and ensure that if eventual employee or staffing changes were needed, it must be properly planned and under Gus's terms.

As part of the integration plan to get employees and staff acquainted with each other and the new shops, I created a poster of each shop to display in the lunchrooms so employees could identify with their new sister store.

Each poster included an organizational chart with small photos of each employee, and photos of work areas and building exteriors.

Over the past 30 days, Gus made sure to include Tom in the integration plan for the two businesses. He also had Tom participate in employee announcements at both shops.

It was Tom's idea to make up the shop posters. He also came up with a great idea for getting the employees quickly acquainted with each other and visit their new sister-store.

Employees from each store spent a day at their new sister-store getting an escorted tour, introductions, and working with new co-workers. Daily, a pair of employees visited and worked with their counterparts at the other's store.

To encourage informal discussions and to create a little novelty, we asked that the same job-type employee, who would subsequently act as the visiting employee's host, pick-up two same job-function counterparts and chauffer them back and forth on their designated visit day.

Gus also asked that each host take his two new co-workers out to lunch at Gus's expense.

To transport the guests, the host employees used the company truck for Gus's Garage personnel and Gus's personal vehicle for Cherock employees.

Gus and Tom asked the employees to look at the differences in equipment, processes, and materials used by their counterparts in each shop. We gave each of them a clipboard and legal pad for notes. They were also given a crib-sheet for their job-functions as a reminder of key topics (i.e. paint systems, measuring systems, computers, filing systems).

Employees were encouraged to discuss among themselves their observations and viewpoints. Gus and Tom were going to debrief the employees and compare notes.

I suggested to Gus and Tom, they also identify key personnel from each store to act as an on-going advisory group that participates in developing continuing integration and im-provement suggestions for both stores.

It took two weeks for all employees to complete the visits between shops, but it appeared to be a hit. There were no complaints and the employees enjoyed the break from their normal routines.

The employees told Gus and Tom that they shared ideas among themselves and considered the exchange worthwhile.

Gus was so pleased by the positive responses that he decided to bus employees between stores in the future, on an alternating basis, for an afternoon lunch on a quarterly basis.

Gus and Tom also took advantage of the employee exchange to encourage shop pride by having the employees clean up their own stores.

A major clean up of each store was conducted the Friday and Saturday before the visits began.

Gus and Tom announced that they wanted to present the shops at their best to new co-workers. Neither one advised employees that their sister-store was doing a similar clean up and left it up to the employees to decide if they should share their impromptu housekeeping chores.

In another of Gus's coups, he was able to recruit and hire the bookkeeper who handled the books for the autobody operation away from Hometown Chrysler. Unfortunately, Gus had to overpay Jennie to come on board to Cherock, and Fred, the owner of Hometown, had to guarantee that he would hire her back if things didn't work out with her new employer.

In exchange, Gus suggested that they work on an agreement to purchase parts for Gus's Garage from Hometown Chrysler. Both Jennie and Pam, Gus's bookkeeper, had been working together for the past three weeks to install Gus's bookkeeping system into Cherock Collision.

Jennie spent one week at Gus's being trained and covering Pam's duties while she set up the new system at Cherock.

In addition to creating matching accounting systems for the two stores, we also began to create matching operating measures. We first revisited the original operating objectives that Gus had for the new store:

1. Improve on-time delivery and process cars in the same sequence in which they arrive or are scheduled-in;
2. Significantly reduce internal defects and redo's;
3. Improve shop efficiency by 25 percent.

To achieve these outcomes, we decided on conducting a benchmarking or baseline measurement at each store on the performance data in the chart at right.

Data will be collected for the next month and monthly performance data will be published for both shops at each store beginning in the following months. The comparative shop performance data will be displayed under each store's "get acquainted" poster.

Next month I hope to get back to those "training options" mentioned in last month's Gus's Garage.

Jake Snyder, creator of the popular Gus’s Garage series, is interested in hearing from shop owners with real-life questions.
E-mail JJ the Remote Pro, Gus’s intrepid consultant.