Let’s kick things off with some background. Can you tell me a little bit about your role with KPA and how you came to be here?
Yeah, I’ve been working with KPA for about 23 years. Starting off, KPA was a California-only company, in the late nineties. And they decided they wanted to be a national company. One of the first places they expanded to was Texas. Living there at the time, got the job. I was in charge of seeing the clients that we had.
It was only like three at the time. Now we have close to a thousand there. So, I’ll go out and see our customers due for OSHA, for EPA compliance, for safety program management, hazmat compliance, and then my role evolved into managing a team of people that would do that. Uh, then it evolved again into doing sales and managing the operations.
And then finally, it’s evolved where I’m just in sales only, working with- and my, my current role is I work with existing clients on programs and services that they may not be using.
And as someone who works one-to-one with dealership leaders, you have such a valuable perspective on what’s going on in the world of dealership safety and compliance. So in a general sense, what should dealerships be focusing on in terms of compliance to keep things running smoothly?
Yeah, you know, uh, compliance is broken down into four components. And the top three here are documentation, training, and auditing. And then the fourth one is fixing the things that you actually find.
So, what we find is that, whether it’s the EHS, which is the OSHA, the EPA and the safety, or it’s HR or F&I, you know, when it comes to documentation, a lot of people say, oh yeah, I’ve got a written plan for hazard communication or emergency response or a spill plan. But I just, nobody can find it. Or maybe it’s from many Spider-Man movies ago.
Do you know what I mean? Do you have the documentation? Does everybody else know where it is? And is it current and complete? So that’s things, you know, from an HR perspective. When’s the last time your handbook was updated from an F&I perspective? There are new safeguard rules that are coming out that you’ll need to update your written program, but you know, your red flags plan, for example, came out about 10 years ago.
A lot of people can’t find it. So take a look at your documentation because that’s the first thing. If you ever did get a regulatory inspection, that’s the first thing they’re gonna look for. They’re gonna say, show me all your written documentation, show me all your written policies. Then they’re gonna say, show me the training that you’ve done to back up those policies.
So that’s the other piece of it is a lot of dealers can’t prove that everybody’s been trained on all those different topics, whether it’s red flags or customer information security or hazmat certification or right to know, or any harassment. Or if they did, it’s old. So it’s one of those things that training has to be…
You gotta set up a system where the new employees get trained on day one. Because the new guy or the new girl is the most common place for a violation or a bad injury. Talk to any insurance guy, they’ll tell you that the new guy always gets hurt. So it’s one of those things that, who knows what they were trained on at the previous place, where they worked.
So you have to train every new employee on the first day on the job. You know, there are web-based approaches that most people use, right? It’s the easiest way, rather than taking up somebody’s time to do all the training live, but you wanna make sure your training is thorough. So it covers all those topics.
Right? F&I, EHS, HR. But also it’s effective, you know, is your training good at influencing behavior? You know, and as a manager, when’s the last time you watched it. Other people say, yeah, do the training, but then they’ve never actually watched it. So you wanna make sure that the training you have gives scenarios and doesn’t just check the boxes of, yeah, don’t harass people.
It’s supposed to talk about all the different types of harassment and all the different protected classes, for example. So new employees need training on day one. And then you gotta make sure you’re redoing that training. And it’s usually annually. There are a few others that are required every three years, like DOT, hazmat, um, forklift training, for example.
But the majority of the trainings that you’re required to have are annual. And by the way, doing this pays for itself. If you’re doing the training and doing it right, it’s gonna help reduce liability issues, it’s gonna help prevent a regulatory inspection, and it could help prevent a bad accident. So that’s first documentation, then training. Then last is audit: is what are you doing to make sure that you’ve got that extra set of eyes doing an audit and it should be done by somebody without skin in the game.
Right? That’s one thing I see is that many people say we audit ourselves. Nobody can audit themselves well. Right. It’s very difficult to audit yourself well, so having that outside set of eyes, looking at it. Or different departments auditing each other, you know, that’s the kind of thing you need that extra set of eyes, and then you gotta have a way to document the things that you found.
And then a corrective action plan. What are we doing, who’s gonna fix these issues that we found, and then by what date. And you’ll find that doing all this stuff systematically really helps in a regulatory inspection because when they come in, you can show effort, right? And effort goes a long way to show somebody, “Look, we’re trying here.” Versus the guy that says, “Oh my God, I didn’t know that was a requirement. I had no idea.” They don’t care. You should know. You’re, you’re basically required to know what all these different regulatory agencies say that you should have.
The ignorance is not bliss in this circumstance. So it sounds like it’s really all about having those compliance and safety programs set up from the get, making sure you have the documentation to back it up and to prove it, and then making sure you have checks and balances, some kind of third party or interdepartmental system for auditing those processes along the way.
Then the training, training’s the big one that we find that people say, “Oh yeah, we do training.” And then they get amnesia and you pull the records out and it’s been three or four, five years. Just like, “Whoa, this isn’t current training.”
Yep. Gotta make sure you have that training program in place.
Are there any particular topics in dealership safety that leaders should be really paying special attention to for 2022?
Safety-wise, it’s the ongoing side of it, whether it’s, you know, we’ve got a safety committee, we just haven’t met in a few years. You don’t have a safety committee, right. And safety committees actually pay for themselves. You’re talking about accidents and how they could be prevented, which can help prevent the next accident from happening, help lower your insurance rates. You know, your ex-mod rate should be in the 0.7 0.6 range. If you’re there, that’s great because they’re looking back at four years’ worth of accidents. But you’ve gotta keep it that way.
The insurance company’s just waiting to raise your rates. And so we find that with a few bad accidents, that rate goes up, then stays up for the next three or four years. So if, you know, if your rates are low, you want to keep them that way. And if they’re not, you need to start working on a sustained, systematic process to bring your accident rates down and then keep them that way.
From an HR perspective, we find that some people say they can’t prove that they’ve actually done any harassment training. And don’t forget there are about 12 states now that all have their unique anti-harassment requirement.
So if you got training in place and you’re in Connecticut, or you’re in Oregon… you know there’s a lot of states out there that have their own. Even Illinois and Texas, who would’ve thought that Texas has their own specific HR requirement for anti-harassment training.
And, our training was just updated for about gender identity things. You know, it’s, your training should continue to evolve and cover the things that you know are required.
And then also from an F&I perspective, gotta make sure that all salespeople are getting that F&I training. On day one.
And that’s the thing I find with dealers. They say, well, my F&I people are trained. Well, guess what? Your violations can start in the sales department. And that’s a turn-and-burn environment. They have high turnover. So it’s super important. They need customer information, security training, they need 8,300 cash reporting. They need the red flags training. You know, those are the main three that are required annually but train your salespeople and your F&I people on that.
What advice do you have for dealership leaders who are on the fence about whether or not to bring in the expertise of a consultant?
You know, that extra set of eyes can, I mean, you can do this on your own.
Absolutely. You can, but you need to make sure that you’re doing it well, and it goes back to, can you audit yourself well. It’s kind of like, you know, I pay my F&I production company to come in. A lot of owners do. It’s great. It’s a big profit center. You wanna make sure that your F&I people are selling, you know, the product and maximizing that as far as giving, you know, your customers, all those different options, but that company’s in charge of jamming on the gas pedal, which is good. You want that. But it’s oftentimes hard to have that same company be in charge of the brake. So separating your production from your compliance is super important to have really effective auditing.
Absolutely. I mean, it never hurts really in any circumstance in life to get a second opinion, a second set of eyes on a scenario, a new perspective, is always useful.
My daughter audits her room and says, “Hey, it’s clean. Dad, looks great.” And I go up there, “it is not; what about this, this, and this.” So that, you know, her eyes, it looked awesome. But you know, because you can’t audit yourself well. Yeah, and you can’t do it well.
If listeners walk away from this conversation remembering one thing, what would you want it to be?
Get your documentation training and auditing in order and, you know, kind of think about from a perspective, is that in place, does it help prevent an issue?
And that issue could be a regulatory inspection. That issue could be an accident. That issue could be a reputation issue from an F&I perspective, right? Some customer claiming that, oh, my identity was stolen, or they’re falsifying income, or they gave me a different rate because of my ethnicity. You know, those are things that you’ve gotta make sure that you’ve got a process in place that includes the written plans.
Training everybody on it systematically, training everybody every year. So that ongoing side of it and for the new employees. And then have a way to audit it. And then finally, fix things. You know, it’s- you can’t just have a way to audit it and then have no plan in place to say, all right, how are we doing on these action items? That should be part of your systematic manager maintenance for sure.
I would agree. Well, thank you so much, Craig, for talking with us today. I really appreciate it.
Yeah, absolutely. It was a pleasure. Thank you.