Puente Hills Toyota (PHT) is a large Toyota dealership which is owned by the corporation Hitchcock Automotive Services. PHT is situated in city of industry, California, about 25 miles east of Los Angeles. PHT offers a wide variety of new and used cars (this is unique in the industry). Furthermore they offer Toyota incentives, service specials, and Toyota parts savings. The annual profits of PHT totaled about $1.8, with annual sales of $ 85 million. PHT had a total of 145 employees. The employees are very valuable to PHT due they are the ones who have to advise the customer, sell the vehicles and repair them. But it is hard to keep them al motivated. As said by Howard Hakes; “It’s people who give us our biggest successes as well as our biggest challenges”. The most important is to get all the employees in the same direction, to reach the companies goals.
For PHT there are two important things, that both the manufacturers and the customers are happy. PHT is divided in five departments, who are reporting directly to the dealership manager, namely: a sales department, and service department, a body shop department, a parts department and a Finance and Insurance department. The departments are managed as profit centers. Within this profit centers there are different performance measurement and incentive systems. First the performance measures and incentive systems that apply to all the departments will be discussed. Than the Sales and Service department will be discussed separately. All the bonus plans within the sales department start from one. At PHT, most employees’ variable incentive pay increases linearly with performance, however performance is defined; that is, the higher the performance, the larger the bonuses that are paid.