Interview with Armen Mansouri

Two record months in a row 0:00

Steve Shaw: Here we are again, Dave Rogers. Can you believe it? We've made it to the end of another month.

Dave Rogers: Amazing. I'm going to talk about the weather.

Steve Shaw: You're not going to talk about the weather. I know we do that too much. If we talked about the weather, we'd have to bring in Armen, who's in Los Angeles, California.

Dave Rogers: And who's the friend you brought along with you here, Steve?

Steve Shaw: Again, I had to find some people with hair. So I brought Armen Mansouri. He is the service manager, the director, of Porsche South Bay in the South Bay area of Los Angeles, California. Now, in full disclosure, I've known Armen from many, many moons ago. I was doing some work on LinkedIn, and Armen made a post saying he has had two very successful, if not record, months in a row. And I went, "You know what? I haven't talked to this dude in years. I'm going to get him on the show." So that's what got us here. Welcome, Armen. It's great to see your smiling face again.

Armen Mansouri: Thank you, Steve, and nice to meet you, Dave. By the way, I actually got a haircut today just for you, Steve, just for the podcast. I was way out of whack, so I thought I'd better get cleaned up. Thanks for having me on.

Steve Shaw: It's great to have you here, sir. Just so everybody knows, like I said, I've known Armen for many, many moons. He is a very well-seasoned veteran of the high-line luxury side, with Audi as well as Porsche. We go back a long, long way. Armen is also a military veteran who served overseas, and we'll probably get into that a little bit. But I really wanted to bring Armen on just to say hello. We're all about talking to people about being successful and how they do it, and we just love chatting about the auto industry. So, Armen, you said you had two record months in a row. How'd you do it? Tell the people what you did to have two record months in a row in this crazy economy.

The 90-day rule and the 1% rule 2:19

Armen Mansouri: Well, I held technicians hostage. I told them they're not allowed to go home. I sent threatening letters to their families. No, I'm just kidding. I came to this store a little less than a year ago, so July will be a year. And I did the 90-day rule. The first 30 days I just observed. No massive changes. I got to know the staff and the team. I found weaknesses and strengths in everybody, and then I worked with them individually to show them their strengths and their weaknesses. The weaknesses weren't a beatdown. I showed them my weaknesses. I said, "Listen, even as a manager I have some weaknesses. These are mine, and I'm working on them. I'm going to share with you your weaknesses and where I think you'll improve." Some took it to heart and fixed their weaknesses, and some got offended and moved on.

And I did the 1% rule. Instead of making massive changes, entire policy changes, heads rolling, "It's my way or the highway," I made small changes. Instead of coming and going as you please and not watching unapplied time, now we're going to watch unapplied time. Small, minute, incremental changes. Instead of making one massive change, a one-degree change over a period of time is going to yield a massive change. That's what I did. I went after the low-hanging fruit to begin with. Every seasoned manager knows this stuff. I'm not going to sit here and preach what everybody does. Open ROs.

Steve Shaw: Well, give us an example. What's low-hanging fruit? Because not everybody does it.

Armen Mansouri: I go over open ROs with my advisors two, three times a week. Right before I got on here, I had my little spreadsheet, and I'm going over it with the advisors: "Okay, tell me what's going on with this car." Some advisors will say, "Hey, I'm waiting on parts." Okay, cool, parts. Then I walk across to the parts department: "The advisor's telling me he's waiting on parts." "No, that part's been here a week." I go to the technician: "Do you know this part has been here for a week?" "No, I didn't know." So, small corrections that way, and then the machine starts moving quicker.

The opcode report. Everyone knows the opcode report. I run an opcode report and see what the top five opcodes being used are. We do a lot of brake flushes and alignments. Okay, let's check our pricing. Is the pricing right? Can I add ten dollars to the brake flush? Can I add twenty dollars to the alignment? Things like that. I realized the matrix pricing was way out of whack over here. We were losing clients, not customers, clients, because we were too expensive. Year over year our clientele was dropping, and CP repair orders were dropping. So I made some changes there, and now they're coming back and staying here. The easy stuff is what I did.

Dave Rogers: How big is the shop?

Armen Mansouri: I have 21 lifts and 21 technicians, including apprentices, and four advisors. For a Porsche store, in my humble opinion, that's considered a fairly decent-sized store. There are Porsche stores that have six advisors, and I think I've seen one with seven. But I came from a small store where we ran ten technicians with a shop foreman and two advisors. Prior to that, I think it was 16 or 17 technicians with four advisors. So I'm back at four advisors and 21 techs. I'm probably getting primed to bring in a fifth advisor.

Leading like Chief McGuinness 6:25

Steve Shaw: Nice. Dave and I always threaten to have this conversation about management versus leadership. So what is your approach? Kind of an oddball question, but do you see yourself as a leader, a manager, or where do you see yourself in that role? What you said about taking these guys and talking about their strengths and weaknesses is near and dear to my heart. How did you approach that, management versus leader, when you sat down?

Armen Mansouri: It's a hard question to answer. I have a coffee mug that one of my employees gave me, I don't know if it was for Christmas or my birthday. It says "World's Okayest Boss." There are greater managers than me, and I'm better at certain things than others. I don't think I'm the world's greatest manager or the world's greatest leader. With your permission, could I talk about November or December of 2004?

Steve Shaw: Please.

Armen Mansouri: Myself and six other guys from my military installation, Vandenberg Air Force Base, were given orders to go to Iraq to do convoy security. In the Air Force, that's kind of unheard of. I joined the Air Force to be in the rear with the gear. I didn't join the Army or the Marines to go to the front lines. I'm five foot six and I'm terrified of loud noises. Who wants me on the front lines? And here I am going to Iraq. Our chief, Chief McGuinness, God bless him, had orders to go to Qatar. Qatar is two beers a day, out of harm's way. You have an air-conditioned, five-star hotel, a four-month deployment, as they call it, and then you come back home without a scratch.

The man picks up the phone. I don't know who he called or what he did, but he took the position of a lower-ranking individual to come with us. As an E-9, which is one of the highest enlisted positions in the military, he took the position of an E-5, which is what I was at that time, to make sure his boys from Vandenberg Air Force Base didn't go without a leader. Because of that, I learned that I would never make my guys do anything I wouldn't do. So my guys see me in the shop holding a torque wrench, getting in the car and holding the brakes, or helping lower an engine. My advisors see me in the drive writing up a client. My porters see me washing a car. To me, that's what a leader is: someone who is willing to do what he tells the other guys and gals to do. That's my definition of leadership. I tend to lead the same way I saw leadership in the military. I lead with love, if you want to call it that.

Steve Shaw: That's awesome.

Dave Rogers: That's really good. We were just talking about managers going to training and seeing what their people are learning, getting their hands in there and seeing what's going on. That's exactly what you do, which is great. I think you have to do that. Steve and I like to mess around with what's managing and what's leadership, not necessarily which is more important. But some of the things you did in the beginning, that 1%, that's a management skill. You're not going to break everything, and you're not going to fix everything at once. You're going for the low-hanging fruit, as you say. That's a good manager, and then following up and doing it over and over again. But getting out there in the drive, that's where the leadership comes in. So it sounds like you have a little bit of both going on.

Armen Mansouri: I would hope so. I try. Seeing what Chief McGuinness did for us literally opened my eyes. There's a saying in the military that we would follow certain individuals up a hill into a barrage of gunfire. We know we're going to get killed, but if my chief is going up that hill, he knows I'm going to be behind him. If I'm getting killed, I'm getting killed, but I'm going up the hill with him. On LinkedIn you always see those posts about the difference between a manager and a leader. What does the manager do? He's behind his desk pointing. Where's the leader? He's in front, pulling. That sits deep within me, and I've followed that work ethic, if you will.

When someone isn't fit for the job 11:11

Steve Shaw: What was the response from your team? I've been into many stores, and Dave's been in a lot of stores. When you take over a new place, what was the initial thought process, and how did your people respond? You said some people had to go.

Armen Mansouri: Well, listen, this job isn't for everybody. I would be a poor leader if I continued to enable someone who's not fit for the job. I'm going to jeopardize my job, the store and the financial well-being of the dealer. This is America. Whoever owns this dealership has every right to make as much money as he can. If I don't have the mental capacity to run a dealership, then so be it. But if I'm being hired to do a job, I'm going to pick the team. Now, I'll do everything I can to save them. I'm not going to walk in and say, "I don't like your glasses. I think you've got to go." I don't do that.

I had one individual, and I don't think service writing was for him. I don't know how he got the job or who brought him in. I sat down with him for three, four months. I coached him, I talked to him and I would show him the mistakes. And it wasn't, "You're making a mistake." It was, "I would have done this differently. You have this problem, and with my years of experience, this is how I would do it. What do you think?" I would get him to engage. And it just came to a point where we had to part ways.

That's the hardest part of my job. You can ask people. I'm miserable that day. People know it's coming, because I'm kicking boxes and telling people to get out of my way, and my door is closed, because I know what's coming. I lose sleep over it, I go home and vent to my wife about what I had to do, and I'm miserable for a week beforehand. I don't enjoy it. But let me ask you this. Let's talk about the military for a second. Would you want someone who's not fully qualified and trained to go defend the country?

Dave Rogers: I use the analogy of an airline pilot for this stuff. Our job as a leader, whatever department you're in charge of, is to put the right ass in the right seat. That's what it is. You're not there to make friends. And you don't keep people in a position just because it's convenient for you. These are hard decisions you have to make, and I agree with you, but you have to make these decisions on a day-to-day basis. What's best for the store? That is leadership. That's the difference between a leader and a run-of-the-mill manager. And I'm sure you got some respect from it. Everyone in the store knew this guy shouldn't be a writer, I'm pretty sure.

Armen Mansouri: Yeah. When you enable the wrong person, it sends a message that others can get away with whatever they want. Then you lose control of the office, you lose control of the shop, it becomes chaotic, and the next thing you know I'm being told I'm being replaced, and I'm asking, "Well, where did I screw up?" So maybe I wasn't fit for leadership either. You need to have the right person doing the right job, or it's just not going to work. Some people can do it and some can't. There's nothing wrong with that.

Standards: policy sign-off, unapplied time and pre-appointment packets 15:08

Steve Shaw: So you alluded to this, but I'm going to bring it out: standards. We've talked about standards a lot here, setting standards for your guys. It sounds like that's what you were doing when you were coaching: "This is how we do it. This is what I like. This is what I expect." Can you talk a little bit about setting standards for your team?

Armen Mansouri: Yeah. I think the biggest standard I can talk about is one I learned from you, Steve. Remember the green sheet? Anything that was policy needed your signature and a reason on the RO. Here, policy was just a free-for-all. So now anything over fifty dollars, I need to be aware of it. And as a manager, what I try to do by the end of the week is go over my policy and see if anything's been charged. If my signature is not attached to it, it's a conversation. "Hey, Steve, why do you have this policy? How come I'm not aware of it?" "Well, Armen, I wanted to give wiper blades away to keep a client happy, for this reason." "Great, I support it. But let me know about it. Let me sign off on it." That's one standard I've put in place.

Unapplied time is another, with the technicians. On Thursdays and Fridays, if you're not flagging your week's worth of work, we need to figure out why. And this is cool, Steve, I've got to show you this later: I created a spreadsheet where I download the ADP timesheets and the RTH from CDK, put them in a workbook, and it populates everything for me. I can see each technician's efficiency. If I have a technician who's been on the clock 50 hours this week but has only flagged 30, I say, "Hey, dude, I know you're working. Where are your hours?" "I'm not done with the engine yet." "That's fine. Flag what you've done for it." Those are the kinds of standards I've put in. Just your basic, common stuff that needs to happen. The 1% rule. I'll make a small change, and once that becomes standard, I'll implement something else.

The next thing I'm going to implement with my service advisors, and we've briefly talked about it, some are doing it and others aren't, is pre-appointment packets. Just have the VIN and the history ready. When the client comes in, you look at the paperwork and say, "Dave, you were here a year ago for your service. You're here today for a check engine light. You're also due for a service, so let's get that going." Those are the standards I'll implement and get going.

Dave Rogers: I want to go back to the technicians. You have 21 techs. How many are flat rate?

Armen Mansouri: I have 19 that are flat rate and two that are apprentices. I'm going to put one of them on a trial run next month and see how he does. He'll still be an hourly employee, but he'll be flagging all of his work now, and if everything works out, in July I'll put him on the line and hire another apprentice to replace him.

Dave Rogers: What are your objectives for your techs daily, and how are you performing? I know it can be a challenge every once in a while, especially with some warranty work. What is your standard?

Armen Mansouri: My standard is not daily but weekly. I could be wrong here, and Steve might put his manager hat on and coach me offline.

Steve Shaw: I'm a kinder, gentler Steve Shaw these days.

Armen Mansouri: They say technicians should flag daily, but in the Porsche world, an engine replacement, for example, is a three-, four-day job. Dave, I'm not sure if your Porsche service manager has talked to you about the new Cayennes and the water pumps. It takes three days to replace a water pump under warranty. Once the job is done, the technician has to get the labor ops, write the story and put everything in. So he may not flag daily until that water pump is done. Come Monday and Tuesday, he's going to have zero, zero. And halfway through Wednesday, when he's done, he's going to have eighteen hours flagged. So I watch it weekly. Around Thursday or Friday, I'll start going around: "Hey, where are your hours?"

Steve Shaw: But you know he's working on that engine.

Dave Rogers: What do you look at?

Armen Mansouri: I look at their efficiency based on their clock hours on the property compared to how much they're flagging. I have a technician who loves to stay late. The guy would give you the shirt off his back. There's a lot for him to learn, but he's a great technician and he'll be a phenomenal gold technician. He'll stay late to knock out work and get it done. But his time in and time out exceeds his flag time, so now I'm paying unapplied time. That's a different type of conversation to have. So I compare their clock time to their flag time.

Dave Rogers: California has its own rules on that.

Armen Mansouri: Yeah, California has a weird law. Technicians in California are paid hourly, but you can pay a production bonus as long as they're efficient. If they're not efficient, they're stuck making double the minimum wage, which I think is about thirty-four bucks an hour now.

Knowledge is power: training technicians 21:06

Steve Shaw: So, and this is not a self-serving question, what's your philosophy on training?

Armen Mansouri: Knowledge is power. I send my technicians to as much training as I can. I'm going to butcher the quote, but I think it was Sir Richard Branson who said, "Train people well enough so they can leave, but treat them well enough so they don't want to." Just last week I sent a bunch of my guys to Porsche training, six or seven of them, and all of them just got their silver certification. It motivates them, it puts a little more money in their pocket, and it makes them feel valued, because they are valued. And your employee retention stays high. You don't have much turnover when you do that. I know it costs the dealer money, but I'm a true believer that knowledge is power.

Dave Rogers: That's great. It's getting harder and harder for those guys. What do you average per employee in training? Do you have a number or goal in mind, or is it just based on the individual? I've told Steve before, when I was running a store, I wanted a minimum of 40 hours per year in training for each person.

Armen Mansouri: I'm going to write this down. I really don't have one. The good Lord blessed me with ADHD, so my mind is all over the place. If you saw my desk, you'd probably fire me. I don't have a set goal, but what I do have in place is Porsche's minimum requirement. Porsche has a quarterly test and everything, and every quarter I want to be a hundred percent certified.

What I also look at is the technician's skill level, their ability to learn and their willingness to give me more than the minimum. I've worked with technicians who come in at 8 a.m., and at twelve o'clock they say, "I'm taking my lunch break." Rightfully so. I'm not going to prevent that. Then: "Hey, Saturday is the end of the month. I'm hoping I can get some guys to come in and knock some work out so we have a stellar month." The guys who say, "Yeah, count me in, I'll be there," are the guys I ask, "You want to go to that special training? Not a problem." The guy who says, "No, it's my weekend. End of the month, I don't care. I'll see you Monday," okay, cool. I'll send you to the minimum training, because you're giving me the minimum workload. But I never thought about an hours goal. I'm going to look at that.

How the military prepares you for the service drive 24:37

Steve Shaw: Hey, I have a question. I've known you a long time, and we were talking before the show about the military, and I know it's near and dear to your heart. How did the military prepare you to work at a car dealership? You talked about your leader, but how do you feel the military prepared you, and do you think it helped you in your career?

Armen Mansouri: I've been shot at. I've been blown up. I've had mortars and IEDs come after me. I've come within an inch of my life. If I can handle being shot at in Iraq, I can handle the service drive. Let's just put it that way. More or less, it's handling stress and working under pressure. In the automotive industry, there's no shortage of pressure or stress, and it's the same thing in the military. You're working hard and trying to deal with all the pressure, because it's coming from every direction. A service advisor has a problem, your phone is ringing, the general manager wants this, the fixed operations director is asking for that, not to mention your technician just crashed a car. You're being hit from every angle. The military taught me how to handle pressure and stress, keep my head above water and still smile.

Steve Shaw: Awesome. Dave, you got anything?

Dave Rogers: Yeah. I had a good friend, a neighbor, who was retired military. He worked for Verizon, and I think Walmart at one point, and his job was to transition ex-military into the business world. I used to try to get him to bring folks to me, but of course he was working for a big company and they wouldn't let him. I've always felt the military prepares you for this part of business: service advisors, technicians. Obviously, if you work on equipment in the military, you can work on cars. You can learn all this stuff. A lot of them are natural-born leaders. They'd be great managers. I just think we do a terrible job in the car business recruiting out of the military, because this would be a great place for them to go after they get out.

Armen Mansouri: I agree. I've hired military before, and they've always worked out great. Like I said, the military has a special place in my heart. Do you remember the old show Married with Children, with Al Bundy? His peak in life was high school, four touchdowns in one game. I joke around and say the peak of my life was 2005, going to war in Iraq. That's all I talk about. Granted, my marriage and my two beautiful children are the highlights of my life. Those are my peaks. But the military is very dear to me, and it was a big part of my life that prepared me for everything.

I have the same degree as these technicians do out of UTI. I got it through the military. I have an associate's degree in automotive technology. I'm mechanically inclined, but God forbid you put a tool in my hand and ask me to change oil. I'd probably fumble the wrench and wouldn't know how to hold it. But on paper, I know everything. If I've got to explain what an alternator does, why you need to replace it and why it's important, I can do it in layman's terms with the client. The leadership aspect, I think I learned more from being in the automotive industry. I did take a leadership class in the military, but that was 2004, so I don't remember anything from it. The biggest thing I learned from the military was how to handle stress.

GM tip: look at your fixed ops leader 28:54

Steve Shaw: So we don't let this go too long, man: I'm always impressed by what you do. By the way, Armen was a contributor to Master of the Waiting Room, and it was awesome having you in the book back in 2018. I've watched your growth from being a service advisor through everything you've done. You're going to get to talk to hundreds, if not thousands, or maybe one or two people watching today. If you could talk to a thousand GMs right now, what would you say? Give a GM a tip of the day, based on our conversation today, for a GM who's bringing up a service manager or taking care of technicians.

Armen Mansouri: Are you putting me on the spot? Is my GM going to be watching this?

Steve Shaw: I don't know him, but we could call him.

Armen Mansouri: That's a good question. I was going to say don't micromanage your service manager, but maybe your service manager needs to be micromanaged.

Dave Rogers: I'd say your 1% rule should be the GM tip of the day. I use the analogy that the most dangerous person on the planet is a GM who just came back from a 20 Group meeting. They just want to unload all their new knowledge. But the 1% rule, that small increment, is what it should be. Give it your spin.

Armen Mansouri: I like that. And for selfish reasons, one little tidbit about me is that I'm never satisfied. I want the next thing. Once I hit a record month, I don't stop there. Now I want to beat that record, and then beat that record. It never stops. Same thing with my career path. I became a service manager. I was the parts and service director at my previous store, and now I have a larger store. What's the next path for me? It's either the fixed operations director position or a GM. So my tip for the GM is: when you're getting promoted to VP, look at your fixed ops guy for that GM position.

A lesson from the waiting room 31:19

Steve Shaw: There you go. I like that. That's a good one. You said you don't remember much, but you did say you're looking at unapplied labor, which is awesome, and your work in process. And I can remember some of those long nights when we were closing out tickets.

Armen Mansouri: Don't remind me, Steve. I'm having PTSD over that.

Steve Shaw: Good job again. I'm super proud of you, bro, and congratulations on all of your success. I look forward to following you some more.

Armen Mansouri: Absolutely. Thank you, sir. I was going to say, I've been blessed in the automotive industry. I don't think I ever had a bad leader. So, Steve, thank you for your leadership. I learned a lot from you. Can I share a funny story from one of my first interactions with you?

Steve Shaw: Yes, please do.

Armen Mansouri: Dave, I think it was my first month working for Steve. A lady came in with her Audi, and something went wrong. I don't remember what the issue was. Instead of bringing the lady into his office, he went into the waiting room where she was. That was the big key factor that impressed me. Body language and your surroundings set the tone. So I wanted to piggyback off what he did, and I offered the customer a rental car. Steve wasn't happy with that, and later I understood why. Maybe off camera I'll tell you what he told me. But I learned something about holding the bottom dollar: be prepared to provide the client what they need, but don't give the store away. I learned that from Steve, and those words have stuck with me ever since, in a good way and a scary way. That's one thing I remember learning from Steve.

Steve Shaw: Honestly, I don't remember that conversation, so I don't know what those words were.

Armen Mansouri: I don't want to bring it up here. I'll tell you afterwards. But it was a good story.

Steve Shaw: But the one thing I do remember, Armen, because we worked together at a very high-end dealership in Los Angeles, and I've got to tell the story: quite a few movie stars would come through the dealership. I guess we shouldn't drop names, but Armen introduced me to a beautiful lady who was in the movie Joe Dirt. I'll never forget meeting Brittany because of Armen, and I'm pretty sure I have her autographed photo, because Armen got Brittany's autograph for me while he took care of her Porsche. I remember her wanting me to warranty a wheel on her Porsche 911, and we ended up giving her a wheel at cost plus ten, because she was such a gorgeous lady and I had a crush on her in my early forties. So I want to thank you for that photo posted on my wall. No, I'm just kidding.

Armen Mansouri: That's right. Miss Brittany Daniel. Get in line.

Steve Shaw: Great talking to you, sir. I'm always proud of you, and I look forward to following your success. And if you meet any other beautiful movie stars, just send me a picture.

Armen Mansouri: I'll send them your way. Absolutely. Thanks for having me on, guys. I truly appreciate this. Great time.

Steve Shaw: Appreciate you as well. Awesome.