CarMax, the nation’s largest retailer of used cars, is headquartered in Richmond, Virginia, where its first store was opened. CarMax has “grown from that one store in Richmond to more than 100 stores across the country.” CarMax promotes itself with the following verbiage on its corporate website: “We’ve sold more than 2 million cars. We’ve appraised more than 5 million. And the news is buzzing with stories about CarMax, the experience we offer our customers, and the work environment we provide for our Associates.”
The operations of CarMax are guided by its five-point business concept. The five points of the business concept are as follows:
1. “We offer tens of thousands of used cars across the country”[;]
2. “Every car we sell has a low, no-haggle price”[;]
3. “Our vehicles are superior in quality. Only the best cars meet our high standards”[;]
4. “We’ll buy your car whether you buy from us or not”[; and]
5. “You’ll get friendly customer service.”
Writing in The RMA Journal, Casey Thormahlen and George Van Horn, suggest that new car dealers that also sell used cars can learn a great deal from CarMax. They say that “[n]ew-car dealers looking to expand their used-car operations should take a page out of CarMax’s playbook. CarMax . . . has consistently outpaced its more traditional rivals by offering a more pleasant buying experience. Sales commissions are set on a per-vehicle basis (rather than by percent of sale), prices are fixed, and buyers are given a transparent, itemized price breakdown. A robust parts and services department creates further economies of scale for dealers choosing this path, allowing for modest repairs that enhance the resale value of incoming trade-ins.”
CarMax asserts that its operations are firmly based on a foundation of ten values that seek to treat customers, CarMax associates, and investors with trustworthiness and ethical practices while merging the best retail practices with the needs and demands of the automotive industry. One of the ten values guiding CarMax is continuous improvement. With regard to continuous improvement, the CarMax website states, “We will never stop improving our systems, our processes, and our policies.” In short, CarMax is committed to organizational change that continually improves how the company operates.
CarMax’s commitment to continuous improvement relies heavily upon learning. The talent management process is one major way by which CarMax capitalizes on continuous learning. The use of learning loops is a second major way by which CarMax fosters continuous improvement.
Talent Management for Continuous Learning
CarMax has strategic goals for talent management to ensure that its workforce has the necessary skills to support company performance. According to Sean Ramage, CarMax’s Director of Talent Management, “Our company has put a strong emphasis on the importance of core competencies that drive behavior, which, in turn, drives performance. Based on our short- and long-term goals, we partner with company leadership to put together programs that support the competency needs/gaps that drives the desired performance goals.”
Ramage also points out that CarMax regularly surveys its associates and managers to ascertain what is needed to achieve their individual work objectives and to improve performance. CarMax combines this survey data with assessment data from other sources, including but not limited to performance reviews and management assessment programs. Ramage indicates that this comprehensive assessment approach links employee competencies with business objectives and promotes a genuine continuous learning process.
As part of the continuous learning process, CarMax closely monitors trends in talent management and human resources, as well as overall societal trends. And CarMax also closely monitors emerging technologies to provide the right tools help associates develop the competencies they need to have in order to excel at their roles.
Learning Loops
Another way in which CarMax incorporates learning into its continuous improvement commitment is through learning loops. Successful learning loops incorporate five basic features. First, the company develops effective performance measures and targets that are linked to the firm’s values, vision, and goals. Second, performance information is communicated quickly, clearly, and usefully. Third, performance information is shared with the right people, and they are empowered to act on the information. Fourth, people are encouraged to suggest changes to improve performance, and the company works to overcome barriers to implementing performance improvements. Fifth, the company monitors the process to ensure that its learning loops are, in fact, fostering increased learning and increased performance.
These features can be seen in CarMax’s use of learning loops, which “can be implemented anywhere in the organization to accelerate the pace of change” At CarMax, CEO Austin Ligon holds regular sessions with employees to share the latest performance information. During a collaborative analysis of the shared information, Ligon asks questions such as, “What is it that we may be doing that could be considered unnecessary, or stupid?” Ligon actively participates in these brainstorming sessions, making sure that “every idea is recorded and receives a response.”
Discussion Questions-Be sure to use APA format. Add questions prior to responding.
1. How is continuous improvement linked to organizational change?
2. What external forces for change are likely to influence CarMax’s commitment to continuous improvement?
3. What internal forces for change are likely to influence CarMax’s commitment to continuous improvement?
4. Explain CarMax’s use of (a) talent management for continuous learning and (b) learning loops from the perspectives of incremental change, strategic change, and transformational change.
5. What are the primary organizational development interventions that are embedded in CarMax’s fostering of learning for continuous improvement?
