8 Pay Program Tips That Generate Happy Technicians
By Bob Cooper
In the coming years, no component of your business will be more critical to your success than the caliber of the people who work with you. In order to hire and keep superstar employees at your shop, you need to utilize shop management best practices and have pay programs in place that ensure your employees stay motivated and happy to be a part of your team. With that said, here are 8 pay program tips that will help you employ top flight technicians who will contribute to your success for years to come.
1. Without a doubt, the best pay programs for technicians are based on billable hours. If you pay your techs a salary or an hourly rate, you are rewarding them for showing up and clocking in; not for producing. The good technicians love to produce, and as with any employee, they should be rewarded for doing so. Some shop owners argue that the problem with flagged hour programs is that they encourage technicians to recommend services that don’t need to be sold, or will lead to poor quality work if they cause your techs to hurry through each job (increasing the probability that they will overlook things, take costly shortcuts, etc.). The truth is, in either of these cases, the problem is that the shop owner has employed the wrong technicians, or has not provided proper training, and neither problem should be attributed to a flagged hour pay program. Not only is there nothing wrong with paying people based on their productivity, but in reality, it’s how we should all be rewarded for our contributions.
2. Technicians should be paid a predetermined hourly rate for each billed hour, not a commission based on sales. If you pay your techs a commission on labor sales, then when you have to raise your labor rate to accommodate for any increase in your operating expenses, your technicians will automatically receive a raise, and you will have to raise your labor rate that much higher to compensate.
3. Make sure that you have a tiered compensation program in place. For example, if your techs flag up to 40 hours in a 40-hour week, they’ll earn $22.00 per hour. If they flag over 45 hours in a 40-hour week, they’ll earn $24.00 for each of the 45 hours. You need to consider the possibility that if it’s the end of the week and the tech knows he’s not going to flag 45 hours, he may decide to sand-bag by carrying the almost completed job over to Monday, rather than finishing up the job on Friday. You can avoid this temptation by having a policy in place which states that in order for your techs to be eligible for the performance incentive each week, and earn the higher hourly rate, they need to have flagged at least XX hours in the previous week. Your techs should also know that in order to be eligible for the performance incentive, they need to meet with your pay period requirements for controlling comebacks, and reaching predetermined CSI scores.
4. When it comes to “guarantees,” consider providing your techs with a guaranteed number of vehicles rather than a guaranteed number of hours. If you guarantee a specific number of hours, it’s no different than giving your techs a guaranteed income that they do not have to work for. So I’d recommend first establishing the labor value of your average repair order. If you discover you average two labor hours per vehicle, then rather than giving your techs a guarantee of 30 hours, give them a guarantee of 15 vehicles. It’s then up to them to do their job of properly inspecting the vehicles and performing the authorized services. If during the pay period you are only able to provide them with 13 of the 15 vehicles, you would owe them the four hour difference.
5. At Elite, we have a saying that goes, “When you hire Larry, you get Mary”. This means that you need to make sure your technician’s entire family is happy that he is working at your shop, so you always need to consider how you can reward your technicians in a way that benefits their families. Rather than rewarding them solely through more money in their paychecks, consider movie tickets they can use with their kids, gift certificates to their favorite restaurants, etc. These are the types of gifts that have “take home value”, and the ones that can help turn your technicians’ families into huge fans of you and your shop.
6. Having your techs compete against one another is a major auto shop management mistake. Not only do they all have different skills and abilities, but often times patterns develop where one tech wins week after week, and all the rest of your techs begin to view themselves as losers. I highly recommend that you set individual goals for each technician, and motivate them to compete against the one person who they should be competing against: Themselves. This way, all of your technicians have the opportunity to be winners at the end of each pay period.
7. Instead of giving your techs raises based on their tenure, it should always be based on their productivity (with the exception of raises that are based on inflation). Just because someone has been with your company for a year, it doesn’t mean they are now worth more money. You need to provide all of your employees, not just your techs, with the opportunity to earn a higher income by being more productive. If they have produced more in the past year than the prior year, then they have earned that raise. You should also consider having predetermined conditions in place in order to be eligible for raises, such as complying with company policies, completing a certain number of hours of training, and acquiring specific certifications.
8. Never give cash incentives as bonuses. Beyond being illegal, it sends a message to your employees that you are willing to cheat the government, and it gives them good reason to question your ethics. Not only do cash incentives violate the ethics of operating a good business, but it may lead your employees to believe that if you are capable of cheating the government, why should they have confidence that you will always be honest and ethical with them, or your customers? I’d strongly encourage you to stay away from any policy that could cause your employees or customers to question your ethics.
Follow these 8 tips and you’ll be well on your way to increased productivity, and to instilling the morale that your shop needs to excel.
For additional help building a more successful auto repair business, learn more about the one-on-one guidance and customized action plan offered through the Elite Coaching Program.
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