AutoShopOwner - Automotive Management Network: Is Flat Rate the Future for Shops? - AutoShopOwner - Automotive Management Network

More and more shops are adopting the flat rate pay model. Is this the future?

I don't like flat rate pay.

I have long paid my techs an hourly rate plus bonus based on performance. I feel this gets my techs motivated with security. Many think my plan creates a dead-beat attitude. I don't think so. My system rewards those who excel and are willing to work hard.

Am I wrong? What plan do you have for your techs?

Joe, on Aug 30 2009, 09:33 AM, said:

We guarantee our techs a fair base pay but have a commission stucture. We wind up paying more than most shops in our area other than the dealers.

We also pay more than most shop and dealerships. But, I also feel I have the best techs because of it.

I know when I worked for flat rate in the 1970's, those lean weeks were tough. I was newly married with a new born baby. I had to work another part time job.

I think we should pay our techs a decent wage and reward them when they produce.

Joe, on Aug 30 2009, 10:33 AM, said:

A number of shops are having good success with a pay system that is about half hourly and about half flat rate....kind of the best of both worlds and fair to all parties.

Tom Ham AutoMN.info, on Sep 11 2009, 08:26 AM, said:

Do you have any guidance on how a pay plan like that is structured?

Tom, could you go into more detail with real numbers about that plan?

Joe, on Sep 11 2009, 09:11 AM, said:

I would also be interested in more of a description of how this would work.

Joe Marconi, on 30 August 2009 - 10:33 AM, said:

As well I'll agree, I to dislike flat rate pay. BUT, at this point in my business, it's my only choice, and with as many shops around that do the same, I'm okay with the fact, but not entirely. I would love to be able to do more for my guy, and sooner or later guys. I never once worked flat rate, I refused. So here I am paying my tech flat rate, and your right it has its ups and downs. I would be interested in atleast getting an idea of how you set up the hourly rate plus bonus based on performance. I may be to small at this point in time, but something well worth consideration for the future. I want to be able to reward good help, and offer incentives as well in the future.

HTI.WERKSTATT, on 16 March 2010 - 04:20 AM, said:

Here’s my problem with flat rate: I speak to many techs that put in 45 hour weeks, only to get paid for 20, because the shop does not have the work to keep the tech busy. However, the shop owner requires that the tech remain in facility and performs odd jobs like clean up, building repairs, working on tow trucks, company vehicles, the owner’s boat, the owner’s classic car and panting the walls.

How many jobs do you know of that mandates the worker to put in 45 hours but pays them for 20?

I’m not saying that this is all shops. And, many times the tech is not productive. But, if I tell a tech that he needs to work a certain amount of hours, he needs to be compensated for those hours.

For shops that are constantly busy all year long with tons of work and the “opportunity” is always there for the tech to make money, then in that case flat rate works.

Joe,

That is the way the dealership that I worked at was and that is the main reason that I left. When the work was there, the required 45 hr week wasn't bad when you were turning 50-75 hrs a week. I turned as many as 130 hrs one week (in six days) and set the shop record for the most hours turned in one week. That was a great plan when there was work but like you said, if there wasn't any work, there was no base pay so it wasn't uncommon to turn 30-40 and still have to be there the full week and a sat every 3 weeks. I always wondered how "legal" it was to require us to work hours that we were not paid for. Since I am the only tech here now I pay myself flat rate because its the easiest for me to figure for now. When I get big enough to need more help, I will have to change that.

CARMandP, on 17 March 2010 - 03:23 PM, said:

My point exactly, well said!

I can't tell my people to put in a 50 hour week and only pay them for 20. I understand the principle of rewarding hard work. But, hard work with no pay makes me wonder. And like you said; is it legal?

Many shop owners don’t agree with me but I pay a base wage with a performance bonus. The base pay is usually less than what the tech wants to make, this makes them a little hungry. In good times we all make money, in hard times we tighten our belts a little. But how can you ask a tech to take it on the chin in bad times and then ask him to go the extra mile when it’s busy. It’s the reason why I left the dealer in 1980.

If we are ever going to raise the level and image of the auto business we need to find ways to pay a decent wage in order to attract the right people.

Joe Marconi, on 17 March 2010 - 11:09 AM, said:

I'm like Joe, I pay a base salary... (what I call... "just enough" to get by on $$) then the main focus is on the performance bonus or % of actual sales that they accomplish. I even have an incentive if you manage to stick it out on a slow week where there is very little in bonus/perfomance... be here a whole 40 hours, you get your base pay and a 100 to 150 bonus.. just for being here. That works on the busy weeks and the slow weeks too. It's worked well for years. However, now with the economy taking a dive, and... some of the other shops lowering their labor rates... I may need to come up with a new plan. Cause the guys are staying... and I'm a paying... and the work is off and on...
Hey, lean times, just hanging around waiting for spring... Gonzo

Joe Marconi, on 11 September 2009 - 10:11 AM, said:

Joe:

Sorry to take so long to reply. The plans I am referring to pay the tech a basic wage for the hours they are at work, and then pay a progressive incentive based on production. The lows of flat rate are higher, and the highs of flat rate are lower. But, the system is still significantly tied to incentive enough to make good production critical to excellent pay. Similar systems can be created for advisors and parts managers.

Hope this helps,

Tom Ham AutoMN.info, on 17 March 2010 - 05:57 PM, said:

This is basicly just like my plan. Also, I agree, you need tie it around an incentive based program.

My guys are paid on a commission with a guaranteed base. We have four different categories that pay different percentages but they are paid the percentage on both parts and labor. My lowest paid guy is guaranteed $400 per week and my highest paid is guaranteed $700 per week. On any given week they can make more but they will never make less. My techs work 44 hours per week most weeks but once per month they only work 40 hours. Paying techs flat rate without some base guarantee is not something I would feel right in doing.

Well here goes! We pay on performance. We pay flat rate from $28.00 to $35.00 flat rate to our ASE TECHS. Our Lube techs and minor repairs are paid $12-$15.40 per hour with a 5% commission on parts and labor. They are ASE in a few fields. All of our staff and techs work for a bonus each month. It is a group bonus based on the best previous same month equals March for any other March etc. We post our stats on the our back refer. It ranges from $50-$500 per month per person. One half is paid on their check and one half is paid into their 401K. This seems to work very well. Our fellows really seem to like the system. We pay more than most. We have excellent employess. One has been here 25 years. We have a marketing manager. It is her job to see that we have the cars to work on. It is the techs job to inspect and let the Service Writer know what is needed and then it is the SW job to sell. If the business is slow, then it is time to do a quick e-mail and fill the bays. When business is down we all share including myself, the owner.

DUFRESNES, on 18 March 2010 - 08:15 AM, said:

When business got slow for us during 2009 for a three month stretch instead of laying anyone off we ask the ones that could afford to do it to work a four day week. Myself and my service manager also took a $100 per week pay reduction. Our guys really appreciated the fact that we all shared in the situation. Fortunately it was only a brief time period.

It amazing the level of appreciation shop owners have for their employees and the willingness to tighten their belts also during tough times. This is why I have the utmost respect for my fellow shop owners.

Joe Marconi, on 18 March 2010 - 12:10 PM, said:

Joe, our technicians are our life blood. They work hard and help us be successful. We owe it to them to try to look out for them and be as fair and honest with them as possible.

xrac, on 18 March 2010 - 10:36 PM, said:

I think you need to be shop owner to truly understand who we really are. Agree?

We are a rare breed.