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Here’s The Perfect Automotive Technician Pay Plan!


Joe Marconi

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Got your attention? Good. The truth is, there is no such thing as the perfect technician pay plan. There are countless ways to create any pay plan. I’ve heard all the claims and opinions, and to be honest, it’s getting a little frustrating. Claims that an hourly paid pay plan cannot motivate. That flat rate is the only way to truly get the most production from your technicians. And then there’s the hybrid performance-based pay plan that many claim is the best.

At a recent industry event, a shop owner from the Midwest boasted about his flat-rate techs and insisted that this pay plan should be adopted by all shops across the country. When I informed him that in states like New York, you cannot pay flat-rate, he was shocked. “Then how do you motivate your techs” he asked me.

I remember the day in 1986 when I hired the best technician who ever worked for me in my 41 years as an automotive shop owner. We’ll call him Hal. When Hal reviewed my pay plan for him, and the incentive bonus document, he stared at it for a minute, looked up, and said, “Joe, this looks good, but here’s what I want.” He then wrote on top of the document the weekly salary he wanted. It was a BIG number. He went on to say, “Joe, I need to take home a certain amount of money. I have a home, a wife, two kids, and my Harly Davidson. I will work hard and produce for you. I don’t need an incentive bonus to do my work.” And he did, for the next 30 years, until the day he retired.

Everyone is entitled to their opinion. So, here’s mine. Money is a motivator, but not the only motivator, and not the best motivator either. We have all heard this scenario, “She quit ABC Auto Center, to get a job at XYZ Auto Repair, and she’s making less money now at XYZ!” We all know that people don’t leave companies, they leave the people they work for or work with.

With all this said, I do believe that an incentive-based pay plan can work. However, I also believe that a technician must be paid a very good base wage that is commensurate with their ability, experience, and certifications. I also believe that in addition to money, there needs to be a great benefits package. But the icing on the cake in any pay plan is the culture, mission, and vision of the company, which takes strong leadership. And let’s not forget that motivation also comes from praise, recognition, respect, and when technicians know that their work matters.

Rather than looking for that elusive perfect pay plan, sit down with your technician. Find out what motivates them. What their goals are. Why do they get out of bed in the morning? When you tie their goals with your goals, you will have one powerful pay plan.

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Joe, when I first started working with my father over 30 years ago, I wanted to hire a guy who was an ex Matco Tool man, he wanted 650 a week plus full paid benefits and 2 weeks a year vacation. My father told me it was too much, but if I thought the guy was good hire him and it was up to me to pull the difference. At the end of the first week my dad told me to give Karl an extra 100 cause he was worth it.  Not only did he pull his weight, but he was one of those guys that made everyone in shop better and helped me get better help.

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38 minutes ago, RYAN B said:

Joe, when I first started working with my father over 30 years ago, I wanted to hire a guy who was an ex Matco Tool man, he wanted 650 a week plus full paid benefits and 2 weeks a year vacation. My father told me it was too much, but if I thought the guy was good hire him and it was up to me to pull the difference. At the end of the first week my dad told me to give Karl an extra 100 cause he was worth it.  Not only did he pull his weight, but he was one of those guys that made everyone in shop better and helped me get better help.

Wow!  Another great story about how great people make a great difference. I too have learned though the years that we are only as good as the people around us! Thanks for sharing that story! 

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A recent article in Ratchet & Wrench magazine said, "Flat rate puts the burden on the employee and hourly puts the burden on the shop."  In the transmission business, I agree.  I don't know of a shop whose main source of revenue is automatic transmission repair that pays their technicians by the flat rate system although many general repair shops and dealerships do.
To me, if the front and back office are doing their jobs properly, including, 

  • marketing
  • advertising 
  • selling

And by treating their customers right by giving them a pleasing experience, there should be plenty of jobs to perform.  Sadly, shops like that are in the minority.  I only discovered this truth in the last 7 years I was in business because I came from a technical background, not business. In most shops, the technicians fully expect slow times.  It wasn't true in our shop once I harnessed the power of the internet.  Although we had our first website in 1997, we didn't start using it properly until ten years later when I started spending more of my time in the back office.

I came to learn that no matter what the pay plan was, it was the office's responsibility to keep the shop busy and full of work.  That bears repeating, it is the office's responsibility to keep the shop busy and full of work.  I think the best techs like to stay busy by nature.  At least that has been my experience.  Techs that were slackers didn't stay around long or if they did, they soon got with the program from peer pressure from the other techs.

I don't care what compensation plan a shop offers, if the techs can't pay their bills with some leftover, they won't be around long.  Whether what's left over after paying bills goes to savings, entertainment, or whatever, that's their choice.  The key phrase I would often use is "a comfortable living."  Some techs struggle to buy tools as reported in this article.

Conversely, I believe most shops have their techs suffer the burden of ineffective marketing, advertising, and sales that lead to slow times.  To me, from a tech's perspective, this isn't right.  It's management's equivalent of a recheck or comeback.  Why should the tech be penalized for it being slow?  This is why we always paid by the hour and it worked well for us.  It placed the burden of keeping everyone busy on me, and not penalizing the techs if I didn't keep them busy.  Any compensation package is perfect as long as the tech makes "a comfortable living."  If you want to know what most technicians think, read this WrenchWay industry survey.

My solution for others is to either learn how to use the internet effectively or hire someone who can.  That was my solution to the perfect pay plan.
 

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