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We've been looking for a new tech to help us grow recently and a topic that's come up for us is a minimum hour or weekly guarantee. I don't mind doing this at all, as I want pur techs to earn a fair and living wage. Honestly as far as I'm concerned I'd love for them to take 50% of the hourly rate including taxes - we want our employees happy and financially we'll. But I also want to be financially well, I'm concerned if I give a tech a minimum guarantee I may have productivity issues. In the same respect I'm not sure if it's acceptable to put a statement saying the minimum only applies to weeks when X amount of hours is not available or something similar. Any input?

Thanks in advance!

 

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I am just a small shop me and another guy that is just beginning.  I pay him a base pay of 12 an hour and give him 6 dollars for every flat rate hour he turns. By doing this if we are ever slow he has a base pay and also initiative to stay busy on other things such as building maintainence etc. He seems to really like it and it works good for me.

 

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I do agree that we need to pay our employees a decent wage. It's a main factor in attracting quality people to our industry. The only thing I would recommend is to carefully look at your overhead, cost of sales and make sure your generating enough profit. This may take some time, but it's worth it.  In other words, it's one thing to want to pay someone a certain amount, but you need to make sure the company earns a profit and that the technician is generating enough labor production hours.
I pay techs a base wage, which is above average in my area, and also pay production bonus on top. 
One more thing, money is not the only motivator for production. A healthy work environment, with a strong leader, and recognition of your employees will do wonders for your production.
 
Thanks Joe!
We're a small shop so we struggle with the offerings that some employees are looking for beyond pay. We do offer a family like environment that's very laid back and everyone that works for us seems to appreciate it. We could certainly use some orginization & productivity improvement but that's a struggle when the owner is turning wrenches and writing service. I think we're finally to a point where expanding is a real possibility, but we've got to find some quality techs!

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I used to struggle with this when I first started out. I found that technicians would generally ask for enough money to make sure they can pay all their bills as a "guarantee". The end result was lazy technicians. If I would guarantee a guy 30 hours plus whatever he produced above that, he would invariably produce 28-32 hours.

Years ago I decided that all my techs would be flat rate with no floor. I also put my advisor on a straight commission plan with no floor. The result has been technicians who are almost always flagging over 40, and advisors who sell. My job is to give them all an opportunity to succeed.

A side benefit to this is in the bookkeeping. My tech wages are calculated as a COGS as they have a direct correlation to billed labor. It makes life easy when you're looking at your labor profitability vs ELR etc. Having a disconnect between labor hours billed and technician wages muddies the waters a bit. And since I'm the laziest human being on the planet, I like easy.

No matter what you do with your pay plan, one adage I always go back to is "There's no better manager than a properly structured pay plan". If your pay plan by default has your employees doing what you want them to do, life gets easy for everyone.

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I pay a healthy living, hourly wage for the slow times and when the RO's just don't work out for whatever reason for the Tech. I want them to earn a percentage of what they produce and give them their hourly or the % of their production, whichever is greater. From the accounting side it works best to pay them hourly and then calculate the % as a bonus when they hit minimum production levels. 

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  • Have you checked out Joe's Latest Blog?

         3 comments
      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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