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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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  • Like 1
Posted
I am trying a new approach by paying an hourly rate and then so much per flat rate hour on top of that.
Very interesting. Any more data on how it works? Any employee feedback ?

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Posted

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.

 

  • Like 1
Posted
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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  • Like 1
Posted

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.

  • Like 2
Posted

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?

         0 comments
      The Technician Shortage Is Our Fault, And It's Time We Own It
      Nearly every day, I hear shop owners complain: "There's a technician shortage. We can't find qualified people. There's no one out there." If that's true, then who's to blame?
      The industry? The schools? The government? I don't know how you feel, but who promised us an endless supply of qualified technicians?
      Another common complaint is that young people do not want to work in the trades. Well, if that were true, then why are other trades such as HVAC, electrical, and plumbing growing? What are they doing that the automotive industry is not? 
      Here's the reality we need to face: We do have a problem, but we shouldn't look for someone or any entity to rescue us. Not the government. Not the trade schools. Not the recruiting companies. No one owes us a workforce. If we want great people in our industry, it's up to us. At some point, we need to own up to the truth: Building a pipeline of qualified technicians is our responsibility.
      In this blog article, I will break down the key reasons we are in this situation today and what we, as an industry, can do to solve the technician shortage. Are you ready to look in the mirror?
      Have We Pushed Technicians Away?
      Let's take a look at flat-rate pay. True flat rate, which pays a technician only for the hours they produce, is a controversial pay plan that emphasizes high production levels and creates a competitive work environment that, if not properly controlled, can lead to increased mistakes and a decline in morale and team spirit. Additionally, the stress and physical demands placed on technicians as they age are not favorable to long-term employee retention. What do we do with technicians as they grow older into their fifties and begin to slow down? 
      I have heard all the arguments and pros and cons of flat-rate pay, and I am not going to judge any pay plan. Let the facts speak for themselves. True flat rate has changed in most areas around the country and has evolved into a pay plan that gives technicians some pay guarantee.
      Many shop owners have learned that team morale, along with the opportunity to earn income, is important to technicians and to the company's long-term success. But let me ask you: how many technicians have left or been pushed out over the years because of the old flat-rate pay system?
      Another issue is the workplace environment. I remember being grateful to be hired as a young technician at a local repair shop. While very thankful, the work environment was not ideal. The shop owner kept the bay doors open year-round (I am from New York) unless it rained or snowed. He felt that if the bay doors were closed, customers might think we were closed for business. We had no heat and no hot water. Many of the jobs were done outside, year-round,  in all types of weather. The starting pay was minimum wage, with no benefits, sick days, or vacation pay. 
      Now, again, I need to point out that I was truly grateful for the opportunity this shop owner gave me. I learned a lot working there, and the experience was pivotal in my career. But looking back, I wonder how many people were discouraged by these working conditions?
      While the physical demands of the repair workplace are daunting, perhaps even more critical is the culture. Too many of my generation shop owners preached the mindset of "my way or the highway." We were the business owners, after all. We started our companies, took all the risks, and provided jobs. Why shouldn't we be the ones to set the ground rules our way?   
      Many of us found over the years that the "my way or the highway" mentality was a sure way to isolate employees and make them more likely to look over the fence for greener grass. In other words, it led many technicians to seek employment elsewhere, where they felt they could be appreciated and recognized for their hard work. The issue, however, was that there wasn't much green grass around. Disappointment after disappointment, bouncing from repair to repair shop, eventually led to despair. So, I ask you: were workplace conditions a contributing factor in today's technician shortage?
      Another factor that we are all well aware of is the complexity of the modern automobile. When I started, the work was mostly physical, and you were required to master essentially three vehicle models: General Motors, Ford, and Chrysler. Let's fast-forward to today. The evolution of automotive technology, along with the extensive training and tools required, has outpaced the typical technician's pay compensation, with no clear career path. Again, leading to frustration and insecurity about the future.
      Here is the bottom line: people don't leave their job; they leave their experience. We must do a better job. 
      The News Isn't all Bad; Your Next Steps to Fix the Technician Shortage
      To fix the technician shortage, it will take a combined effort from everyone in the automotive industry, particularly automotive shop owners. Shop owners are in the perfect position to make the greatest impact, not only on their businesses but also on the future automotive workforce.
      First, shop owners must become better leaders and understand that their ultimate success is directly dependent on the people they assemble around them. Any shop owner who mistakenly believes they can build an empire solely on their abilities is destined for serious disappointment. Business owners who think like this will eventually plateau. Without the collective contributions from a team of qualified people, your business will stall; it will not continue to grow.
      Create a workplace that attracts top talent: a clean, professional, well-equipped facility designed to support productivity, teamwork, and a career, not just a job. Build a great reputation in your community by getting involved locally. Become the auto repair shop that people take notice of as "the" place to work.
      Next, shop owners must become more financially knowledgeable. Knowing your numbers and what you need to achieve for a strong bottom-line profit is essential to paying technicians the money they need and deserve. Profit will also allow you to compete with other trade industries by providing a benefits package that has real take-home value and security.
      When it comes to culture, this is where the rubber hits the road. People crave recognition, praise, and a sense of purpose. Despite what you hear, people are not just money-motivated. Once people feel secure in their financial situation, retaining and motivating technicians can only be achieved by connecting with them on an emotional level. You cannot show enough appreciation. Give out praise for a job well done as if your business depended on it, because it does.
      As technicians age, we need to have a place for them. Expecting a 58-year-old to perform like a 35-year-old is unrealistic. We need to be more focused on career pathing. Provide training, skill development, and coaching to develop leaders and mentors within our older workforce. While their bodies may have slowed, the knowledge they have gained is priceless. 
      Our future is dependent on young people entering our industry. We need to give more young people opportunities. Every shop owner across the country should consider hiring an apprentice, then build an apprentice training plan and career path for them. If every shop did this, we could solve the technician shortage within five years. Get involved with the trade schools and high schools in your area. Look into the NAPA Apprenticeship Program. Don't sit on your hands with this one. Do it today.
      Lastly, don't get left behind. Commit to ongoing training for all your employees. Keep up to date with tools and equipment tailored to your business model. Don't try to be all things to all people and all vehicles. Identify your core profile customer and the vehicles they drive, and become an expert on those vehicles and the services you offer.
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