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Joe Marconi

Overtime without high production will hurt your shop's profit

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Not every shop pays flat rate; for many reasons.  So, many techs are on hourly pay.  There is nothing wrong with hourly pay, as long as you have an incentive program in place that promotes high production levels to avoid complacency.  For hourly paid employees I strongly urge you to have a pay plan that rewards production levels on a sliding scale.  

As a business coach, I have seen too many times shops with low production levels and high tech payroll due to overtime pay. Overtime pay must not be used to get the jobs done with no regard to labor production.  Limit overtime and create a strategy that increases production and rewards techs with production bonuses.  By the way, there are many ways to incentivize techs, it's not all about money. 

Overtime without high levels of production will eat into profits and if not controlled, with kill your business. 

If your shop is an hourly paid shop, what incentives do you have in place to maintain production levels? 

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    • By Ron Ipach
      CLICK HERE TO JOIN THE SUCCESSFUL SHOP OWNERS FACEBOOK GROUP
      [transcription]
      Could Auto Repair Flat Rate Be Dead?
      TECHNICIAN shortage today is real. Last study that I saw said, for every eight shops that’s looking for a technician, there’s only one tech available so I know many of you watching this are experiencing that same thing. And I’ll also say one thing that I found: most technicians, when I mention flat rate, their cheeks kind of pucker up. They hate it. Why? There’s risk. They’ve been burned before. So often in the technicians starved market, what’s a shop owner left to do but put technicians on hourly or even maybe salary? And what that leads to is, really what I’m going to call an “uninspired performance.” Why? They get comfortable, they’re able to pay their bills without exerting a ton of effort.
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      So, let me leave you with a question. Does each and every one of your employees on your team clearly know what you expect of them?
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    • By Joe Marconi
      Got your attention? Good! Before I start, let’s get something out of the way. Does technician aptitude or attitude affect the productivity of your shop? Absolutely. But this is the exception, not the rule. If your overall production levels are low, that is the sole responsibility of management. Let’s look at a few reasons for low production levels.
      The first area I want to address is billing. Many hours of labor go unbilled due to not understanding how to charge. This area is most prevalent with testing and inspecting. If your technicians are handed a work order, with no direction and not a clear process of what to do, or when to stop and ask for labor testing fees, there will be a ton of wasted labor hours, never to be recovered again.
      Next is training. Service advisor and technical training is a key component to high production levels. But let’s not forget in-house training. All policies and procedures must be reviewed often and refined if needed. Your team must follow a process. With no road map, labor dollars are lost. By the way, if you don’t have procedures in place, you need to make this top priority. Every successful organization has a detailed set of workflow guidelines.
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      Next up is scheduling. There should be a structured approach to scheduling where the day is balanced with enough opportunity to make profitable sales. Have a process where vehicle history is reviewed before the customer arrives. Any previous service recommendations or notes is any opportunity to make a sale. But the key ingredient is in preparation. A customer that’s scheduled for an oil change may have forgotten that he or she received a recommendation for tires. Informing the customer at the time of scheduling and preparing for the work ahead of time, greatly improves productivity and overall efficiency.
      Another problem area is with service advisors and their workload. The service advisor, in many situations, handles the front counter, the phone, scheduling, helps with dispatch, part procurement and sales. All these tasks are critical to the daily operations. However, nothing happens in the shop until a sale is made. You need to look at your service staff. Are estimates getting processed quickly and upsells getting back to the technicians in a timely manner? If not, this is another area where production suffers. Carefully analyze your staff and run the numbers. More estimates processed means more sales and higher profits. Adding a service advisor or an assistant may be the missing link in a shop’s production problem.
      Knowing your numbers is another key component to attaining high production levels. I will refrain from giving you benchmark numbers, since all businesses models are different. With that said, you need to determine your breakeven and establish your labor goal for the week. Then knowing your labor goal, you need to calculate how many labor hours you need per technician. Then, you need to communicate this number to each technician. Having clear expectations and knowing the goals of one’s position is essential for hitting production goals.
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      This story was originally published by Joe Marconi in Ratchet+Wrench on March 1st, 2019


      View full article
    • By Joe Marconi
      We allow visitors to read the first post of each topic. To read this post, please login or register for a membership. 
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      Shop production is a hot topic these days.  High production results in higher sales and profits.  But there seems to be so many obstacles to overcome to achieve high production levels.  
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