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Tech Pay; Too high? Too Low? Or Just right?

Joe Marconi
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ghmerlin Newbie

ghmerlin

Posted
Posted

I just had my A Tech quit on me. I was thrilled because I finally found an opportunity to promote my B-Tech and hire another mechanic. I found that in the process i lowered my payroll by 2% of sales. The truth is that we often pay technicians way too much because we think they are the key to our success. I am finding out that a mechanic's are not motivated by money. Money just makes them lazy and un-happy at work.

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  • 5 weeks later...
SMMotors Enthusiast

SMMotors

Posted
Posted

Ghmerlin,

 

Why did the tech quit? If the techs aren't the key to your success, what is?

 

Depending on what consultant you follow, loaded labor costs should equate to 20-30% of your posted rate. Saying you pay your techs too much is crazy. Either bump your labor rate to reflect what you need to make ( as an owner) or your going to be stuck promoting b techs to be your a tech.

 

How come you bumped him up? Did he suddenly improve in skill to become an A? Is he going to be able to do the tough diag that your a tech was able to do all of a sudden? Or was your a tech really a B tech that you paid too much and didn't have the skill to back it?

 

Let's be honest, your techs do make you money. Between them doing proper inspections and a service advisor who knows how to sell value, you should have no problem paying a tech good money that basically pays for itself while allowing you to earn your desired profit. It's up to you to figure out your costs, tech pay, GP needed, COGS, and bills and then come up with the correct hourly labor rate to make it all come together.

 

It seems lately that everyone is so worried about being the cheapest shop in town which in turns makes the techs pay lower, which in turns means your going to able to only afford "economical" techs. Economical techs aren't going to produce you a profitable business.

 

Your right on not all techs are motivated by money. You do have to find out what motivates them.i like spending time with my family, and not suffering in my wallet for it. One of my techs loves tools so I buy him tools and get the write off.

 

But, everyone likes having money. We wouldn't work unless money motivated us. Figuring out how to keep people motivated to make more money is the big question.

UsedTireShop Collaborator

UsedTireShop

Posted
Posted

I really like the idea from SMMotors about finding out what motivates them and then let them work towards that.

My head tech is always taking days off. Especially if he worked over 40 hours the week before.

My tire tech love tools.

and my SA loves money.

 

I am going to work on a program that will give them all some incentive to perform.

jwidener Newbie

jwidener

Posted
Posted

Everyone in my shop has different things that motivate them but one thing I have noticed is that most techs not all that are payed a high wage with no incentive to achieve that wage eventually get to a point were their not motivated to work any harder or improve at all they get paid the same regardless so they don't care. We give are techs a base pay with bonuses @ 42 hrs 46 hrs and 52 hrs and they stay highly motivated most of the time. I also set production goals for the week and if they hit the goals I take them for a steak dinner on Friday or give them a gift card to the tool truck etc all these goals are set as a team goal you be supprised how the motivated guys will push the ones that are slacking when it effects them. My loaded labor costs with all the perks stays under 18 %.

mastertechlex Apprentice

mastertechlex

Posted
Posted (edited)

I have only been a shop owner for about 2 years now. My tech pay plan is as follows. I have a $10 per hour plus 5 hours overtime maint tech. a $13 per hour plus 5 hours overtime plus 10 percent of all billed labor hours after the first 20 he produces. and another $13 per hour plus 5 hours overtime plus 15 percent of all billed labor hours after the first 20 he produces. Essentially I told my techs to earn $13 per hour plus overtime you "owe" me 20 hours of production per week. If you cant do that I dont need you here and if you cant earn more by the production incentive well..........you shouldnt want to be here. Dont know if its the best but seems to be working so far.

Edited by mastertechlex
flacvabeach Community Regular

flacvabeach

Posted
Posted

Any compensation plan you come up with that does not report income to the local and fed government is putting you in jeopardy. Gift cards sound great but they are just a scheme for tax avoidance. It sucks that if you want to give a tech a bonus or incentive, the tax man takes a chunk of it, but that's how our system works. Big tech companies provide cafeterias where their employees can get free lunch. They are engaged in litigation to show why that should not be considered income for their people.

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  • Have you checked out Joe's Latest Blog?

    • Joe Marconi
      The Technician Shortage Is Our Fault, And It's Time We Own It
      By Joe Marconi in Joe's 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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