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tracking shop hours billed vs hours worked.


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I will be starting to track our shops hours billed versus hours worked this week. What i really need to know from those of you who have been doing this is what is a realistic number of hours per tech per week. Thank you in advance. Bob Keene.

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This is currently being discussed in this thread: http://www.autoshopowner.com/topic/9540-effective-labor-rate/

since the formula you are going to track is actually technician productivity.

Tech productivity = Hours billed / Hours available

 

Industry standard for productivity nowadays is 110% or more (bill about 9 hours in an 8 hour day), however most independent shops across North America are hovering below 70%, and many are actually around 55%, or half of what you need to be a profitable shop!

Productivity, more then any other key performance indicator (KPI), DIRECTLY translates into profit! High productivity = high profits, low productivity = low profits!

 

You should also consider tracking tech efficiency:

Tech efficiency = Hours billed / Actual hours it took to complete the jobs

Efficiency is a better measure of how good your techs are (tech skill and motivation), while productivity also factors in many other things, like shop layout, front counter processes, tooling etc.

 

To track efficiency you also need to track lost time (all the hours your techs spend doing non-revenue generating tasks, such as sweeping, cleaning, tool repair, shuttling customers, picking up parts, waiting for the next job etc) because:

Actual hours = Available hours - lost time hours

Ideally, lost time hours would be 0, but this is unrealistic. It needs to be tracked so you can minimize it each week, and it helps you find and fix problems in your work flow processes.

 

You can have high tech efficiency (great techs), but have low productivity, which will still translate to low profits, if your techs just don't have enough work to do, or you don't have a service adviser, or your front counter processes are lacking.

On the other hand, if you have low efficiency (weak techs), I'd be surprised if you could attain a truly high productivity.

If you're looking to pay bonuses, try to look at efficiency for your tech's bonuses, and productivity + profit margins + gross sales for your service adviser and shop foremen/managers.

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Thanks for your help. I'll will post our results after a week to give a snapshot of our shop numbers. Also on a personal note I have an uncle in your city. James Keene former concert master of the Edmonton Alberta Symphony Orchestra. Small world.

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Right on, it's always good to see real world numbers, and be able to compare apples to apples, something most people don't do.

 

As for the Edmonton Symphony Orchestra, it's not my style of music so I've never seen them, but I hear that it's world renowned, so that's quite impressive. Small world indeed.

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It costs about $80/month. To exploit it fully, you need to have all of your techs punching in and out of the jobs they are doing and every time they go to lunch or take a smoke break. If you enforce that, you, your techs and your SAs will be able to see where tech time is going. It color codes productivity on individual jobs so if a tech is taking 4 hours to do three hour jobs, you know you need to look at his performance or your estimating. An added benefit is that it gives you an automated timeclock for wage/hour purposes. If you are not going to make your techs punch work and breaks in and out it probably is a waste of money. For any fans of Vin Waterhouse, a tool like this will help you fine tune your factory. Takes discipline.

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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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