Quantcast
Jump to content


Tech pay plan question


Recommended Posts

I currently pay fate rate. I'm looking at going with a hybrid system with an hourly rate for 40 hrs plus an hourly rate for hours produced. I also want to add some type of bonus system, I guess on hitting a hours produced goal. I keep running the numbers and it seems that the less hours they produce, they more they make an hour, but if I lower the hourly rate, they make less than on flat rate. It also seems that the closer they get to 40 hrs, they less they make compared to flat rate. I'm going crazy running numbers! They are all starting to run together! Am I looking at it right? Or am I overlooking something? Also am I using the right bonus system, or do I need to base it on sales? Any help would be appreciated . Thanks guys!

Link to comment
Share on other sites

Straight flat rate is best for the owner, techs become COGS. A better system for a tech goes something like this: flat salary $10/hr for the first 30(failsafe), 30-40 hours billed $15/hr, 45 hours $17, 50 hours $20, 55 $23, 60 $27.50. 60+ make him a partner.

 

So a tech that comes early stays late bills 60 hours makes $1650 that week. A guy who smokes and txts all day makes $300.

 

Overtime is still required in some states for flat raters so ask your payroll guy first, the guy making $27.50 @ 60 hrs might also get a bonus of 20 more hours OT which is amounts to a lot of money for a tech.

Edited by alfredauto
Link to comment
Share on other sites

Pay based on parts/labor will result in techs replacing rather than fixing, its in their best interest for a higher RO. That might not be best for customer retention. I pay my best guy hourly plus bonus based on gross monthly reciepts, it works because my tech acts as manager, tire salesman, and car salesman sometimes and its the only fair plan I could come up with.

Link to comment
Share on other sites

Straight flat rate is best for the owner, techs become COGS. A better system for a tech goes something like this: flat salary $10/hr for the first 30(failsafe), 30-40 hours billed $15/hr, 45 hours $17, 50 hours $20, 55 $23, 60 $27.50. 60+ make him a partner.

 

So a tech that comes early stays late bills 60 hours makes $1650 that week. A guy who smokes and txts all day makes $300.

 

Overtime is still required in some states for flat raters so ask your payroll guy first, the guy making $27.50 @ 60 hrs might also get a bonus of 20 more hours OT which is amounts to a lot of money for a tech.

 

Agreed. If you are a small, independent shop, techs are gonna be cautious about coming to work somewhere that they might not get a ton of hours. This pay plan will provide a guarantee that they wont go home without a paycheck but that they also have an incentive to hustle.

 

 

Pay based on parts/labor will result in techs replacing rather than fixing, its in their best interest for a higher RO. That might not be best for customer retention. I pay my best guy hourly plus bonus based on gross monthly reciepts, it works because my tech acts as manager, tire salesman, and car salesman sometimes and its the only fair plan I could come up with.

 

I still have yet to become comfortable with paying employees commission off of gross sales, gross profit, net, etc. In my mind, it creates too many opportunities for employees to want to see the numbers of the business. It also automatically gives employees pay raises if you raise your labor rate, parts matrix, etc. Third, it's just too easy to pay techs by labor hours. It's easy to track, it's easy to understand, it's easy to get techs to compete against each other, it's easy to set bonuses off of, etc.

 

Just my opinion though, lots of guys on here seem to pay off of Gross Sales, Profit, Net, etc and are fine with it.

Link to comment
Share on other sites

I should clarify that when I say tracking hours is easy, I also mean it's easy for the employees. Techs and service advisors can manually track their hours for the day/week so they know where they are at for the day/week. Trying to get an employee to know how they are doing with GP, markup on parts, etc makes it tough to calculate quickly and they might lose motivation...

Link to comment
Share on other sites

Jimbob661, what motivates your technicians? Money? not always! Sometimes its benefits, or flex time. What do you want from your techs? Better inspections? Better accuracy? I say the process starts with you deciding exactly what you need to take your shop in the direction you envision. Next, think about what you need from each tech. Not just the numbers, but career development. For one example consider a $ 1.00 hour raise for each new ASE certification . Leading your team means getting them to achieve their goals while getting you to your goals at the same time. I can be a lot of fun, and you will get to learn a lot more about your team.

Link to comment
Share on other sites

I've watched this guy closely and talked with him and it seems he just wants the money. He doesn't take any time off and the only other thing he does is work on stuff at home. He normally is 85-93 percent efficient. Right now he is strictly flat rate with $1 bump per hr at 35 hrs and .50 cent bump every 5 hrs after that. I haven't checked his hours yet this week but he is going to be 100 percent plus. Now today he tells me what he " needs " to bring home every week and it's more than I make. He graduated from a community college program a few years ago and this is his second job as a tech. He is a master tech and does a good job, but I can't pay him what he wants so I'll guess I may be looking for help soon.

Link to comment
Share on other sites

I'd look at doubling his production bonuses if he needs a raise.

Either go to $2 for 35 hours and $1 for each 5 hours after that OR

$1 for 35 hours, $1 for 37.5 hours and $.50 for each 2.5 hours after that.

 

I'd also do everything in my power to get his production above 100%, remove all obstacles that are preventing him from increasing his productivity.

Productivity = profits, and great techs at great shops will be well above 100%, but front counter processes can be a drag on his productivity as well.

If he's producing more, you're making more money so you can afford to give him more as well.

You don't want to lose a good master tech, so at least show him that you're willing to work with him to help him earn more money for the both of you.

Link to comment
Share on other sites

Since your tech is good and motivated by money, there is a lot of potential . Take a look at the money he wants and set the bar at 60 billed hours, then reverse engineer it to what he makes now in the 40 hour/100 percent area. I do not know your numbers, but I'll demonstrate the idea.

 

00-40 hours $15.00

41-50 hours $ 20.00

51-60 hours $ 25.00

61-+ hours $ 30.00

 

With his pay as an percentage of production, you CAN afford to pay him. Make the rate retroactive to all hours, so a 53 hour week would be $25.00 x 53 = $1325.00 gross. And lets say your at $95.00 hour, this would be 26 percent unloaded cost of labor for this tech. Look at what he wants money wise and put that carrot where its attainable for him and affordable to you. Maybe put the hourly he really wants at the 61 hour plus slot. Like I said, I do not know the numbers. But this tech sounds like he's worth trying to work with. I hope this helps. There are infinite ways to build a pay plan, find one that benefits both of you. Great techs are very hard to find.

Link to comment
Share on other sites

This and Service Writer compensation have been the toughest problems to solve for us, but after working for literally months with our ATI coach we have developed pay matrices for our techs that provide a safety net, create incentives for production, allow us to manage overtime pay, and allow us to achieve the labor margins we are looking for. The hardest part has been talking techs who were on an outdated pay plan into adopting the new one. Eventually they see that, with our car count, they can make more money on the new plan.

Link to comment
Share on other sites

We use a labor matrix where we add .1 for every full hour the book gives, and then some for broke bolts, rust, etc. I pay a full hour for scan tool hookup and have a charge for each test ( fuel pressure, sensor test, smoke test etc) but he complains that enough time is not allowed for test drives, etc . I guess what I don't understand is that he wants to be paid more than some master techs make at the local dealer who have 25 plus years experience. I'm all for paying a guy what he is worth , but where do you draw the line ? Or am I looking at this wrong?

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Available Subscriptions

  • Have you checked out Joe's Latest Blog?

         0 comments
      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.
  • Similar Topics

    • By Joe Marconi

      Premium Member Content 

      This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

    • By carmcapriotto
      Thanks to our Partner, NAPA Auto Care Murray Voth, owner of RPM Training, discusses the importance of language in the automotive industry, advocating for a shift from "labor rate" to "service rate" to better reflect the value provided. He also dives into financial strategies for shops, emphasizing the significance of setting the right service rate and understanding gross profit to ensure business profitability. Murray Voth, RPM Training. Listen to Murray’s previous episodes HERE. [email protected] Show Notes
      The breaks for breasts initiative (00:00:13) Discussion about the initiative started by two shop owners to raise funds for breast cancer research. https://brakesforbreasts.com The rise of the mechanical and technology specialist (00:02:28) A language shift in the industry and the importance of recognizing the rise of mechanical and technology specialists. https://remarkableresults.biz/rise Transitioning from diagnostics to testing (00:03:04) Discussion about the shift in terminology from diagnostics to testing to improve customer perception and willingness to pay. Changing terminology from labor rate to service rate (00:04:09) The importance of changing the terminology from labor rate to service rate and its impact on customer perception. Professionalism and perception in the industry (00:05:26) Discussion about the importance of professionalism and perception in the industry and its impact on customer behavior. Showing the value of service rates (00:13:24) Strategies for showing the value of service rates to customers, beyond just raising prices. Analogies for service rate and cost (00:14:25) Using analogies of fast food restaurants and steakhouses to explain the concept of service rate and cost. NAPA Auto Care Apprentice Program (00:17:05) Information about the NAPA Auto Care apprentice program as a solution to the technician shortage. Financial calculations and analysis (00:19:26) Murray Voth shares calculations and analysis of a shop's financial data, including occupancy costs, labor rates, and profit margins. Determining the right service rate (00:22:05) Discussion on adjusting service rates, parts margin, and other expenses to optimize profitability while considering market competition. Challenges and mindset shift (00:30:14) Exploration of the emotional and intellectual barriers shop owners face when making financial decisions and setting service rates. Wages and effective proficiency (00:33:40) Analysis of technician wages and the impact of selling work properly on the effective service rate, setting goals for improvement. Coaching Gross Profit (00:34:52) Murray discusses coaching gross profit, creating net profit, and making changes to increase revenue. Back-End Sales Impact (00:35:48) The impact of service improvements on parts purchases, revenue, and margin. Behavior Coaching (00:37:09) Murray talks about coaching to behavior, raising inspections, and the 100% rule for vehicle inspections. Facility Service Rate Calculator (00:39:02) Murray offers a facility service rate calculator and discusses how to obtain it. Odd Numbers and Service Rates (00:40:52) Murray explains the significance of odd numbers in service rates and how to use the calculator effectively. Profit in the Estimate (00:44:39) Murray emphasizes the importance of the estimate in generating gross profit and providing value to clients.
      Thanks to our Partner, NAPA Auto Care Learn more about NAPA Auto Care and the benefits of being part of the NAPA family by visiting https://www.napaonline.com/en/auto-care Connect with the Podcast: -Follow on Facebook: https://www.facebook.com/RemarkableResultsRadioPodcast/ -Join Our Private Facebook Community: https://www.facebook.com/groups/1734687266778976 -Subscribe on YouTube: https://www.youtube.com/carmcapriotto -Follow on LinkedIn: https://www.linkedin.com/in/carmcapriotto/ -Follow on Instagram: https://www.instagram.com/remarkableresultsradiopodcast/ -Follow on Twitter: https://twitter.com/RResultsBiz -Visit the Website: https://remarkableresults.biz/ -Join our Insider List: https://remarkableresults.biz/insider -All books mentioned on our podcasts: https://remarkableresults.biz/books -Our Classroom page for personal or team learning: https://remarkableresults.biz/classroom -Buy Me a Coffee: https://www.buymeacoffee.com/carm -The Aftermarket Radio Network: https://aftermarketradionetwork.com -Special episode collections: https://remarkableresults.biz/collections
      Click to go to the Podcast on Remarkable Results Radio
    • By carmcapriotto
      This week, Hunt unravels the mystery behind the AMC and GameStop stock phenomena that has captivated the financial world.
      Institutional Investors: Who they are and their impact on the stock market. Private Equity Dynamics: How firms like Bain Capital manipulate markets. Short Selling: A simple explanation of this complex strategy. Public Power: How individual investors can influence stock prices.  
      Thanks to our partners, NAPA TRACS and Promotive
       
      Now show notes!
      Did you know that NAPA TRACS has onsite training plus six days a week support?
      It all starts when a local representative meets with you to learn about your business and how you run it.  After all, it's your shop, so it's your choice.
      Let us prove to you that Tracs is the single best shop management system in the business.  Find NAPA TRACS on the Web at NAPATRACS.com
      It’s time to hire a superstar for your business; what a grind you have in front of you. Great news, you don’t have to go it alone. Introducing Promotive, a full-service staffing solution for your shop. Promotive has over 40 years of recruiting and automotive experience. If you need qualified technicians and service advisors and want to offload the heavy lifting, visit www.gopromotive.com.
      Paar Melis and Associates – Accountants Specializing in Automotive Repair
      Visit us Online: www.paarmelis.com
      Email Hunt: [email protected]
      Get a copy of my Book: Download Here
      Aftermarket Radio Network
      Click to go to the Podcast on Remarkable Results Radio
    • By carmcapriotto
      Thanks to our partners, NAPA TRACS and Promotive
      This week, Hunt talks about a $40 million tax bill that teaches critical lessons on spousal tax liabilities and business strategies.
      Explore the "Innocent Spouse" provision and its complexities: Learn how this provision can shield a spouse from tax liabilities and why proving innocence can be challenging. Understand the tax implications of exercising stock options: Learn the complexities of stock options, including the potential for significant tax liabilities when exercising these options. Learn strategies to protect personal and business assets: Get practical advice on structuring business ownership to manage liability and safeguard your personal assets effectively.  
      Did you know that NAPA TRACS has onsite training plus six days a week support?
       
      It all starts when a local representative meets with you to learn about your business and how you run it.  After all, it's your shop, so it's your choice.
      Let us prove to you that Tracs is the single best shop management system in the business.  Find NAPA TRACS on the Web at NAPATRACS.com
      It’s time to hire a superstar for your business; what a grind you have in front of you. Great news, you don’t have to go it alone. Introducing Promotive, a full-service staffing solution for your shop. Promotive has over 40 years of recruiting and automotive experience. If you need qualified technicians and service advisors and want to offload the heavy lifting, visit www.gopromotive.com.
       
      Paar Melis and Associates – Accountants Specializing in Automotive Repair
      Visit us Online: www.paarmelis.com
      Email Hunt: [email protected]
      Get a copy of my Book: Download Here
      Aftermarket Radio Network
      Click to go to the Podcast on Remarkable Results Radio
    • By nptrb

      Premium Member Content 

      This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.



  • Our Sponsors



×
×
  • Create New...