In our introduction article last month on helping to overcome the technician shortage, we alluded to the roles of those involved in hiring, orienting, training, mentoring and leading the technicians and office staffs of the future. In this article, we will discuss some ways to provide incentives or rewards to them to encourage support of their efforts.
The Importance of Labor to Collision Repair
As you look at the target sales mix of 30 percent body, frame and mechanical labor and 20 percent paint and detail labor, then a full 50 percent of your shop’s sales are labor.
If your target is 60% gross profit, then 30% of your total sales are for technician wages. Add to that, another 15-20% of your overhead costs for overhead-staff wages, taxes, benefits, training, providing databases and other employee related costs. The total labor costs represent 50% or more of the total costs most repairers manage.
The question you have to ask yourself is: are you investing 50-70% or more of your time finding ways to invest in people development, to optimize your technical and office labor resources?
The Contribution of the Repair Center = True Cost of a New Hire
Across almost every industry, experts will tell you the true cost of a new hire is 30% of the new hires annual salary. Here are some estimates for our industry after surveying a few collision-industry HR leaders:
- 2% = Termination costs of the employee leaving - paying someone to finish jobs partially completed or any rework, unemployment, workers compensation claims, etc.
- 3 to 5% = Recruiting fees and other hiring costs
- 5% to 7% = Training costs and certification fees
- 15% = Lost productivity in the work area they are assigned (lost opportunity to fix more vehicles)
- 3 to 5% = Disruption to flow and the team dynamic
- ?% = Fellow employees time spent investing in getting the new person up to speed
If a repair center pays that 30% annual wage cost each time they lose someone, and they have 30% of their staff turnover annually, the true cost of turnover becomes quite high. Let’s focus on investing in encouraging them to stay.
Options for Investing in Apprentices and Mentors
The table below contains a menu of educational, financial, vacation and other options you may consider to attract new hires, to retain them and to reward the mentor.
Types of Incentives to Consider
| Background or Level | Education | Financial | Vacation Earned per Year | Other Incentives |
|
Entry Level 20 flat-rate hours per week |
Work “X” weeks, go to specialty school for “X” weeks | Wage-per-hour adjustment | 5 personal days | Basic tool box and starter tools (Earned after 90 days in role) |
|
Demonstrate Technical School Grad / Level 1 to 2 Skills Produce 30 flat-rate hours per week |
Pay for part of technical school loan or fees when they move up; $X retention bonus |
Wage-per-hour adjustment | 5 days of vacation | Basic tool box with more advanced tools (Plus) |
|
Demonstrate Level 3 to 4 Skills Produce 40 flat-rate hours per week |
Pay for ICAR training of up to X hours or classes $X retention bonus |
Wage-per-hour adjustment once earned; performance incentive |
8 days of vacation | Air and other hand tools |
|
Demonstrate Level 5 to 6 Skills Produce 50 flat-rate hours per week |
Pay for I-CAR training of up to X hours or classes; $X retention bonus |
Wage-per-hour adjustment once earned; performance incentive |
10 days of vacation | Other specialized tools; advanced tool box or help in paying off tool bill; mentor incentives |
|
Demonstrate Level 7 to 8 Skills Produce 60 flat-rate hours per week |
Pay for welding school and I-CAR Welding certification; $X retention bonus |
Wage-per-hour adjustment once earned; performance incentive |
10 days paid vacation; 3 days sabbatical; reasonable expenses paid by company (every 3 years) |
Specialized tools; mentor incentives; management training; help in paying off tool bill or cell phone allowance |
|
Demonstrate Level 8 to 12 Skills Produce 65+ flat-rate hours per week |
Pay for frame school and OE certification schooling; $X retention bonus |
Wage-per-hour adjustment once earned; performance incentive |
15 days paid vacation; 3 days sabbatical; reasonable expenses paid by company (every 3 years) |
Specialized schooling for Artisan Level acknowledgement; management training; help in paying off tool bill or cell phone allowance |
Note: Many repairers have opted to provide a portion of the apprentice’s wages to the journeyman, as they move along the developmental path, with some even agreeing to pay this benefit to retirees (up to a few years) who help train their replacement.
What if they leave?
Hopefully, you are the employer of choice, have solid benefits and offer plenty of opportunity and reward for advancement. But it happens — people DO leave. Sometimes all your efforts are not enough. They might need to switch jobs due to a spouse who has a new job, a conflict with a leader may occur or another shop may offer more money or advancement. It will happen; work to prevent it, but plan for it and keep developing people for growth.
The Pay Off
With faster apprentice growth, technician efficiency grows, stall utilization is optimized for your entire repair center and you have happy employees willing to ask others to come join you on their team at their location or company, making recruiting that much easier.
Hopefully, this article has inspired you to review how you allocate your time and to focus your efforts to recruit and retain staff in the future. My next article will focus on the explanation of the levels within each role of the repair center. I’m looking forward to sharing more details in this series over the coming months.
