Many shop owners look at only the technician’s labor revenue, namely the total billed hours, for the period being measured and from that report, determine how productive the technician was, and whether a “bonus” or pay increase is warranted for the technician. Measuring total billed hours for each technician is a very key measurement; however, if this is the only guideline being followed, management may be conducting an unfair practice policy, which in turn, may lead to a competent technician moving on to greener pastures. No shop can afford to lose a good, competent technician or any competent people within the shop these days.
Perhaps it is time to review the total issues that management controls before blaming the technician.
Consider that a technician works on a vehicle and completes all work necessary. Consider it is the technician’s total contribution to the shop gross profit picture that should be recognized also and measured, and not just one category.
The business guideline is that the technician’s total gross earnings, before benefits and employer payroll costs, should come in at 30 percent of total gross profit produced by the technician, including gross profit from oil, tires, batteries, all parts and labor. Measure the technician’s productivity against his/her total gross profit produced and not just the labor produced, or, management may be short-changing the technician’s true productivity contribution to the shop. This is just another key step in looking at the total picture for each technician.
Now consider that it is management that determines what the client is going to be charged in terms of dollars and cents on the final invoice. If the client is given a deal or discount and the full labor time spent by the technician is not being charged out at the correct labor rate, then, in essence, management is short-changing the technician’s labor productivity. Also consider if management is going to give the client a discount on parts, and/or other hard goods, then management is, once again, short-changing the technician’s productivity in terms of total gross profit contribution produced for the shop for the month or period being measured.
Consider that it is management that determines the gross profit percentage policies of each revenue category for the shop, and if the shop’s gross profit results in each category are below the industry’s business operating guidelines, then management again is affecting the true gross profit productivity produced by the technician.
Finally, consider that it is management that sets the shop’s labor rates. Today’s shops require a minimum of three labor rates — maintenance, diagnostic and a re-flash rate, and if management sets the labor rates below the industry wage multiple or cost per billed hour guidelines for each labor category, then once again, it is management who is affecting the total labor revenue and gross profit produced by the technician. Also consider the internal processes to insure the correct time on each labor category is captured fully and properly. A simple example to consider is are test drive times being captured at the diagnostic rate and being included on the final invoice? I find that this issue can average .2 in time on a typical invoice. That adds up to a lot of time over the course of a year. If all processes for capturing everything are not being attended to properly then the technician is, once again, being short-changed.
Management should re-examine the shop’s business practices, processes, policies and standards, before stating that they have an unproductive technician, or can’t afford to pay the technician a professional wage package with benefits. If shop policies and practices are out of line with successful business practice guidelines, then the chances of losing good people are very real, because management “perceives” they are not productive.
We are in a new aftermarket era and it is critical that all shop owners and managers truly understand all business aspects that are under their full control. Let’s face it — a shop always wants to be able to retain the best technicians and people in the industry. The fact is it is very possible to retain and pay the top technicians a very professional income; however, management must clearly understand their own new role in the business. We all are now in a knowledge based business and continuous education must be the new culture standard. Great technicians take a lot of pride and insure they are on top of their technical knowledge. Management must do the same for their position they are responsible for.
Consider that perhaps it is time for management to invest in the time and make the effort to get involved in up-to-date management training and development and do the research now as to what management courses you must update yourself on.
Please don’t be complacent on these issues because once you have lost a great person, or great people, it is too late; they will be gone forever and that will affect the businesses future.
