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The impact of management decisions on technician wages

Monday, October 8, 2018 - 06:00
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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.

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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.

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