Employees know what’s expected of them in their job, and of course they know what’s good enough, right? How many times have you thought, “You’re a professional, you should know what the job is, just do it!”
Honestly though, should they really? Should we assume they know about business and know what you need to survive? More specifically, do they know exactly what you expect? This month, Mike Bennett, a shop owner from Gettysburg, Pa., and a coach for ATI, will share some of his secrets to creating the shop of your dreams.
One thing that will always happen is that your business will have a direction. This is a fact. It might not be the right direction or a direction you would prefer, but it will have a direction. So, either you set the direction of your business or your business will set its own. Same with your employees: If you don’t set a standard of performance, they will. In either case, if you haven’t set a standard, you likely will be disappointed. Remember the old saying, “Close is only good enough in horseshoes and hand grenades.”
What should the success of your business look like? Do you know what a successful productive employee looks like? Do you have a clear set of expectations for the business and for each member of the staff? Most importantly, do your employees know what you expect of them every day and in every area of their job performance? My guess is that the majority of you are shaking your heads no. But for those of you that are nodding your heads yes, I commend you.
How to Set Expectations
I believe the success, mediocre performance or failure of your business depends on the understanding and application of three very simple words: expectations, standards and accountability. Expectations are what you want and need from your shop. The standards become the level of performance that you set for the individuals in your crew.
Your ability to determine these standards, communicate them and make them real, understandable and achievable with your employees determines how well and how quickly you can achieve your success. Probably sounds a little too simple, right? I mean you repair and service vehicles for a living, this shouldn’t be rocket science. Show up, work hard, everyone do the right thing; this should be easy! Consider for a moment though, could a ship with a crew sail from Baltimore, Md., to London without a rudder, captain’s wheel, compass or map? I’d guess not likely, but if it did somehow arrive in port, it would likely be on the luck of the winds. I don’t know about you, but it certainly scares the socks off me to think anyone would leave their business’ success to that much chance and prayer.
Your expectations and standards need to be real, tangible and therefore measureable. “Providing exceptional customer service” is a common expectation many shop owners have for their business. It might be what you want a customer to think about you, but it is hard to measure. So we have to focus on the things we can measure that will help to create that emotion in our customers. This comes from creating a series of standards that, when completed properly, help to fulfill that expectation. “We perform courtesy checks to ensure that we can provide each client with a complete understanding of the condition of their vehicle.” That is a standard. We expect that service advisors will send each work order into the shop with a courtesy check form attached to the repair order, and techs will perform a thorough courtesy check on 100 percent of the vehicles. As a standard, this can be tracked, measured and ultimately managed.
How to Communicate Your Expectations
As you can imagine, the real challenge for you as an owner is to be able to identify the measureable benchmarks of your business and then be able to communicate those as standards to your staff so they can understand what is expected of them. More importantly, this is what their performance will be judged against to determine success or failure. As an employee, when you understand what the target is, you can set yourself in a path to achieving it routinely. No matter how broad or focused, determining and setting expectations and standards is not an impossible task. It’s really about understanding your needs — but how do we do that?
Here’s an example: Let’s assume you have already determined that your shop needs weekly sales of $16,000 at 54 percent gross profit margin to support your weekly fixed and operating expenses of $4,800 and to achieve desired net operating profit of $3,840. Some of you might have had to read that last sentence a couple of times and still might have a fuzzy view of the picture we are trying to paint. I get it, but this is where your money comes from. You really need to know these things, along with the answers to these questions: What would your service advisor need to target in sales, car count and average repair order value to support this? What would your technicians have to do to support the production necessary to meet the standard?
I mean, honestly, would you just open the doors on Monday morning and pray it happens? Well, you could, and maybe in a great location or with a super service advisor, you might even achieve success at times. However, unless you set the standards for your crew, the likelihood of your achieving them will be nothing short of chancy.
Setting expectations for the business, and the standards for each employee in support of your expectations, is essential. For example, given your sales goal above, your techs (assuming you have three) would need to be 85 percent productive at an effective labor rate of $82.46, or each produce a minimum of 34 billed hours per 40 hour work week. Do you have daily production tracking and do you let your techs and advisor know where they are in relation to their goal on a daily basis? Your service advisor would need to understand that they are responsible for making sure the shop has 51 vehicles available per week or 10 vehicles per day at an average 2.0 billed hours per vehicle to support the techs. The point is, the standard has to be known, and once known, it has to be tracked, and once tracked, there has to be accountability.
How to Make Your People Accountable
As important as expectations and standards are, the magic is in accountability. Let’s admit it, we might believe we have the greatest employees in the world, that they have the shop’s best interest in mind and that we have established very clear standards with supporting processes, procedures and policies. But without accountability toward expectations, employees can slip and move toward the standards they believe to be sufficient. In the absence of real accountability, what motivates an employee to the standards you’ve set? One truism I see without fail is that in the absence of accountability, employees always will migrate toward the path of least resistance, which means taking it easy. Unfortunately, it is very rare that their path supports your expectations.
Accountability comes in several forms, all of which are important. For example, there has to be a tracking and reporting element. There also has to be a consequence for performance, whether as reward or penalty (i.e., carrot or stick). This is where production-based pay plans work really well. Exceptional performance is rewarded with an exceptional paycheck; mediocre performance is rewarded with a mediocre paycheck; and of course there has to be the risk that poor performance will be rewarded with a poor paycheck. This is how it works for you, right?
Create Your Own Business Expectations
So, how do we do it? As mentioned earlier, it starts with you knowing the needs of your business. What’s your win number? What are your expectations for your business? Make them known by all so you can hold employees (and the business) accountable. Work to come up with measurable performance standards. Your employees and business should be responsible to report to you (or a manager) with results of daily performance.
Finally, make it real. I recommend that you give consistent feedback. If there is no follow-up, then likely your staff will consider it not so important after all. If you make it important and you make sure they feel they have some “skin in the game,” it is more likely that they will remain on the same page as you and be motivated to keep working hard.
Remember, the money is in the math, but you have to know where to start. Go to www.ationlinetraining.com/2014-02e to get a free copy of the Win Number Drill and get started on setting standards for your staff that will make you and them more successful. But this is a limited time offer. Your profits will be more consistent, your business will be easier to run, and your business can stay the very best shop in your area.
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