Every shop in Canada is stating that they are having a tough time finding competent technicians. There just are not enough technicians to go around. These are the facts of the industry.
Based on this reality, it is imperative that shop management retain their best technicians for the long term. Service providers can do this by turning a technician’s job into a long rewarding career at their location.
Once a shop owner starts losing his top technicians frequently, questions about the shop management’s role must be asked. These include:
— What was management’s attitude like towards that technician? A negative attitude by management creates a terrible environment to work in day in and day out.
— Did management surround that technician with other competent technicians with a similar mind-set? Overloading one technician with all the responsibility of the back shop, and not providing him with equally sound (competent) people capable of performing the tasks they are supposed to do, is a fast way to frustrate, and burn the best out.
— Did management provide the best equipment for the technician to perform his task efficiently and professionally? Cutting corners in this high-tech world leads to frustration, potential time lost through safari hunts and comebacks with the work performed, which in turn can lead to lost retail clientele who perceive incompetence.
— Did management recognize the productivity improvement accomplished by the technician and have the improvement properly reflected through the technician’s paycheque?
It is this last one that I want to address in this issue.
Many shops do not have a bonus system or proper financial reward system in place for their technicians. Understanding how a shop works can put the jobber in a position of offering value, by bringing forward to the shop owner a proper business solution that allows the shop to move forward.
In today’s environment, having shop management sit back and say “you’re lucky to have a job” just doesn’t cut it. This is archaic thinking and will lead to staff turnover, which is a huge cost to any business, not to mention the stress that it brings with it. Competent people must be recognized financially for competent work, but if management doesn’t measure each technician’s productivity properly and accurately, the odds of losing good people increase significantly.
Consider outlining the following strategy to your service provider clients.
The financial guideline in today’s shops is to have the technician’s gross pay come in at 30% of the total gross profit produced by that technician. This figure is before any employer burden or benefits that may also be paid to the technician.
Larry Swift, a licensed technician, has all of his productivity properly monitored by the shop management.
Motor Oil$357.00X50%X30%= $53.55
Total Payroll Produced= $3,197.78
In this sample, the technician has earned $3,197.78 for himself, and it is the proper wage for this shop to pay under the current circumstance of what it is earning in gross margin and at this productivity level by the technician.
Two questions now have to be asked.
1. If the technician is producing more than what he is being paid under this formula, i.e. his pay is working out to 26% of total gross profit, then there is room to bonus out to the technician the difference to bring it up to 30%. This bonus can be given every four months, which in turn allows for a season to pass and be accounted for. The message to the entire staff is “when productivity goes up, your paycheque goes up. Let’s get focused and work as a team.”
2. If the technician is actually being paid more than what the formula works out to be, then an analysis by management must be completed.
Is this a “blip”? Some months are busy and some are not. Blips happen, so it should not be anything to panic about.
If the technician is short consistently three or more months in a row, then management must assess the following:
the technician’s attitude towards work;
management’s attitude towards the technician;
the technician’s interaction with the other technicians in the shop (positive or negative);
if management provided him with the right equipment or tools;
if time is lost as the technician waits for stock to arrive because the shop does not stock properly;
whether the technician has had the opportunity to get the right training for the work he was asked to perform.
All those questions affect the technician’s productivity, and it is important for management to do the right assessment before blaming the technician.
Now, let’s assume the technician is consistently being overpaid $300 a month based on the productivity numbers. For management to calculate the required increase in productivity for the technician to break even, the formula is: Dollars Short Shop Total Gross Profit Percentage 30%= Required Productivity Increase ($)
Assume the shop’s Total Gross Profit Percentage (including the labor component) is 63%.
$300 short 63% = $479.19
$479.19 30% = $1,587.30
When the technician can be shown how to produce $1,587.30 more per month, then the technician is back to his current pay or breakeven. This $1,587.30 works out to a $79.37 increase in productivity per day based on 20 working days per month. One additional automatic transmission fluid change per day, more than covers the necessary increase.
Take the time to discuss technician productivity and the importance of measuring it with your garage customers. You don’t want to see your client lose good people based on a misperception by management, as technicians are just too hard to replace.
Robert (Bob) Greenwood is president & C.E.O. of E. K. Williams & Co. (Ontario) Ltd., which has six offices across Ontario specializing in business consulting and training in the independent installer sector of the automotive aftermarket. Bob also works with jobbers to understand the installer side of the industry and address what is required from both parties to set up a relationship that grows future business. E. K. Williams (Ontario) Ltd. is on the Internet at www.ekw.ca. Questions and inquiries can be made in full confidence via fax c/o Jobber News (416) 442-2213 or via e-mail to email@example.com.