PARTS MGR PAY PLAN

[LEFTHANDTHREAD]

Looking for ideas for a parts mgr pay plan that work. We have a employee who came in three years ago without parts experience. He has now blossomed and is doing a good job, however the fixed paychecks are way overdue for changing. Time for a performance based plan. any ideas ?

[KevvyG]

What car line? Base salary plus a commision based on gross profit % is where I'd start.Roughly 60% of this would be base. Gives him something to shoot for, more Gross profit/Sales means a bigger cheque for him and more money for the store. When times are slow, you are reducing your Manager expenses. My 2 pennies...

[LEFTHANDTHREAD]

We are a stand alone chevy dealer. thanks for the ideas.

[possum]

Our fixed mgrs are paid salary + commission on combined parts and service sales/hours, as well as department goals. This keeps us working together.

[Strap22]

A Draw against commission. Base the commision on a sliding scale depending on the performance in his controllable areas.(Retail, Wholesale and Internet if your store is doing that). pay him a portion of the dept gross and a portion of the department net before overhead. The percentage of each will be based on total sales in the controllable areas with a qualifier that the gross also meets a pre-determined percent. This type of pay plan will aloow him to focas on the areas that really affect his check but will also keep his focas on what is important to the department. With a pay plan like this he will be able to double or triple his performance and his pay will not outpace his net. It works very well for and i would know, I have been on it for 5 years and I have doubled my sales and gross and more than double my net. You will be paying him stupid money if he is aggressive and starts to work his pay plan. Who cares how much it is, he is doing what you need to him to do and remember he is paid on net after his controllable expenses so he will be watch them as well. I thought you may want to hear from a PM that loves his job and is motivated to keep moving forward. By the way I earn more than many GM's out there and work almost as many hours. I use this type of pay plan in the department and the performers are compensated better than most PM's. They should be...they produce at much higher level than thier peers and they control thier financial future. Just my 2 cents.

[Colin W]

I'm a little confused about how your pay plan works. First you say "a portion of the net before overhead," then "he is paid on net after his controllable expenses"
Your faith in the dealers honesty is amazing. I had a plan like this years ago and found out that the dealer was jacking me in a big way. I'm all in favor of incentives and bonuses but only in addition to a solid salary base.
My pay plan incentives are based on a percentage of the fixed ops net. This ensures a good relationship with the shop and a lot less bickering about where expenses are assigned. It encourages reducing and avoiding expenses where possible, adding to the net.

[This message has been edited by Colin W (edited 02-07-2008).]

[cantfind12]

Amen to Colin W's logic. I started in this biz in the northeast during the late 70's. All the guys I worked with were hourly or salary. Being young it was important to have a constant income even if it wasn't great. I believe this is still true with the relative factors of the cost of living of a more mature lifestyle. The translation is that it is difficult to budget and run a household without having a minimum income level. It was not nor will it ever be the fault of a parts (or service) counterperson that business gets slow. Yet, even though it is touted that everyone makes money during healthy times somehow the exponential factor favors the dealer making a bunch more over the employee when times are good. So the arguement I suspect wil be made must ask the question "do we all do better when we all do better" or do some make out really well while others make out a bit better. In the years I have worked in this business I can say I have heard countless stories of plans that did not live up to their supposed promise. Ask yourself this question....if commision is true what is PAC for in sales. Frontload, Backload its all a game but relying on a stable income is foundational and the rest is incentive.

[Strap22]

The Net before Overhead is correct. After overhead is NET/NET. He can control the Net in his operating expense section. The overhead expense you have little to no control over.

I believe you have a lot more control over your income and future on a incentive based pay plan.

I suppose the 5 years I said I was on this pay plan may have made it sound like that is all the longer I have been in the business. I have been doing this since 1976 and have been on just about every pay plan there is.

Sure they can pay with salary plan but the next question I would have is, if you don't trust them to pay you for you what you really do and they play with the numbers why are you still there?.

I want paid for what I do and I damn sure want more than any employer is expecting to have to pay. That is why I wouldn't want to be paid any other way. I still have alot of control over my future.

Yeah you have to ride the bad times but if you are motivated enough you will find a way to make it happen. What is bad times for others will not effect you nearly as much if you if you don't let it.

It wouldn't matter what I say if you believe your pay plan is the best (not saying mine is) than stick with it. I am happy with mine and will continue to use the same type for my employees.

I expect 2008 to be my best year ever. From what I have read on here lately most think this is going to be a flat year at best.

Maybe I am too trusting and I look at the glass half full, but I sure don't sit around complaining about it because that will only make it worse. As a matter of fact I have spent too much time replying to this thread. I wish you the best......

[tcollins]

Pay him on those things that are important to the dealership that he has total control off. If you pay him off the bottom line, he will find out very quickly that there aren't many things he controls on his own DOC and won't chase for them very long. Pick 5-6 items that are measurable, weight them according to performance and even set some bonus levels for exceptional performance and turn him loose.

[cantfind12]

America is a great country. This is personal and philisophical quandry for every individual. I view it as a parallel to choosing an investment program. The peaks and valleys of playing the market are exciting and can be very lucrative. The consistent 401k program is boring and doesn't seem to ever go anywhere. However, I know more boring comfortable older people than I know rich exciting older people. Continuity is the name of the game and any good business owner knows it. I believe any valued tenured employee who approached the business owner with the desire to be salary rather than work on an incentive program would be met with a postive ackknowledgment. In response to the predictable question regarding incentive do perform to an ever increasing higher level I can only respond in two ways from my experience. Your incentive to do your job was not to get fired but more than that it was to live to a personal value that meant becoming better and stronger at everything you did (sort of like an athlete). It comes down to a standard of work ethic which in days gone by was not always rewarded by monetary gain but by pride in workmanship.