flat rate or clock hour

[gene calhoun]

anyone on clock hour,how does it compair to
flat rate?when we where on flat rate the comebacks were horrendous!with clock hour comebacks are rare!
we have a new dealer who wants to go back to flat rate!!!!!!
i would like some input??

[David S]

Personally, I have no knowledge of the clock hour method. I would like to hear feedback from anyone who uses it. How are jobs priced? How does the labor rate compare to a store on Flat rate? What effect does it have on GP? How do pay plans for techs or ASMs differ if any? And, how to customers respond?

David S

[sallen1]

Question: what is the objective you are trying to meet? Are you trying to eliminate come-backs (we should be doing this) or increasing profits (we should be doing this, too)? We actually should do both simultaneously!

The big difference between flat rate and clock rate is the incentive for the technician to do more work for more pay (flat rate) vs. techs taking as much time as needed to fix the problem (clock rate).

Each method can work if its properly managed, and they should be managed differently. If the flat rate mode, the 'slow' times for your shop will not incur the additional expense that clock rate techs would. However, during busy times, the clock rate shop will have much higher profits because you set the ceiling on the tech cost-of-sale.

Therefore, if you change to clock rate, expect an un-even gp% AND fixed coverage % from month to month, but your quality will improve. If you change to flat rate, you can expect consistant gp%.

We used to have our used car techs on clock time but changed them to flat-rate a couple of years ago. Didn't effect the quality and we were able to forecast easier.

My feelings are that different people will work better under different situations: You will find techs that only perform under the clock system and visa-versa. If you are going to switch from one to another, expect a lot of disruption.

I would suspect that under the 'team' concept of shop organization, the clock system would be beneficial. Why? Because the 'team leader' is an integrated part of the team and each team is responsible for its performance.

We are more traditionally organized (more specialization than not) with a manager, foreman and four advisors, so the flat rate system is easier. As far as the ASM's or advisors are concerned, they should always be compensated on what they produce either individually or as a group. Putting ASM's on salary may be a disaster.

scott

[This message has been edited by sallen1 (edited 08-06-99).]