service writer pay plans

[ksdiector]

would like to see some examples of pay plans developed for service writers. they can be sent to my e mail address.

thankyou
steve

[robc]

I encourage everyone to send on what they have, but I'll just answer in a general sense.

From our studies in pay plans, a mix of commission and base (about 50/50) with the bonus du jour and you've made about 90% of the plans out there. The key, as harsh as this sounds, is deciding really and truly how much do you want to pay this person? That might only come from doing a survey in your area. It's funny how we all might know what the tech average for our area but we don't know the advisor average. Really once you know what the job is going to pay, then you can work backwards from there and calculate a good base/commission/bonus mix.

Say an average advisor in your market area earns about $36,000 per year (or $3,000 a month) and can generally be responsible for writing about $40,000 in labor sales every month. A typical start would be to do a 50/50 mix of base and commissions. In this shops case, an advisor might make $1,500 as a base salary and 3.75 percent of labor sales.

It is when getting to the bonus part that we see most problems. Maybe weve said this before, but our general feeling has always been that pay plans for too long have been used in place of management, instead of an aid to focus attention. Pay plans cant manage people. While an additional reward is always nice for making goals if you make it too much of a portion of someones pay they will do anything to make sure they hit the targets. Having a good reward for CSI, profit, hours sold, or whatever seems to be the problem of the day is fine, but it should always play a minor role in compared with the base pay.




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** Rob, Editor WD&S **
Help is only a message post away!
robc@dealersedge.com

[flyboy]

Well now, wont this be fun!

First, we should all post these to this media, as opposed to e-mailing them. What the heck, we could all benefit and maybe learn from one another!

Here in my shop, 13 techs, 3 writers, I pay my writers 4% of what they write, p&l, plus a matrix figure for CSI. They all write about the same, $80 - $100K per month.

The CSI pay is just that, pay, not bonus. It is a substantial part of their income, and they wont make it if they are low in CSI. The lowest they can earn is $200.00, but they simply cannot survive on that. The top amount is $2500.00 for 3.9 to 4.0 (our own grading system, you could base it off GM's, your standards etc)

Our intent was to get them to buy into the CSI program. It has been succesful, our CSI has increased substantialy. I think the previous manager, who actually set this up, was under the gun to get CSI numners up, and I beleive he did the right thing by not making it some kind of seperate "bonus" or spiff.

So, there you go!

[Doug]

Good points.

I have just changed advisors' pay plans from a complex mess of parts, labor, spiffs, bonuses, hours-per-RO, etc etc to something easier for them to focus on: labor sales and CSI. That's it. Two things and two things only.

CSI was previously just a bonus...good CSI helped them but poor CSI wouldn't hurt their pay. Now, to earn what they're accustomed to, they'll have to produce good CSI scores.

Advisors get a graduated percentage of labor...all labor....based solely on total amount of labor sales. I have removed the emphasis on "hours per RO". There was so much emphasis on this forever-accepted "standard" that they were going out of their way to avoid writing low-labor repair orders, creating many problems.

I could go on for hours but my new motto is "keep it simple".

Cheers to all,
Doug

[FLAT]

ROB HAS THE RIGHT WAY TO THINK ABOUT IT.FIND OUT AREA PAY FOR ADVISORS.THEN SET WHAT YOU WANT TO PAY.I HAVE BEEN DOING THIS FOR 6 YEARS NOW AND IT IS WORKING FINE.I DO IT A LITTLE DIFFERENT I PAY A BASE SALARY OF 3000.00 A MONTH A COMMISION BASED ON TOTAL SERVICE GROSS LESS INT. BASED ON CSI FOR TOTAL SHOP QUESTION 16 ON GM SSS SURVEY.IT VERYS FROM .75% TO 3.0%.IT STARTS OUT AT UNDER 3.0=.75% TO 3.35=3.0% WHICH IN OUR AREA IS NEAR IMPOSSIBLE.BUT WE GET CLOSE.I DID THIS TO KEEP THE ADVISORS WORKING TOGETHER INSTEAD AGAINST EACH OTHER.THEY ARE A TEAM INSTEAD OF ONE PERSON FIGHTING FOR A CHECK.I HAVE HAD GOOD LUCK WITH THIS.I ONLY HAVE TO ADVISORS AND THEY AVG.AT OR ABOVE THE AREA BUT MY CSI IS ALMOST ALWAYS ABOVE THE AREA WHICH IS WHY I DID IT THIS WAY TO START WITH.HOPE THIS MY HELP SOMEONE.THIS IS MY FIRST REPLY.I READ IT DAILY JUST HAVE NOT REPLIED.

[R.C.]

Since our Technicians are paid on sold hours, we feel it's beneficial to pay our Service Advisors on sold hours as well.
Our Service Advisor pay mix consists of shop pooled hours which makes up about 45% of their base, and personal sold hours which contributes another 45% to their total. The last 10% of pay is from CSI and spiffs. By paying a set amount per sold hour, management controls their rate of commission and any changes to it, therefore, labor rate increases do not automatically change their pay.

[Doug]

Please define "sold hour". Here's why I ask:

Assuming a posted rate of $60 considering the following.

Tech "A" does a competetive type job in which he flag 1.0 hour but the menu-price yields only $45 actual billed labor.

Tech "B" does a repair job which pays 1.0 hour and the customer is billed $60 labor

Tech "C" does a high-tech repair which pays 1.0 hour but the customer is billed $68 labor

In which case has an hour of labor been "sold" ? I'm not being argumentative...I just want to know what everyone thinks about this type of scenario.

In my mind advisors pay and tech pay are not necessarily related. Advisors should be paid on the amount of labor *billed out* to the customer.

Assume two advisors each have one tech. Advisor "A" sells 10 menu-jobs for the day. The tech flag 10.0 hours. (good day for the tech !) The amount of billed labor is $450 and, given $15/hour tech pay, the gross profit for the "team" is $300.

Advisor "B" sells 8 high tech repair jobs for the day. The tech flags 8.0 hours. The amount of billed labor is $544 and the gross profit for the "team" is $424.

Which advisor has "sold" more hours and deserves more pay ?

Are we interested in filling up a tech's flag sheet or are we interested in producing billable labor? They are two different things.

I know my examples are over-simplified and there are many variables out there (the most obvious being different skill/pay level techs), but it's food for thought.

Cheers,
Doug

[Farfinator]

Just some thoughts:
If a BMW store with strong CSI has business hrs Mon-Fri 7:30-5:00, how do you compare the base "salary" of that advisor with the one in the struggling GM store who is pressured to extend service hours to 7:00-6:00 and Sat 8:00-4:00?
Similarly, how do you justify the different earnings potential when the effective labor rates can be severly compromised by menu service items drastically discounted by GM service departments to compete with the aftermarkets?
When you access hours/dollars per RO, do you take into account the impact of the fill rate by the parts department?
When you weight the CSI factor, do you concider the impact of the quality and training of your technicians?
My point is simply that the Service advisors income is more often than not dramatically impacted by variables that have little or no relevance to their contribution and "value" to the departmentment.
Whatever the pay plan, make sure it is fair. Any employee should be compensated for what THEY contribute, not what the guy down the street gets. You can't compare a 45 hr work week to a 55 hr work week. The extra 10 hrs ain't free! If you suffer a 50% fill rate from your parts department, as I did once, dollars per RO is an absurd measure of the advisor's effort. Similarly, CSI achievements are dramatically influenced by part availability and fix it right criteria.
It is not appropriate to hold the advisor hostage for all the deficiencies in an organization, but invariably their income is greatly impacted by them.
Largely, I echo Robc's take that pay plans can't manage people, and managers need to keep their fingers on the pulse of all processes in the organization that impact their employees and their profitability. This grasp of the Big picture and commitment to its effective handling is what many advisor's see as lacking, and thats what breeds discontentment with pay plans heavily impacted by the performance of others.

[Mike Vogel]

I believe Toyota has the best idea, 40% of pay is salary, 40% is commision based on flat rate hours produced by that advisors techs, and 20% of commision is based on what rest of techs in shop produce. This will probably only work best in a team or group shop. It helps control future cp gross by basing on the hour instead of the $ . It also keeps control in the case of an advisor having a high parts sales month.Future CP labor rate and warranty labor rate increases go right to gross profit on this program as well. Things that have to be watched and contolled would be effective labor rate and gross in case they try and over flag the techs. I will be rolling out this plan come the first of the year. Stores that I have spoken to that use this plan are happy with it. As we will also be going to full teams at the same time it should make a good transition.

[Farfinator]

I must disagree with the the Vogel plan and justification for it. Why shouldn't an advisor's income go up with labor rate, like a cost of living increase, every other dept's do. Every time a parts tape runs the parts advisors get a raise. Every new model year, the salesmen's commissions increase relative to new car prices, but god forbid the advisor reap the same benefit?
An advisor sells labor and parts,bears some of the responsibility for positive CSI, and provides a presence between set hours. Thats it!They DO NOT govern the "productivity" of the technicians, the efficiency of the shop, or the skill level of the technicians, so how can it be justified to guage their value by such measures? Example: Tech A screws up a 6hr timing belt service and the consequence is a 8 hr valve job, which he is back flagged. He produces negative hrs and the advisor who sold the job is punished by loosing 2hrs? NOT RIGHT!
* Advisors should not be penalized for discounts (coupons). They sold it-YOU decided it was worth the hit. You wouldn't DARE discount the tech's pay, so why is it ok for the advisor?
*Advisors should not have a base "salary", but be paid w/ overtime for the hours invested.
*Advisors should not be penalized for comebacks. They have absolutely no relevance to their performance.
*Advisors SHOULD be paid on total parts and labor sold. THAT'S the total income the store realizes from their "sales" efforts. That should therefore be the guage.

C.S.I. is a joke. It has become little more than damage control, and a guage of potential allocations of new cars and bonus revenue. Just think how many of you plaster little shiny stickers on your RO's begging customer's, AFTER THE FACT, not to blast you on C.S.I. but instead to contact your "sincerely" invested Service Manager to discuss your discontent. What utter crap, and you know it. The lowly advisor forced to grovel for all "Excellents" with a big smile despite all the flagrant screw ups in parts ordering and diagnosis that caused the 3 day inconvenience. But, If not successful the C.S.I. income is lost. Gee thats just swell, I won't make the mortgage this month cause my A tech was on vacation for 2 weeks and the new guy fried a PCM in a 35,000 luxury car which is on inter-galactic backorder and the guy is stuck in a Escort, cause we don't have loaners and the manufacturer will only pay 30.00/day. A discontent customer will bury your CSI across the board and a satisfied customer has no idea the difference that excellent vs good makes on one's paycheck ...and you think its fair to impact a person's income given this fact.
You, the manager, should be conscious of the advisor's customer handling skills. You should be managing, not relying on some manufacturer's survey to determine your employee's performance. If it's not up to par take action or terminate, but do not play games with peoples income. Pay them fairly for the job for which they are responsible.
Who is the ONLY one truely empowered to affect ALL that influences C.S.I.:the Manager. Your income is the one that should be weighted by C.S.I. performance (not a spiff),not the advisor. And you can certainly tell from these posts, that this is not the case.