Incentives

[HOSER]

Hello everyone! I need a little help. I just took over as parts/service manager after years of doing just parts. The techs here are hourly and I don't have any real intention of going flat rate. What I would like to do is offer an incentive based on proficiency and ELR. The guys are great guys, just not as motivated as I would like. We are using R&R. I have looked at 3612 until my eyes have crossed and I'm just not sure this is the report to base this off of. What are you doing out there? Any thoughts or suggestions would be great.

Thanks,
HOSER

[jazdale]

I'm really curious why you don't want to go flat rate. Seems like the best motivator out there.

The only way you'll get a decent proficiency (productivity and efficiency?) report is to track actual hours spent on a job as a ratio to the sold hours. Just knowing that they were on-site for 40 hours and you billed out 40 hours doesn't give you much detail to work with.

[chashelp]

Dear Hoser:
We at our dealership have been using a Excel template I designed now for over a year. It has successfully increased our shop production, by implementing a bonus program. It may work for you, e-mail me at templates@automotiveprofit.com and I'll forward you a copy.

[slapenta]

HOSER,

Do you have Reynolds&Reynolds Electronic Service Scheduling?

Steve LaPenta

[Sonny]

The most effective way to motivate techs is to make the switch to flat rate. That will insure 2 things, that the techs are motivated (because their pay checks depend on it) & the 2nd is profit.

It will also breed discontent amongst the techs, but that is almost par for the course. If the dispatching is done correctly, seperating your A techs from your C techs, it will all work out.

Hope this helps.

Sonny

[Old Irish]

heh heh heh

Funny thing how we think differently. I love to dump flat rate.....


Besides what's already been mentioned, remember that techs are not the primary controllers of effective labor rate. For E.L.R. look at your work mix, labor rate matrix, and how your advisors are *billing* the jobs

Cheers
DD

[scotstrong]

Amen Doug!

The flat rate system unfortunately motivates techs to do what is in their best interest at the expense of customer satisfaction and profitability.

It also encourages corner-cutting and shortcutting repairs. It encourages parts-changing rather than diagnosis.

Whatever "incentive" you come up with, make sure that there is an element that is tied to CSI and comebacks.

I have seen far too many flat-rate shops where the techs manage the service manager and / or dispatcher rather than the other way around.

If you have the opportunity to not go down the flat rate road, eventually you will find smoother motoring. Good luck.

Scot Strong

[robc]

While I see everything Scot has mentioned I am not sure it is flat rate that encourages part swapping. That unfortunately sounds like something a parts person would say, as if the vast majority of techs are out there just hanging parts to make the parts dept's life miserable. (And I've read a ton of Scot's stuff in the forums and newsletters, so I know that isn't where he is coming from ... just my thoughts.)

Every tech I've ever met wants to diagnosis the problem and get it right the first time - maybe I've just really fortunate in the last 20 years of this business. They don't because (1) management fails to collect on the diagnosis time, (2) the tech is overbooked and when push comes to shove must get the vehicle out or (3) the shop fails to hold techs accountable for comebacks. All three of those issues are management issues - not a problem with flat rate.

I guess I always think of this debate just like every other pay plan debate in the shop - that is management wanting to figure out how to manage through pay and not through shop controls. In this debate (and I am absolutely not saying this is what Hoser was after), I often basically read it as a manager saying, "I can't figure out how to make these guys more productive, so let's flip them to flat rate and let them figure it out for me."

As Scot added all these things are the responsibility of management to control. Incentives based on hours flagged, usually either a dollar amount (flag 40 hours get $75) or a retro-hourly bonus (flag 40 hours make an extra $1 an hour) are common. I personally also like a shop bonus (if our five techs book 200 hours this week) as a teamworking incentive, and then I tell the manager to get to work to make sure the guys can actually do that (scheduling, etc.)

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

[LIFESENTENCE]

The other thing I've noticed flat rate does is make techs unhappy for getting any job that they can't make a lot of time on (in other words, gravy work). Techs can make more money on flat rate, but I think it is bad for morale. At least in this shop it is.

[scotstrong]

Rob is very correct that it is often a parts-biased viewpoint about parts-changing versus diagnosis. Part of my point was that (in defense of flat-rate techs), it is often faster to throw a couple of known-to-be-common-failure parts at a vehicle with a better than 50% chance of repairing it than going through the often time-consuming step-by-step following of the diagnostic tree process. The ones that get my goat are the problem vehicles that require contacting the manufacturer's technical assistance people, who then suggest throwing parts at it.

Again as Rob said, the key is managing your system and processes, whichever you use. Flat rate seems to breed more "opportunities" for avoiding accountability than hourly.

Scot Strong

[This message has been edited by scotstrong (edited 11-23-2005).]