Warranty administration

[Eric]

I have had a great deal of trouble with warranty administration over the last few years and am looking to make some changes in the way we handle it. At the very least I am going to change our warranty administrator's pay plan and I am investigating using a third party service to complete claims. My questions are:

What kind of pay plans do other dealers use for a warranty clerk or administrator?

How many dollars in warranty claims should one warranty administrator be able to handle?

Do any of you have a good job description that you use for a warranty administrator?

Can anyone recommend a third party administrator (Ford & Chrysler)?

What are the downsides to using a third party company?

I would appreciate any information anyone can provide.

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[robc]

The most typical pay plan for a WA is an hourly rate combined with some incentives on return rate, days outstanding, etc. I am a firm believer that 85-90% of their pay should be base and the remaining incentive.

If you aren't getting the performance you need out of someone (WA or anyone else) then wild incentives will only mask the problem. I've never seen a pay plan that allows the dealership not to have to manage the process or the person. Incentives/pay plans should be a way to focus goals, as opposed to a way to modify behavior.

Also, I recommend dealers stay away from plans that pay a percentage of the claim. While a good WA can look for and a few bucks to a claim - it's still a only a few dollars. In the most extreme cases (i.e. your shop currently misses a lot of opportunities and the WA exploits all of them) we might be looking at a 1% increase in sales. They simply have no great control over what the $$$'s are, so why judge them on it.

Dollars per WA is also tough to answer, because levels of responsibility vary greatly from dealer-to-dealer. For the typical WA, who looks up all the labor operations, closes the warranty tickets, does a little flagging, backs up the phone and cashier, and reconciles payment, keeps schedule clean, etc. I would draw that line at or about $100,000 a month. Over that the WA is going to need some help (like having the advisors assign time). Under $75,000 and the WA can take on other duties in the shop (maybe back-up writer, or some other administrative tasks).

I have a job desription for a full-tilt WA as above (in fact I have a few). Anyone can e-mail me at robc@dealersedge.com and I'll email it to you in MS Word format. Feel free to edit it from there.

There are a number of very good outside firms out there, and I encourage them to contact you directly. I can't recommend one over the other because they are all pretty good at what they do.

The biggest downside to an outside company (and I was in that business for a while) is the costs in relation to not having another employee. (not that the outside companies are expensive for what they offer). I am not sure the current going rate for processing, but I assume it's in the 3%-5% range, so if you're doing $55k a month that's around $36,000 a year. Another employee always brings to the table more talent than just what they were hired for. I guess it depends on who you end up hiring. The other downside is the transmission of information back and forth to the outside company. If you pick one of the larger national firms I think they generally just sign on to your system and close out the repairs remotely. It does add a few administrative headaches, but some employees do too.

I hope that helps!

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

[This message has been edited by robc (edited 04-12-2001).]

[RickW]

Eric,
Let me give you a an on-the-ground perspective. Being a WA for a few years, and having several close friends that are WA's in different OEM shops, I think I can speak from experience. To really be successful in this area, don't concentrate on compensation packages, submission dollar goals, or other "business oriented" buzzwords. Focus your attention on the PERSON you want to do the job. A true WA is a different breed of people. They are independent, hate to be managed, and are detail oriented. They are self motivated, love to learn, and hold themselves to higher personal and professional standards. The most effective means to manage them is to point them is the general direction you want them to go, then get out of the way. As they get accustomed to the work place, they will tell you what changes in the work flow need to be done, and what they can and cannot handle and why. It pays to listen, because the personal goals they set for themselves are normally higher than yours. The downside to them are the same reasons that make them so good. They are trying to do the job right, and when someone doesn't want to follow the established warranty procedures, they tend to get testy.

Look at the person doing the job now. If they don't fit the model, you might want to look around. Warranty P&P can be learned. Human behavior can never be completely or permanently modified.

Rick Williamson
Isuzu Trucks of Augusta

PS: A good analogy was given in an interview by Darian Hatcher, Captain of the Dallas Stars hockey team, when he was asked to describe a good Goaltender. He said "Goalies (WA's) are Freaks, but they are the hardest and smartest working people you will ever know."

[Misky]

"Kudos" to you Rick W.
PERFECT analogy. Although I am currently a team service manager I am always a WA at heart. Whenever I get burnt out on writing service that is where I take my break.
Whenever I have actually been paid to be a WA I have been hourly with bonuses.Bonus being on claims being kept current and keeping the return rate down. There are many different bonuses you could come up. Be creative.