FLATE RATE OR HOURLY

[BIG ORANGE]

I have a tech that does only light body repair, such as water leaks, wind noise and so forth. He will also do new car prep and hang running boards at times. I am at this time paying him by the hour but would like to change him over to flate rate. The issue I have is that thru dodge the pay for light body is very poor and therefore he would starve being on the line. Any suggestions on a problem such as this and how are some of you all paying your light body guys.

[Old Irish]

I am fighting the same battle with some of my newer techs. I just put 'em on a guarantee, subject to review every 90 days.

Cheers
Doug

[robc]

You might not be able to reveal this on the board, but generally I find the shift from hourly to FRH comes from three underlying issues:

(1) I need to tie my costs to his production, right now he is either a zero or negative gross producer (i.e., I can only collect one warranty hour for every four he spends on a vehicle.)
(2) His production is horrible and maybe FRH will kick him in the pants to perform to a reasonable level
(3) His production is ok, but maybe he'll embrace FRH and put forth mor effort to turn the hours.

I actaully would handle each of these differently if you can give a little more about your situation.

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

[BIG ORANGE]

The main issue is that I need to tie his cost into production. As you said for every hour of labor I can charge under warranty it does take him 4 hours to fix. The other thing that I think will help the problem is with enough flat rate techs getting the overall hours up, my light body guy wont have such an impact on my problem. Hope this helps.

[robc]

Ok, I'll make a couple of assumptions here. Let's say we are paying this tech $400 a week and we're getting 15 billable hours out of him. That makes him really $26/FRH, which would be the price of a really high level tech - not a junior trim guy. I assume you aren't looking at giving him a raise (unless he earns it through production).

There's no easy way around the obvious - so we need to be very frank with the tech to help him grow and develop his talents. If he is looking to progress into a regular tech then this situation isn't helping him either. It is retarding his growth. At the same time, you can't just flip a switch in a pay plan and get out of a bad deal for the shop. I always feel like, well I made the deal I have to live with it for a while.

When I explain it like I did above - literally he is the highest paid on a FRH basis in the shop - they seem to understand the shop's position. I am also not afraid to say while I totally appreciate all his efforts, we simply can't afford to basically be paying a tech as an expense. In other words, we would literally be better off under the current plan not to have him - it would literally save the shop money. It is that drastic that something has to change.

But I also understand people have families and mortgages - so we made a commitment under his current production to pay him $400/week. That really can't change in the near term. Pay plan changes scare the heck out of people, especially going from a guaranteed salary to a commission basis. But if he can trust your commitment to him and keeping his salary as stable as possible plus the ability to earn more he'll be a little more accepting. My language is something like, look this is automotive, it is feast or famine sometimes, you have to understand that to decide whether this is the right business for you. But as long as I can do anything possible, Ill make every effort to make sure that your income is protected. Sometimes it might not feel like it week-to-week, but at the end when you get your W-2 next year, youll see the change.

That means feeding him some gravy so he can make it. Ive seen a people flip a trim tech to flat rate and then still feed him the same work. Be honest, he was hourly because it is near impossible to make a living on FRH being a warranty trim tech. So plan that some of his work mix will steal a little more gravy from the regular shop.

With all that in mind, I try to work a split of an hourly with a production bonus to start and progress from there. So instead of $10/hour, lets start by going to $6/clock hour plus $8/FRH. If he is turning 15 hours a week that is $360 meaning hell need to get up to booking 20 hours a week to break-even. After he does that we can start to move to targeting 25 hours, and so on. If by some miracle he hits 40 billable hours that $560, but it is still a very respectable $14/FRH cost for the shop.

The point of FRH, and I am not afraid to explain this to him, is that he needs to learn to play the game about what is good enough to get the job done. If you leave nearly any tech to their own devices they will spend hours on any job because they take personal pride in doing it right. They are craftsman. Well, we arent working at OCC for the American Chopper show. The factory doesnt pay for craftsmen, they pay to get the job done at as low of a cost as possible. I hate using the term, good enough for government work but it is almost like that, good enough for warranty work. If he needs to spend outrageous time on a job let him plead his case to use why he should get 4 hours for a one hour job and then we might be able to better fight for that time with the factory.

At least that is what I would do.

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