Body Shop manager pay plan

[Oliver Spires]

I know this subject get beat to deathg on all levels, but I checked for archived info before posting this. Ceo is looking for input on pay plans for the above. Any input would be apprecieated.

Body shop specializes in Subaru / Isuzu and Gm domestic.

replies to: spireskf@cdsnet.net
mailto:spireskf@cdsnet.net

[fburrows]

Oliver:

My vote would be for a percentage of total gross profit including paint materials less shop supplies, rental cars and shop policy. The problem with the body shop is that the manager has discretion in adjusting the final bill to the estimate. Pay plans can encourage managers to shift expenses and sales to accommodate their pay plan. If you pay them on everything then you eliminate that problem.

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Frank Burrows
Automotive Business Solutions
frank@autobusiness.org

[Earl]

Oliver,

Frank makes a very valid point with regard to paying on the gross and I would agree, although I would take it a step or two further. I would back the percentage down and pay him, as well as the Service Manager and Parts Manager on the total adjusted gross profit of all three departments. You will find you have more collaboration between managers and departments. You will also have three managers looking at the gross profit and expenses of each department.

Adjusted gross profit = Total gross profit less personal and fixed expenses.

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Earl Asbury
Service Director
Weseloh Chevrolet
earl@weseloh.com

[Earl]

Oliver,
Correction:
Adjusted gross profit = Total gross profit less personal and SEMI-fixed expenses.

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Earl Asbury
Service Director
Weseloh Chevrolet
earl@weseloh.com

[Eric]

I use a plan that pays based on a salary of $20,000 plus a commission. About 70% of the commission is based on what I consider net departmental profit (total gross minus variable expenses) of the body shop, the other 30% is based on the combined net dept. profit of parts and service. I also offer a $2,000 year end bonus for meeting a stretch objective. This plan has worked very well for us.

[Dick Rushworth]

We have a similar pay plan in place as Frank's. Our dealer principle hired a consultant (Pritchard) who sold this plan to us.

The dealer get's 38% of the combined fixed ops gross, the remaining 62% is shared by "share holders" (just a term, they do not have any ownership)less fixed ops expenses. The share holders are, fixed ops managers, service writers, parts counter personnel, estimators, production managers and the body shop booker/AR person. Each person has a different number of shares depending on thier position and experience.

The plan is great in theory because all departments work together for the common cause, sell more and reduce expenses.

We've had this plan in place since January 1, 2000 and it has been a disaster for the body shop shareholders. The body shop has increased the selling gross by 40% over a 2 year period (from $306,000 to $517,000)however our service and parts departments have had only a slight gain. The bottom line is an annual loss of $30,000 to the body shop manager for getting his department to the next level!!!! Not good.

Dick Rushworth
A Puget Sound Ford Dealer body shop manager