Advisor pay

[phorn]

I am curious what other dealers are paying their advisors. I have a plan that pays the advisor a set dollar amount for each hour sold based on their CSI score. This amount can go anywhere from $5 to $6 per hour (I keep hearing from our director that the industry average per hour is only $4.50) and includes a bonus for hrs per RO. This focuses the advisor on total hours sold, maintaining a high CSI score, and (because te dealer wants it) HRS/RO average. The plan works and I have been able to retain some good advisors in a shop that has had a high turnover rate on the drive. The problem is that I could have several advisors earning $6000 in a month resulting in an astronomical personel expense and since the plan pays for total hours, sometimes there isn't enough gross to offset the high pay (if we have a high maintenance month). The other problem is that if I reduce the plan to get to the $4.50 per hour range (as the director would like), I fear I will lose some good people and have a hard time getting new high caliber people. Feels like a catch-22. Any ideas?

[robc]

I guess I am struggling a bit with your numbers, but if you want an average then I assume it in the $35-$50k range for most of the country. That is always a function of the labor rate, cost of living etc.

I guess my first thought with your director's concern is that the store doesn't want to pay any advisor $72k. Where I a getting tripped up is if you are at $5 an FRH for the advisor how that is profitable with low productivity and not with high productivity. When we are talking a percentage/commission based pay either it is profitable or not - being more productive shouldn't reduce it into unprofitability unless there are overly generous incentives at the top tier.

My second cocern is if we are paying $5 per FRH then $6000 is 1200 hours sold. That's just insane and doesn't seem possible. I always hold 700 hours sold per month as the goal (that's four techs flagging 8 hours a day per advisor)

Finally, yes it is a catch-22. If people are used to having the potential to earn $70k then there is no way to keep them by cutting pay to $50k for doing the same work - even if you are/were overpaying them based on community standards.



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

[phorn]

Let me try to clarify a bit. If an advisor is at the base, per hour rate, they are being paid $5/hr. If their CSI increases, so does the per hour commission. The hours per RO bonus starts at 1.8 for $150 and tops out at 2.4 for $800. I have an advisor that consistently hits in the $5000 to $6000 range per month. We just opened a new store, and I have recently added another advisor (bringing the total to 3) because 700 is optimal for hours per advisor. Our effective labor rate is usually about $58/hr and or gross profit is about 68%.

I guess the problem I am facing is not one of total monthly pay, but of the per hour rate. Our accountant has informed us that our personel expense is too high in part because we are paying our advisors too much per hour sold, and that $4.50 is an average per hour commision for advisors in lieu of any bonuses.

My director informs me that the per hour commission we are seeking is $5.00 inclusive of bonuses. Where this plan gets out of hand is if we have a high maintenance month (i.e. lower gross). The advisors make good money based on their total hours and bonus for Hrs/RO, but the store, faced with a low gross month already, gets hit with a higher than average personel expense.

The only way I can figure to correct this is to pay the advisors off the gross, but I believe a focus on FRH is the best approach, and we are too slow to have advisors being choosy about what they sell. I hope that clears things up a bit.

[Mike Vogel]

How about setting minimum guidelines for effective labor rate and gross profit ? If they fall below the minimum numbers you set then there is a reduction in their pay per hour

[Michael White]

You are walking into a mine field. Advisors are the hardest working (besides service management) employees in the dealership. So much relies on their efforts; from CSI to future car sales. What does your dealer pay their top 2-5 car slaesman? What do the F&I poeple make. I bet it is a lot more than your advisors. many dealers look at advisors as an expense, and truly do not grasp their responsibility and benifit. But not knowing their perfromance levels, we cannot comment if they are overpaid. I know several advisors in our area that work for mercedes dealer, and make over $150K. But tghey average 4-5 hours per ro with effective labor rates over $120.
I am in the land of nuts, and socialists running our state government. (California) We pay a base salary with a variable gross percentage on a sliding scale. There are up to $600 a month bonuses available for CSI performances, and $250 for hours per RO objectives.
Only you can evaluate their performances versus pay. but be careful. You should survey the dealers around you, foreign and domestic and see what they are doing. Just be careful and do not forget what a great advisor can do for your company. Dont forget what a bad advisor can do as well.

[grhawes]

Raise the gross on the menu sales.

[robc]

This doesn't relate directly to the question, but I think it is appropriate to bring up now.

My thoughts as well are that a certain work mix shouldnt alter the gross significantly to the point of making the work unprofitable. We dont know everything about the pay structure, but I am getting more and more where I think that maintenance work should raise our gross not lower it. Otherwise my reaction would be we are probably overpaying the technicians and the advisors.

The days of getting five hours at $40 an hour to make a 30K competitive are over. Lets make it 2.5 hours at $80/hour instead.


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

[david byrne]

I agree with Rob, I have increased my labor rate on service specials to $80 because so much of my work is maintenance. Haven't seen any real loss of business from the change.
S.C. pay plan: (lateral support groups)

Daily wage of $35.00 to $65.00 per day
Amounts paid depend on experience and seniority.

$2.85 per flag hour for repair orders written by the service consultant.
25 cents per flag hour for repair orders written by the other service consultants.
Good S.C. will make $65,000.

[dodgeboy]

ARE YOU PAYING YOUR SERVICE WRITERS ON C.P. ONLY, OR ARE YOU ALSO PAYING THEM ON WARRANTY/INTERNAL REPAIR ORDERS? ARE YOUR ADVISORS RESPONSIBLE FOR WARRANTY AND INTERNAL RO's?

[Art_Mopar]

Personally, I like paying off of the Net. It keeps them honest as far as "free rental cars" and putting tech comebacks to service policy. Sure I can catch it after the fact but why not let the Advisor police themselves a little bit? Just a thought!!!