A
Killer Compensation Program for Techs
By Bob Cooper, Elite
Business Services
One of the most
commonly asked questions we from our Members, worldwide, is how do
you put together compensation program for technicians. Although there
is no "one program" that will work for everyone, here are
some tips you can use to put together a killer program. The first
thing you need to do is come to a conclusion as to what you want your
technicians to do. Here's the list:
1. Generate
billable hours.
2. Be instrumental in helping us control our part cost.
3. Generate happy Customers.
In
order to reach these objectives the technician must think like an
owner, understand the importance of the customer, and have clearly
defined goals.
Now you're probably
saying to yourself … "Sure Cooper, that would be great,
but how in the world can I do that?" Well, here's your answer!
First of all, make sure all your technicians have a clear understanding
of the minimum levels of acceptable performance. Let them know what
your expectations are for billable hours per pay period, what you
expect from them in controlling part expense, and what your expectations
are in Customer satisfaction. We call these clearly defined expectations
the "minimum levels of acceptable performance", or to put
it another way, the "low hurdles".
"Goals"
are what we strive toward, the "Minimum levels of Acceptable
Performance" are the "must do's" that come along with
each and every position in the company.
In regard to "goals",
I firmly believe that all technicians need to have billable hour goals
that they are going to work toward. And even though you may have a
service advisor or manager who is responsible for pricing and sales,
the technician also needs to have goals in controlling part cost that
they'll work toward. They'll do it by not overlooking parts that need
to be replaced during their initial inspection, by diagnosing the
vehicle correctly the first time and by controlling comebacks. They'll
also need to work toward the "Customer Satisfaction" goals
by doing all the above in a professional, ethical way. So here's the
plan. Let's say the position you're looking to fill demands that the
tech produces an average of 38 billable hours in a 40 hour work week,
giving you a 95% productivity ratio. Let's say your business plan
also demands that your cost of parts does not exceed 53% of part sales,
and your CSI demands that 92% of your Customers be pleased with your
service. We'll call these three the "low" hurdles since
they'll be the minimum we'll accept from the employee. Now let's talk
about the high hurdles, which we'll call the "goals". We
would like the tech to generate 40 or more hours a week, we would
like our part cost to be at 50% or lower, and we would like our CSI
to be 96% or better. So here's the way he or she would be compensated.
They would be
paid a fixed hourly fee for every hour they flag during the pay period.
If they go over the "high" hurdles and give us 40 or more
billable hours in the 40 pay period, then they would earn a 15% pay
bonus, for all the hours they billed in the entire pay period, with
the bonus being payable at the end of the month. But here are the
conditions! Those "extra" hours would have had to have been
generated in a way that did not drive up your part cost or lower your
CSI. How can you tell? It's easy! At the end of the month, come to
this conclusion: Did they keep your part cost at 53% or better for
the month, and did your CSI for the month, based on your Customer
follow up calls, come in at 92% or better? If they did, then don't
worry! Everyone is a winner! You made a nice profit, your technicians
earned the extra income, and you have … happy Customers! Not
bad, huh?
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