So, last month we discussed the lack of new automotive technicians to fill the open positions. This month I want to bring to the forefront a very possible unpopular topic: technician pay. The way technicians are compensated for the task they perform could be a portion of the reason for last month’s article topic of technician shortage. I truly believe this is something that has been avoided for quite some time within shop owner circles. Understand, I do not condemn the flat rate way of compensation. Hopefully we will be able to discuss in a rational way; the negative and positive aspects of it.
Flat rate pay is when someone is paid per job instead of a salary or per hour. This flat–rate system motivates workers to finish as many jobs as possible, but can lead to sloppy work if the workers sacrifice quality for quantity. Definition from Monster Job search
The Flat Rate Lifestyle
I spent most of my time as a working technician being paid on a flat rate scale. I must admit that if the shop was busy my pay at the end of the pay period was great. Understand, this was at time in my life where I did not have any problem working under a dash for an hour or two rebuilding a wiring harness or leaned over the fender of a C60 Chevrolet truck installing new head gaskets on a 366-big block. I guess you could say I had enough experience to accomplish most tasks and the physical stamina to get the job done in a timely manner. Please don’t misunderstand, I am not saying that as we age we can’t accomplish these tasks anymore but it just takes longer. As a repair technician ages, they exchange speed for knowledge and wisdom and they begin to work smarter not harder. Most older technicians if they are honest about it would agree. The problem is the standard flat rate way of compensation punishes the older more experienced technician. I think this is where we lose some of the 25% skilled work force we discussed last month. The experienced tech will transition into parts sales such as a service manager position or possibly completely out of the industry. I think this is a tragedy for the shop owner, that technicians experience is irreplaceable. Just think of the value it could be in mentoring a new hire. Especially if that shop owner is going to invest in a young technician to grow their own A level technician. Then think about the value the older A level technician represents in investment by the shop owner over the years of employment. This could be in the tens of thousands over their time with that shop; in benefits and training. Oh, there are still several older technicians working in the bay day in and out but it is usually for a shop owner that understands their value and has developed a pay plan that works for both the employer and employee.
“Opportunity is missed by most people because it is dressed in overalls and looks like work.” Thomas A. Edison
Slow Times and Pay
There was always a time that brought back reality of just how little money I could bring home. Some of those times you could expect like tax time, then when school started back in the summer these would always usher in a slow time in the bays. After a couple years, I could plan for those times and experience no adverse effects from it. Now understand that this was during a time when the most complex diagnosis may have been on a EEC 3 Ford control system which was relatively simple especially in comparison to today’s multiplexing systems. With today’s complex vehicle controls the diagnosis can be the most time-consuming section of the repair. This is where even the experienced technician can see their paycheck drastically reduced on the flat rate pay program. Then there is just the standard day of vehicle repair which can be physically taxing on the body so you can’t turn the hours like you could five years ago. Then there is the time in a technician’s day that has no flat rate set such as waiting on parts or approval for you to make the repair or the customer that missed their appointment. There is no book time or flat rate for these common items in the day of a repair technician. So, using some common sense, why would an older technician want to stay in the business from a financial stand point if they are strictly paid on flat rate?
Young Tech on Lube Rack
Let’s look at the challenges that a potential future A level technician can encounter upon leaving a post-secondary program. First, most of these individuals enter the field doing oil changes and maybe the occasional brake and exhaust jobs. Now if they are in a position that pays them an hourly wage and not on a flat rate scale they start becoming accustom to the daily workings of a busy repair shop. Now in my local area most of these individuals are getting eight to nine dollars per hour. So, on a forty-hour week they might bring home $300. They possibly have a student loan payment along with vehicle expense, food, utilities, rent and maybe even health insurance. If they are expected to provide their own tools and if they buy the basics this can eat a large portion of that $1200 a month. In talking to some of the local automotive program instructors a lot of their past students fit into this description. The problem they say is, the ex-student gets burnt out with the position and then they become lured to a manufacturing position. These positions in my local area are providing thirteen to $13-$14 per hour starting out. They also are not required to purchase any tools. So, no wonder why we lose young talent to other careers. Yes, there is a group of young technicians out there that have an unquenchable passion for this industry but they are not the majority. This may not match your area but this is a repeatable story in the Midwest where I live. I believe this could be part of the reason 60% of new technicians leave after the first year as discussed last month. I can’t blame these young techs they are at an age where they are looking to start a family possibly buy a house, but these numbers won’t even allow them to move out of their parent’s house, unlike the manufacturing positions.
So how does a repair shop recruit and keep a group of young qualified technicians? I think one option is to purchase a set or two of the basic hand tools for the new tech on the lube rack to use. This would help to reduce the burden on that tech when just starting out. As a shop owner, you might say how can you afford to supply tools? I say run the numbers of matching the beginning wages of local manufacturers then compare that to the cost of one or two sets of basic hand tools for the beginning tech to use. I believe you will find that tool set is a cheaper investment and the tools are a fixed cost to only appreciate. Now how about a tool allowance for the older techs again you say? How can you afford that if it helps keep that experienced tech in your bay and preforming to their ability then money well spent?
“There’s a way to do it better – find it.” Thomas A. Edison
I think flat rate can and should be used but in a slightly different form. I said in the beginning I am not completely against flat rate. I especially support it for the middle-aged tech that can physically keep up with the fast pace in a lot of today’s shops it is a benefit to both the employee and employer. Now let’s look at that incoming younger tech that shows potential to be a great tech, if he is on the lube rack then each oil change should have a time rate assigned to it. Then if they become proficient with PMI that should be equated into the pay rate formula. I hope every shop owner understands just how valuable an oil change in combination with a thorough inspection is in providing additional work for the shop. So, why are you satisfied with only minimally rewarding that new tech on the lube rack for his ability? I would have to say that in slow times a steady flow of customers for an oil change has keep many shops afloat with the items found needing repair while doing an inspection. I believe there is a formula that can be devised for that new incoming tech that combines base hourly pay with a flat rate and a monthly bonus for upsell found during those critical inspections. Now for the older tech that is starting to slow slightly because of age why not create a similar program for them? A base pay with performance bonus along with some one-time monies if they are willing to mentor an up and coming tech.
Educate the Vehicle Owner
How do you pay for these changes to technician pay? First, as a shop, where does your labor rate fit in the middle or top of the range with your local shops? If you’re in the middle, you should ask would you consider your shop one that only does an average repair? The same goes for your shop if you’re at the top of the local hourly rate then are your repairs exceptional? You must answer these questions first before you can determine the type of technician you want. Then you must educate the service writer/advisor depending on how your shop is set-up. They must be willing to educate the vehicle owner on just what is involved with the repair that they have been quoted. When a surgeon explains what they are going to do to you do they not first explain the entire procedure? yes, they do. Because they understand that is what we expect as a customer. This may require a short video showing an overview of the surgery. Let’s do the same for the repair! The service writer/advisor should be using all the technology available today from live video to text message to keeping the customer updated on the repair process.
The vehicle owner also needs to understand the type of technology required to repair today’s vehicle. I once had a shop owner tell me he did not want to show the customer what was required to repair the vehicle because they might do it themselves. I don’t feel that is an issue that would happen very often especially with today’s modern vehicle. I don’t understand why we as an industry have allowed the vehicle owner to dictate what we charge. I have yet to see a plumber, carpenter or electrician lower their bid because I told them their competition was doing it cheaper. It is all about what you and your staff believe in what you’re selling. If everyone believes in the abilities of the shop then that will cause the customer to also believe. If you’re worried about losing that one price shopper because someone else is doing it cheaper then you need to reevaluate the entire business model.
“The price of success is hard work, dedication to the job at hand, and the determination that whether we win or lose, we have applied the best of ourselves to the task at hand.” Vince Lombardi
Performance Based Compensation
Even though I no longer work under the flat rate way of compensation, or do I? I truly believe everyone that is working today is being paid on a performance based compensation. We are all evaluated at our place of business on how we are performing, then given possible ways to improve. Then at that point we have two options; one to try and follow those suggestions or find a new positon. So why not, as a shop owner that is looking to the future, look at your policies? Determine first, what type of shop you want to be, then the type of technician you need, to have the repair facility you want. Formulate a plan to bring in those technicians so everyone involved can be successful.
If you have some ideas how we as an industry can improve the flat rate way of compensation then I would encourage you to call me at 812-618-6101 or email me at email@example.com I look forward to your ideas because we as an industry cannot continue to operate the same way and expect different results.