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Flat Rate isn’t dead yet, but it’s getting sicker and may not recover
At least, that is the impression I am getting lately. I am hearing of more and more shops having great success with technician pay systems that are hourly with a small production bonus. I suspect this is because this is the only way they can find and retain techs. What do you think?
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3 Replies
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I would agree, it sure seems that way. Or a hybrid system of some kind that gives a high base rate and flat rate bonus on top of that.
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I have used a high paycheck paid bi-weekly with a bonus paid monthly for 25 years. I review it every 6 months, and adjust it based on sales. None of my Technicians work (are on the property) over 40 hours, do not work nights or week ends. Works for me.
Bill
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I’m sure many, if not most shop owners and managers were at one time a technician and likely worked flat-rate. As a tech of many decades, Flat-rate was a love/hate situation. Seemed much of my success under that system was based on a combination of Service Adviser skills and management favoritism. For that reason, and much to the adamant disagreement of every shop-growth company out there, 20 years ago I began paying a base pay (usually hourly) that will keep the wolf away from the door with a flat-rate option that pays higher and calculates each two week pay period. This pay rate reflects the higher end of what each tech’s experience and skill level would typically garner. In the last five years, all share in a split of the shop gross profit bonus as well. That additional incentive bonus is a set percentage of overall shop GP for the month divided as 1/2 for the techs and 1/2 for the customer service staff (Advisors & CSR). If the techs earn the flat-rate, they collect the flat-rate. If not, they are paid hourly. That compensation plan requires 100% attendance and 80% production minimum. The latter monthly incentive is dispersed based on percentage of billed hours produced by each tech. This like any other pay structure, is not perfect and does require a bit of extra work a couple times a month, but has been well received and genuinely appreciated by most technicians who’ve spent any time under my employ.
I might add that this approach requires a close relationship with my employees and keeps me accountable to regular reviews. I always let them know that I don’t want or need to know what they do with their finances but it can help me work with them for needs vs goals which unfortunately is something very few learn in this age of instant gratification. As an added benefit, I often see a personal problem and can help them recognize and self-correct before one’s personal life choices begin the all too often downward spiral to work and life destruction we’ve all witnessed.
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