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  • Management Compensation

    Posted by mcgyver on February 19, 2014 at 11:01 am

    Looking for thoughts on management compensation, middle management to be specific. 

    Currently paying shop managers a percentage of sales once cost of goods and labor has been subtracted along with a salary. We have been tweaking the pay of the support staff to make them more productive, which it has, but that then affects the managers cost of labor and the increase in shop sales doesn’t necessarily make a big enough difference to affect the manager positively.

    Looking for a way to motivate all but not break the bank. 

    theperfectday replied 8 years, 3 months ago 4 Members · 4 Replies
  • 4 Replies
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  • Tom Ham

    Member
    February 19, 2014 at 2:12 pm

    Just a thought…

    Pay them a percentage of gross sales (or all kinds) and modify it up or down based on cost of goods.

  • theperfectday

    Member
    February 26, 2014 at 7:45 am

    I agree with Tom a straight percentage of gross sales is usually the best (excluding things like tires). 

    Could you break down the number of people you have in the various positions to help make specific recommendations?
  • Scott Waddle

    Member
    March 10, 2014 at 10:17 am

    Hi,

    Why pay off gross sales? Sales can be inflated in ways that don’t profit the business.

     I would pay based on gross profit.

  • theperfectday

    Member
    March 10, 2014 at 2:56 pm

    Hi Scott,

    I always used gross sales because it was the simplest way to calculate the managers/ service writers pay. 
    Also since I set the gross profit margins, (ie parts margin and labor rate) I was the one in control of the gross profit. 
    Now obviously there are many things that the service manager should be held accountable for such as aro, appointments set, gross profit, shop productivity, etc. However I found that just keeping a report card that kept track of those items on a regular basis was all I needed to keep those numbers where they need to be. 
    If they didn’t maintain those numbers it was training time or bye bye time, but it was easiest to pay on a straight commission of gross sales. 
    Running 21 shops I valued simplicity and ease of implimentation.