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What are your Tech and Service writer incentives please help.
We have been trying to come up with an incentive base for our employees. I’m seeing a comeback issue, slow work, lost of interest. all the guys are there over 7 years except for 2 c-techs. I read a lot of articles about percentage base incentive after a certain number hit. But I never see what these numbers are is it a flat percentage, flat rate on parts, labor, both, gross, net. IDK. I guess looking for examples from shops like me and not like me.
We operate a lot different then a lot of shops we run two locations with a total of 5 bays 3 writers, 7 full time techs. An A-tech at each, 2 B-techs at each, And 3 C-techs. So there’s a lot of double teaming jobs. So how do I pay incentives when I’m not sure who deserves the money. There’s times when I’ll have a C dbl with the B to do a brake job and an oil change. So I’m guessing a whole team incentive would only work but what’s the magic number? And if a comeback occurs best practice would be take out of their incentives but what’s that amount? and what if it’s the A tech and only the A tech, should everyone take the hit.
As of now we pay hourly A techs at $22.00 hr, B $17.00, C $14.00. 80% of their health insurance, 3% retirement match, supply tools,training, lunches pat least once a week. $600 Christmas bonus average. also A small spiff where tech avg about $75 month. We get $110.hr but we do a lot of maint. Menu board repairs so an ARO is only about $225.00. With car count at avg. 180 a week.
Also what’s the best incentive program for a writer that you have seen Work to sale. At this time they don’t see anything but salary, and we usually pick up the bills for their personal vehicles.
Thanks for your time. -
3 Replies
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Holy Smokes! That’s a lot to unpack. Typically for my clients I make a pay plan for their service writers that gives them a base pay and then incentives for total sales AND gross profit. You have to tie those last two together or they can sell you out of business. I have 100’s of questions that are probably best left for a phone conversation. Sounds like you run a quick lube. That’s great if you want to be a quick lube and run that type of business. My other question is what type of shop do you want to have/run? If you want to be in the quick lube business and are mainly doing maintenance then why all the a techs? Big thing for you is developing a shop culture where everyone works as a team. You MUST find the right people to go on your journey with you.
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Joe
I seldom see a “best practice” incentive plan laid out on forums or anywhere else, and I also do not have one for you. That said, we have had incentive plans (productivity based pay) in place for most of our 40 years in business. We have had substantial incentive plans in place for a couple years now, as we make the transition from on site owners to remote owners.
I will start out by suggesting that anyone that believes an incentive plan can be laid out using the KISS methodology, either has no employees that work over 40 hours ever, or they calculate bonus dollars weekly and pay their employees weekly, or they just don’t understand the federal labor laws related to bonus’s, incentives, spiffs, ect.
I have to start with the legal disclaimer. I am NOT about to give legal advice. I am NOT suggesting that you do anything that I do, without consulting a labor law attorney for their professional advice.
One of the concepts it has taken me a long time to understand is the concept of “gross funds available”.
I used to think that if I developed a bonus program around a dollar amount or a percentage of something, then that was the “bonus” amount, to be added to an employees pay. That was certainly defective thinking on my part.
What I have come to realize, is that what I really have is a “gross amount of dollars” available, to begin the calculation, that will determine the actual bonus dollars to be added to an employees pay. I can find no indication that the DOL can regulate the amount of funds we have available for a bonus or be involved in the calculation that results in the final amount of actual bonus dollars to be added to employees pay. They (the DOL) only appear to get involved once you put a bonus, spiff, ect. dollar amount on top of the employees base or standard pay. Only then, once you add those non discretionary dollars and the employee works over 40 hours, do you have to consider the regular rate of pay and subsequent premium overtime.
In my case, we pay based on the DOL required “regular rate” basis on our bonus’s paid out, but it does not take me out of formula for the gross amount I have determined to be affordable and prudent, as the calculation for the actual bonus dollars to be added to an employees base pay, is up to me.
I make sure that the calculation allows for every factor that i believe is important to our business, before i can determine the actual amount of bonus I can afford to pay. In 2019, we have had 28k in gross funds available to begin the calculation. By the time we complete all bonus payouts for the year, we will have north of 40k in gross funds available to begin the calculation, that will determine the actual amount to be added to employees base or standard pay. This is shared among 10 employees.
For me, even though the calculation can reduce those gross amounts by 12-20%, it still drives the attitude, activity and sense of ownership I am looking for. That said, it is NOT a silver bullet, nor does it fix all employees and/or all problems
Whenever we revise the “conditions” of our bonus system, we make sure employees are kept up to date, and have them sign that they have received the latest version and all past versions are null/void. I make sure my folks know how much government regulation costs them. Once you understand the concept of the “regular rate” you will better understand that statement.
I also make sure they understand that all decisions regarding any and all “special compensation program” are completely and solely at the discretion of ownership. It is also made clear that minimizing the administration of any of these programs, is a primary mandate of the program.
Our primary basis for most of the bonus dollars paid, is based on “new gross profit dollars”. We assign a percentage to the gross profit dollars generated this year that are above last year for the same period. We have safeguards in the calculation to ensure that gross profit dollars are always tracking above last year, and net profit ytd, is tracking above a preset minimum. We pay this bonus monthly, when eligible. This year we have added north of 23k to employees pay on the monthly bonus system. It was a good year. Our best ever.
Hopefully someone will have an easier method for you, then ours. No matter what plan you are presented with or come up with on your own, please don’t underestimate the importance of the federally mandated “regular rate”.
I have attached a somewhat difficult to read image of our special compensation programs. It should help you better understand the concept of “gross funds available”.
I intentionally created the image under low light conditions and somewhat blurry. Pay plans are serious stuff. Doing them wrong, is sometimes called a “company killer”. I suggest that no one take my word for anything. Get your own legal advice.
Regarding the concept of “gross funds”, I just find it easier with staff, to get them to comprehend that we have a limited amount of funds available to pay bonus’s from and everything we do wrong, and anything we don’t do as well as we could, reduces the amount of gross funds available.
Randy
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Thank you great advise. I guess also making sure I’m staying with the industry above standard.
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