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How are you paying your technicians?

Successful Dealer Staff November 21, 2012

Having a strong payment structure can help your dealership keep quality technicians.

By Lucas Deal, Associate Editor

lucasdeal@randallreilly.com

A major key to keeping dealer’s service department running smoothly is quality technicians. When you have quality employees, it helps to have a strong payment structure in place to keep them.

Today there are several ways to compensate heavy-duty service technicians. The two most popular methods are a flat-rate system and an hourly system, and each has advantages that can work in your business.

When choosing the best payment plan for your technicians, it is important to research each method and how you can implement it.

The flat-rate system is rapidly gaining popularity in the industry. The system works by charging customers and paying technicians for an equal amount of hours when providing service. Meaning, if a dealer quotes a fleet two hours to replace two brake shoes, the technician making the repair is then paid two hours in wages to complete the job.

According to Mark Martincic at KEA Advisors, the flat-rate system is a positive influence on technicians because it motivates them to complete work in the time billed on repair invoices.

“The [flat-rate] system is a great way to increase productivity,” he says, “because it allows a service provider to equalize the labor it bills with the labor its technicians provide.”

Under the system, if a technician is paid for two hours of work and completes a job in an hour, he is still paid for two hours. However, if a two-hour job takes three hours, he is only paid for two hours.

Katie Hopkins, executive vice president at Truck Centers, Inc., says her company has been using a flat-rate system to pay its technicians since the 1980s. Hopkins says the benefits speak for themselves.

“I think it motivates [the technicians] to do their work as quickly and effectively as possible,” she says. “It allows them to create their own destiny.”

The hourly system is the most common payment plan in the heavy-duty industry. The system works by compensating technicians a certain wage per hour for the work they do.

By paying technicians an hourly rate, a dealer has the flexibility to increase or decrease the hours its technicians work depending on his business. When things are slow, a technician may work 35 hours a week; when it gets busy, he may work 45 or 50.

A technician will be paid overtime (commonly a higher hourly rate) in those cases, but if that allows a dealer to complete repairs faster it is still a net positive for his business.

Martincic believes most dealers operate under hourly technician payment plans for that very reason.

“It does allow [them] to manage its repairs efficiently because it keeps technicians working on a repair until it’s completed,” he says.

The next step in successfully launching a new payment plan is making sure your technicians understand it.

Allowing your payroll and human resources departments to teach your technicians about their compensation will make sure everyone is on the same page.

“There has to be communication and consistent engagement between both sides,” Martincic says. “You have to make sure the guys in the shop understand everything.”

Giving your technicians a little extra to work toward isn’t a bad idea, either. Martincic says well-described goals and rewards programs can help motivate technicians to stay on task, and/or reward quality technicians for doing great work.

And letting technicians know there is room for growth in your dealership, and in their pocketbook, is a good idea as well.

Hopkins says Truck Centers’ operating structure features a points system that leads to advancement. Technicians can accrue points for a variety of reasons during the year, and certain point benchmarks allow them the opportunity to move up to different pay grades and into better shift rotations in the dealership.

Each possible step is discussed as well, which keeps technicians abreast of their situation.

“We try to explain to them where they are, and what they can do to stay in one spot or work their way up the scale,” Hopkins says.

And the more technicians that make their way up the scale, the better. Because even though that costs money, it’s worth it — a good technician is hard to find.

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