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MotorAge published a training article and video from Jeremy O'Neal, AdvisorFix.    See this article here:  https://www.vehicleservicepros.com/shop-operations/service-repair/whitepaper/21253866/advisorfix-beyond-flat-rate-mastering-the-hidden-art-of-labor-profitability

It's definitely an interesting training session.  Jeremy explores some areas of thought that I've never considered.  My mind is a bit more basic in my approach.   I'd encourage you to check it out. 

What do you think of his approach to managing profitability? 

 



Posted

I am a very big believer in what Jeremy is describing. The first attachment is my service techs performance for the past three years. I have always wondered how we do against shops in a similar business model and retail environment, especially on the items marked with red arrows.

The second attachment is what my techs fill out every day. The orange arrows are what they fill in daily, using two SMS reports. The rest populates based on those 4 columns.

We would fit somewhere between "Generalists" and "General Generalists", in the descriptions below. 

 

Specialized Specialists

Approx 70% or more of service dollars come from work on only certain aspects of automotive service, examples might be:

Diag specialists

Locksmiths

Hvac specialists

Electrical specialists

Transmission specialists

Brake Specialists

Adas specialists

Specialized vehicles(fire, rescue, motorhome, ect)

Oil change 

Average Opportunity for technicians working at shops in this category, to see similar issues and perform similar services on a repeating basis – High Likelihood

 

Specialists

Approx 70% or more of service dollars come from work on only one or two brands of vehicles

Average Opportunity for technicians working at shops in this category, to see similar issues and perform similar services on a repeating basis –Highest Likelihood

 

General specialists

Approx 70% or more of service dollars come from work typically only on cars from a certain part of the world, like euro or asian, or a specific range of services.

Average Opportunity for technicians working at shops in this category, to see similar issues and perform similar services on a repeating basis –High Likelihood

 

Generalists

Most of the automotive service facilities fit here. Most makes and models, most services.

Average Opportunity for technicians working at shops in this category, to see similar issues and perform similar services on a repeating basis –Low Likelihood

 
General Generalists

These will typically be small market generalists. (approx. <10k households in a 10 mile radius, or < 30 homes per sq. mile in a 10 mile radius)

There would typically be no specialists, beside oil change, in these markets, so these shops will likely

have a broader service offering,. May include mix of light, medium and heavy duty vehicles

and/or specialized vehicle service like fire, rescue, motorhomes, ect.

Average Opportunity for technicians working at shops in this category, to see similar issues and perform similar services on a repeating basis –Lowest Likelihood

 

 

tech performance 19 20 21.png

tech tracker example2021.png

  • Like 1
Posted
5 hours ago, rpllib said:

I am a very big believer in what Jeremy is describing. The first attachment is my service techs performance for the past three years. I have always wondered how we do against shops in a similar business model and retail environment, especially on the items marked with red arrows.

The second attachment is what my techs fill out every day. The orange arrows are what they fill in daily, using two SMS reports. The rest populates based on those 4 columns.

I'm curious...  Do you manage daily profitability on a job by job basis as he does?    I definitely get measuring and monitoring overall profitability.

I thought I was tracking lots of data, but I am humbled in seeing your charts. 

For your red arrows, I think your asking these questions (am I close?):

  1. Technician Hourly Pay (total pay / hours worked)
  2. Technician Effective Flat Rate (total pay / billed hours)
  3. Gross Profit per Technician Clock Hour (GP / hours worked)

It seems to me that these measurements are mostly comparing technicians against other technicians.   I guess #3 is a good way to normalize measurements across different sized businesses.    I track this data in aggregate monthly.   Not per technician.  I do keep an eye on individual Technician Efficiency (during payroll), but I'm not tracking (logging) it. I may need to do more.  So far, I've focused on startup survival over efficiency.  We are just now starting to look deeper and wider. 

For your daily technician tracking, I see hours worked and hours flagged and labor hours.  What happens for jobs that span multiple days?  What happens if they finished today and cashed out 4 days from now?   Are they logged on actual day completed or on the day it's invoiced?

 

Posted

We have a pop graph in our SMS that we have set profitability goals on, so it is easy to look at profitability on a invoice basis. This assumes that you regularly update your cost of labor in your Sms, which we do, and that you are razor sharp on costing parts accurately. 

  1. Technician Hourly Pay (total pay / hours worked)  This is not tech hourly pay, if you pay hourly. This figure does not care how you pay on a week to week basis. It is total W2 wage "gross dollars" (paid in a period) to the tech divided by total hours worked in clock time (in the same period). This does count on accurate time records, but it does not care how the gross pay is accumulated. 
  2. Technician Effective Flat Rate (total pay / billed hours). This is correct, It is total W2 wage "gross dollars" (paid in a period) to the tech divided by total hours "billed" in labor time (in the same period).
  3. Gross Profit per Technician Clock Hour (GP / hours worked). This is correct. Accurate total GP$ generated by a technicians activities for a specific time period, divided by total clock hours worked in the same time period. 

The effort is aimed at trying to come up with some financial benchmarks, that are not affected by type of pay plan. We have techs on 2 different types of pay plans.

"So far, I've focused on startup survival over efficiency.  We are just now starting to look deeper and wider"  sounds like you are on the right track. I hope you are quicker then I am at picking up on this kind of stuff. I am 42 years in

 Jobs that span multiple days are accounted for on the day they are closed. It catches up over the course of weeks and month. 

I meet with my staff in groups (leadership, service techs, lube and tire techs)weekly, and the first 10 minutes is going over month to date goals and performance. We were guilty of what Jeremy describes in the video, for most of my career. We would get to the end of the month, and look back, and say "while that month sucked".  Now, our daily trackers play as a slide show on our screen savers (a dozen workstations in the shop and growing), as well as staying focused with the weekly meetings. 

It helps a lot, maybe more than any of us realize, if you are "digitally adept" when it comes to things like computers, networks, software, ect. Excel has been our close friend for decades

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  • Have you checked out Joe's Latest Blog?

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      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.
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