Tech Pay; Too high? Too Low? Or Just right?

[Joe Marconi]

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[xrac]

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[CARMandP]

As I am making changes in this area, I am thinking about the same thing. Not only for my techs but my service writer.

[ghmerlin]

I just had my A Tech quit on me. I was thrilled because I finally found an opportunity to promote my B-Tech and hire another mechanic. I found that in the process i lowered my payroll by 2% of sales. The truth is that we often pay technicians way too much because we think they are the key to our success. I am finding out that a mechanic's are not motivated by money. Money just makes them lazy and un-happy at work.

[UsedTireShop]

Payroll should be what percentage of sales for a tire shop?

[SMMotors]

Ghmerlin,

 

Why did the tech quit? If the techs aren't the key to your success, what is?

 

Depending on what consultant you follow, loaded labor costs should equate to 20-30% of your posted rate. Saying you pay your techs too much is crazy. Either bump your labor rate to reflect what you need to make ( as an owner) or your going to be stuck promoting b techs to be your a tech.

 

How come you bumped him up? Did he suddenly improve in skill to become an A? Is he going to be able to do the tough diag that your a tech was able to do all of a sudden? Or was your a tech really a B tech that you paid too much and didn't have the skill to back it?

 

Let's be honest, your techs do make you money. Between them doing proper inspections and a service advisor who knows how to sell value, you should have no problem paying a tech good money that basically pays for itself while allowing you to earn your desired profit. It's up to you to figure out your costs, tech pay, GP needed, COGS, and bills and then come up with the correct hourly labor rate to make it all come together.

 

It seems lately that everyone is so worried about being the cheapest shop in town which in turns makes the techs pay lower, which in turns means your going to able to only afford "economical" techs. Economical techs aren't going to produce you a profitable business.

 

Your right on not all techs are motivated by money. You do have to find out what motivates them.i like spending time with my family, and not suffering in my wallet for it. One of my techs loves tools so I buy him tools and get the write off.

 

But, everyone likes having money. We wouldn't work unless money motivated us. Figuring out how to keep people motivated to make more money is the big question.

[UsedTireShop]

I really like the idea from SMMotors about finding out what motivates them and then let them work towards that.

My head tech is always taking days off. Especially if he worked over 40 hours the week before.

My tire tech love tools.

and my SA loves money.

 

I am going to work on a program that will give them all some incentive to perform.

[jwidener]

Everyone in my shop has different things that motivate them but one thing I have noticed is that most techs not all that are payed a high wage with no incentive to achieve that wage eventually get to a point were their not motivated to work any harder or improve at all they get paid the same regardless so they don't care. We give are techs a base pay with bonuses @ 42 hrs 46 hrs and 52 hrs and they stay highly motivated most of the time. I also set production goals for the week and if they hit the goals I take them for a steak dinner on Friday or give them a gift card to the tool truck etc all these goals are set as a team goal you be supprised how the motivated guys will push the ones that are slacking when it effects them. My loaded labor costs with all the perks stays under 18 %.

[mspecperformance]

18% of your total operating costs or your total cost of labor?

[mastertechlex]

I have only been a shop owner for about 2 years now. My tech pay plan is as follows. I have a $10 per hour plus 5 hours overtime maint tech. a $13 per hour plus 5 hours overtime plus 10 percent of all billed labor hours after the first 20 he produces. and another $13 per hour plus 5 hours overtime plus 15 percent of all billed labor hours after the first 20 he produces. Essentially I told my techs to earn $13 per hour plus overtime you "owe" me 20 hours of production per week. If you cant do that I dont need you here and if you cant earn more by the production incentive well..........you shouldnt want to be here. Dont know if its the best but seems to be working so far.

Edited November 14, 2014 by mastertechlex

[mastertechlex]

jwidener, I have been looking at a way to offer gift cards as a total shop bonus myself but havent figured a way yet.

[flacvabeach]

Any compensation plan you come up with that does not report income to the local and fed government is putting you in jeopardy. Gift cards sound great but they are just a scheme for tax avoidance. It sucks that if you want to give a tech a bonus or incentive, the tax man takes a chunk of it, but that's how our system works. Big tech companies provide cafeterias where their employees can get free lunch. They are engaged in litigation to show why that should not be considered income for their people.