I’ve shared some basic tips shops should follow as they’re looking to create a benefits package for technicians.
Let’s pull it all together for something that can be used to create a competitive compensation package that attracts and retains great talent.
5 Steps to Creating a Technician Compensation Package
1. It is All About Culture
The core of any successful company is the personality of its actions. Every company has a culture, and that culture is composed of the sum of the behaviors of its people. This can be modified when guided by strong leadership that provides a clear Vision and establishes guiding principles to manage the actions of the team as a whole.
How would you describe your culture? Every owner should write down what they believe their culture to be and then place it against the litmus test of their leaders and staff. Does it align? If you are experiencing high turnover it probably doesn’t. Remember that culture is the hidden benefit that nobody ever talks about. It’s what can allow employees to put up with stressful times as well as not so perfect work environments because it is all about the relationships built and their sense of purpose as it aligns with the organization’s.
A Culture 360 Assessment will help you ensure alignment and become a key selling point when speaking to your staff. It’s really what creates worker satisfaction.
2. Don’t Forget the Competition
Many factors need to be considered as you build your plan. One of those factors is, what are others paying in your market? Wages are the most visible aspect of compensation. It is one of the key benefits your employees and candidates will judge you on.
If you haven’t done so, create a position description for your team. This will help you compare what your techs are doing over other shops.
Talk with people in your industry, and get a pulse of what others are seeing. Also, use the tools available to you online. Check out indeed.com, salary.com, glassdoor.com, payscale.com, or WrenchWay
3. Create your Wage Strategy
Where culture provides clarity of the working environment, wage strategy brings to light how someone will be paid. This calculates the ‘wages beyond the wages.’ Here you would tie in other compensation factors such as benefits, bonuses, and any additional perks that go into the financial investment of the team member.
- What percentile of industry wages do you want to be at?
- Are there other benefits that you want to add in? If so, how many? More paid benefits may lower wages but still be more attractive to the employee.
- What incentives do you wish to put in place? See culture. Do you want your organization to be performance driven? Could you incentivize productive time for your techs? Bonuses? Commissions? What will help put skin in the game?
- Will everyone be treated the same? Should the shop manager participate in the same program or will you separate them from the techs? Do the parts guys get commissions on what they sell? Good to have this planned out ahead of time.
- How are they compensated? My guess is most of your techs are hourly and that’s probably where they want to stay. However, some businesses may pay salaries or even commissions. Figure out how you want it to work for you.
- Make the commitment — Remember you get what you pay for. Growth businesses WANT employees to be compensated well. They do not see wages as an expense, but an investment in their success.
4. Build a Performance Matrix
There have been many arguments for and against pay for performance. In the end, you have to decide what is right for you. Ultimately, I caution against creating an incentive program that is too ‘rich.’ In other words if incentives such as bonuses and performance pay become too substantial their intent can backfire.
I remember reading the two Freakenomics books by Stephan Dubner and Steven Levitt. The overarching theme resonates with me to this day: People are motivated by incentive, and be careful what you incentivize. One client of mine had an incentive program that richly rewarded his employees for growth. It was done for all the right reasons and with the best intentions. Once the economy started to dip and compensation took a dip he found many of his team members became disenchanted with the program. We had to modify the formulas and re-establish the benefits of the program.
I found this to be true in corporate America as well. I worked for one company that had gone through several profitable years and paid out healthy bonuses right around Christmas time. One year ended a little softer than expected and bonuses were cut in half from what they had been in previous years. This led to a lot of hard feelings towards senior leadership. While we may communicate an incentive shouldn’t be counted on, many employees become comfortable with routine. Incentives work well on the highs, but if not communicated properly it can hit you hard on the lows.
5. Recognition for a Job Well Done
The last component is often left out of strategy. That is how do you handle raises? I have seen all sorts of complex formulas for calculating merit increases. There are still many more companies that just wing it when it comes to wage increases.
The smaller the business the more it is like throwing spaghetti against the wall. Whatever sticks works. Usually that is when a tech knocks on your door and asks for a raise.
Businesses need to budget. Part of that process should include increasing compensation from an inflation side as well as a merit side. Planning ahead can help lessen the burden of how the business will afford an increase. This requires a formula and a way to measure performance.
While wage increases do link to performance, I never tie them directly to reviews. Again, the behaviors you incentivize can have consequences. The most common is a boost in performance when evaluations come due. Performance raises are better off to be a little random. Keep in mind this is different from a cost of living increase which you may also budget for. Do as much as you can to take the guesswork, and favoritism, out of raises.
Combining these five steps will help you improve your chances of hiring and keeping great techs for your shop. You need to do everything you can in a competitive marketplace with a shortage of workers to keep the best talent showing up at your door.
About Dan Paulson
Dan Paulson is a coach, speaker, and consultant that helps businesses achieve greater growth and profitability in any economy. His Go Far, Go Fast! Method helps business owners overcome their challenges to produce high performing, sustainable companies while improving workplace culture, communication, and quality of life. Dan can be reached at danpaulsonletsgo.com, or by calling 608-467-0223.