Shop owners, when you hire technicians, are you thinking about their long-term future at your shop, or are you thinking about what you can get out of them right now? Do you look past the technician and think about how you are supporting their ability to help take care of their family?
You have to figure out what type of owner you want to be by how you value your people. The culture, benefits, tools, and most importantly, the wages you offer employees is what sets apart amazing ownership from subpar.
Value of a Technician
Do you know how much money your shop is losing by not being fully staffed?
For example, a technician that works a 40-hour work week and has a $100/hour labor rate at an 85% productivity rate, has the potential to bill $13,600 per month (or $35.29 per hour). That same technician usually sees 70 cars per month, and their shop averages 1.4 billed hours per repair order. In total, that is 98 billed hours (or $9,800) that technician would be bringing into your shop…
…This means is the cost of a technician (salary only) to your shop would be $4,800 for the month.
Is Your Technician Pay Competitive?
According to Indeed, factors that affect competitive pay are:
- Geographical location
- Industry/job title
- Supply and demand
- Level of expertise
This means an entry-level technician in Wisconsin will make less than an entry-level technician in California, due to location and cost of living expenses.
To make the salary you are offering attractive to potential technicians, it must be equal to or greater than the average technician salary in your area. For example, according to Salary.com, the median salary for an entry-level technician in California is about $38,000. However, some shops are offering upwards of $45,000 for that same job. In order to be competitive in this area, shops should be offering entry-level technicians a salary above $38,000.
To find out what your shop should be offering technicians, research similar job posts on job boards, LinkedIn, or by using a salary calculator online.
How to Free Up Cash to Improve Your Labor Rate
Technicians deserve more money, but shops can’t cheat the customer in order to pay their people more. Here are some ways your shop can free up cash to improve your labor rate:
Consolidate Software Programs
Think about all the different software programs your shop uses. All these software programs require separate training for technicians to learn them. (Not to mention each software probably requires each technician to remember separate login information.) It takes too much time to train on multiple platforms. Consider consolidating all your individual software programs for estimating, billing, pricing, and ordering into one with a shop management software. This will allow your technicians to have more time to bill more hours — allowing you to pay them more.
Stop Devaluing the Process
If your service advisers are using the phrase, “We’ll plug it into a computer and figure out what’s wrong,” when speaking to customers about their car issues, they are decreasing the value of your diagnostics. When this happens, customers will question why there’s such a high price tag for diagnostics when all the technicians did is “plug it into the computer.” Make sure your service advisers are well trained in how they are presenting and selling diagnostic time.
Increase Billable Hours
Of course it makes sense to increase billable hours in order to pay your technicians more. However, you don’t need to increase hours into the double digits in order to see a notable change. Simply increasing billable hours by 1-2 hours per person can generate more revenue, allowing you to better compensate your technicians.
Hire Quality People
You need quality technicians in your shop and one way to do this is when you are hiring someone to look at the long-term potential value they can have at your shop. This requires looking at more than what you can get out of them right now. Can you picture them mentoring entry-level technicians in the future? Could they become a manager at your shop? Are they someone you can trust? Think about these things because you are investing your time and money into these technicians.
Retain Quality Workers
As managers of shops, you have thousands of dollars of equipment in your shop, but your most important assets are your people. Replacing great employees is incredibly expensive, so retention needs to be top priority. Some strategies to retain employees, include:
- Promote work-life balance
- Foster positive work relationships and show your appreciation
- Make development a top priority
Remove the Need to Walk Around
Utilize a messaging system in the shop to communicate with technicians so they don’t have to walk to the front to check on parts, ask questions, etc. With instant messaging, technicians can stay informed without leaving the vehicle they are working on.
Make a Company Rulebook
A company rulebook doesn’t need to be lengthy, but your shop should cover basic rules for technicians and other employees to follow. Remember to cover the rules that are costing you money like cellphone use during work hours, smoke breaks, etc. These are small things, but can add up and cost you money in the long run.
Shop Owners, Will You Pay Your Techs More Money Now?
You can’t run your shop with AI and robots, you need technicians in your shop. You, as an owner, are providing technicians the means needed to support themselves and their families. You must value your employees, trust them, respect them, and above all compensate them well in order to get them to stay.
So, are you convinced yet?!