Wednesday, March 28, 2012

The Good, The Bad, and The Ugly! (Part 2)

Part 2 of The Good, The Bad, and The Ugly the dreaded "Pay Plan" for your Technicians. In Part 1 we went into how to build your "Hire to Fire" business model that is essential for any Dealership to be customer sensitive and profitable. My question is without one how will a dealership ever get were it's going if the team doesn't know where it's going?

 We've been in business since 1996 and have seen just about every pay plan imaginable. We will dive into how we build a plan that challenges the individual to be the best they can be! The first step is what do I want to accomplish?

The "Job Description" should state what your desired results should be at a specific time which should include any tools needed and training requirements to achieve. The pay plan then should be very easy to calculate so they can see the results of their efforts on a daily basis.

The pay plan should not encourage competition between each other instead with themselves so we never put a "First Place Bonus" out there do to the low morale it creates. All Dealerships have the "Super Stars" that are self-motivated and always reach or exceed expectations however there are far more employees needing Training, Coaching, and Consulting then the Super Stars.

What we like to create is a "Level Bonus" program that rewards anyone who achieves the desired results so the playing field becomes even based on the desire to achieve not "First Place" and "Second Loser" philosophy.

We start with a "Grid Pay" structure that rewards achievement in a stair step process. Here's an example of a Technician Grid structure that let's them decide what they want to get paid based on Training, Production, Efficiency, and Fixed Right First Visit.

This allows any Technician to become an "A" Technician if they desire through hard work and determination.  It's up to each individual to become who they want to become and not from a Manager/Dealer feeling or an annual pay raise even when they didn't deserve it. I had a Dealer recently give all his Technicians a raise before we arrived. He said he was trying to increase the morale before we started installing our Eight Habits Program.

This sent a Huge message to everyone that the Pay System is not a fair one and the morale actually got worse from this due to some of the Technicians said they did not believe all the Technicians deserved it based on Performance, Tardiness, Days Out, and so on. As you can clearly see the Technicians that deserved it felt like they didn't need to give the "Extra Effort" to get a pay raise.

That's why the "Technician Grid" levels out the playing field and if they want to improve themselves they will get rewarded for it. If they get lazy, or stop online or off site training it will have consequences to there pay. It's that simple. Now each Dealership has it's own requirements based on each manufacturer's needs and the Service Departments needs that makes good business sense.

The last thing I would like to add and is very important. As I said before, we have been around since 1996 and found that if you pay your Technicians and Advisors every week Performance Goes Up Automatically! The reason is people have a tendency to slack off if they know they not getting paid for two weeks and make it up the following week. It Works!

Summing Up

  • Job Description for each position that makes good business sense
  • Behavior Profile Style matches the Job Description
  • Hire to Fire Process in place
  • Everybody should be able to Win! No Losers!
  • Pay Plan that Rewards what you want repeated
  • Everybody gets paid weekly

The Service Advisor's pay plan is similar in structure however we will review it in the next e-zine

For a copy of ACG's: 

Technician Pay Grid Program 

If you need help in building your pay plan e-mail me: 

Guy Salkeld is the President and Head Performance Coach of Automotive Consultants Group Inc. The only Low Risk High Return Training, Coaching, and Consulting company in the world! To learn more go to  Have a question? E-Mail Guy directly at or Call me direct at: 305-331-3373    

The Brutal Facts about Electronic Multi-Point-Inspections

One of our Dealers was asking us if the Multi-Point Inspection program he has is worth the $7500.00 a month he was spending for it. I asked him how much he paid to have it installed before the monthly fees? He said around $40,000.00 for the printers,computers, and training. I also asked him when it was installed? So I grabbed the financials and went to work on the "Return on Investment"

The 12 months prior to installation C.P. Labor was averaging 1.8 @ 80.00 or $128.00 per ticket averaging around 600 CPRO's per month. After the installation the CP hours per RO increased to 2.2 @ 80.00 or $176.00 per ticket in CP Labor. This only lasted for "Two Months" after the installation and so called training they provided and went back even below the average or 1.6 @ $80.00.

The next step was to find out how long it was going to take to break even and make a profit. The following formula is what I used:
  1. $40,000.00 Initial Install Fee
  2. $7500.00 per Month User Fee X 12 months ($90,000.00)
  3. Look at a 12 Month Period First
I took $40,000.00 plus the $7500.00 per month for twelve months. That equals $130,000.00 total which I divided by 12 and came up with $10,833.00 direct expense every month for the next twelve months. WOW! How much will I need in additional C.P. Labor Sales to break even?
  1. $10,833.00 Monthly Expense
  2. Divided by a Gross Profit Percentage of 70% 
  3. Equals $15,476.00 in Additional C.P. Labor Sales 
So if we take $15,476.00 divided by 600 C.P. R.O.'s equals $25.79 per C.P.R.O. or .3 @ $80.00 over and above to just break even. Doesn't seem like much however if you remember we actually went backwards after two months being on the program.

The other thing to remember is I want a Return on my Investment not just break even! The basic assumption that technology is the answer is really flawed! Remember that the best tools or technology will never substitute for Leadership and Management.

The Truth is if you are unable to get your Technicians to perform a "Paper Multi-Point Inspection Form" with every customer, Technology will only add to your expenses! I always ask a Dealer how well they are doing since installing "New Technology" and I get a "Don't Ask" 90% of the time and that's why your here!

That's not to say that it can really enhance a Service Operation that has Great Leadership and Management in place who believe in "Mastering the Basic Fundamentals" first before ever installing a program like this. I believe in three things that always work:
  1. Leadership/Management
  2. Master The Basic Fundamentals
  3. The Right People for the Right Job
How well is your Multi-Point Inspection Process working? Are my customers being advised on the condition of there vehicle every time they visit? 

Want more information on our Multi-Point Inspection Process? 

Guy Salkeld is the President and Head Performance Coach of Automotive Consultants Group Inc. The only Low Risk High Return Training, Coaching, and Consulting company in the world! To learn more go to  Have a question? E-Mail Guy directly at or Call me direct at: 305-331-3373