Critical Efficiency

A client said – ‘We are having trouble getting our shop production over $15,000 a week’. We have tried everything, bonuses, bribes, complaining, but we seem stuck at this level. I went to the mechanic staff and ask ‘how do we do this?

Well first, they said, all the owner wants is more and more for the same pay, AND we are working in cramped quarters as we have very limited parking that’s just not enough. We went back to the owner and related these opinions. Tell us how to change this, he replied.

I went to the shop manager and explained that we needed $20,000 per week in completed work. He had a few complaints that we were able to fix by the second week and we hit $17,600 – but we only did it one more time in the next month. This shop manager had hit, what he was convinced was, MAXIMUM, so it was time for a change. We put the shop manager in another area.

The new manager requirement was to average $20,000 per week, for wages paid. The sales were there – we just needed production. The new manager pay was presented to him so he would make (the same as the other manager) as long as he averaged $20,000 per week and would be given a bonus over that amount.

We built in a bonus compensation program to reward all the mechanics at $21k, $22k, $23k, etc. We found our new average went to $23k almost immediately, but seemed to peak within the next months. We met with the shop manager and asked what was keeping us from doing $25k? He related that they were working in cramped quarters and had very limited parking. That sounded familiar.

Was the new shop manager, now producing 22-23 instead of 15-20, that much better, or was the incentive program doing it? It also appeared that when the shop manager hit a point where he was able to bonus he allowed the limitations to return. This shop now does in excess of $30k regularly, in spite of cramped quarters and limited parking.

Then the Sales Manager decided that now he was selling more – and that should be worth more in his paycheck. Now if this employee is paid a salary for 5 days work then compensation for increased sales does not come into play.

If, however he is minimum salaried plus commission on excess of base, he is due some extra compensation. IMPORTANT POINT OF ORDER- BEFORE you set wages for any employee. You must be absolutely sure that you also set the requirements for performance at that level of pay. We don’t just see how it goes. We give goals and parameters for each pay level.

I once visited an Auto repair facility that had the entire shop area CARPETED. You read right – Carpeted. I ask the owner his reasoning and he related that he was after the high end cars, Mercedes, BMW, Lexus, Porsche, Bentley, Lamborghini, etc. They want their cars cared for and pampered and the carpet shows we care. I said how do you keep it clean?, he answered ‘we just don’t let it get dirty’. If it does, the mechanic cleans it – after all, it’s a CONDITION OF EMPLOYMENT!

This is something every owner needs to consider. When business is good we don’t mind having extra people around to pick up the extra slack – however it produces a level of production that is not necessarily their best work or their best production. When business falls the owner is reticent to cut back help, because he doesn’t want to be caught short WHEN IT RETURNS.

Therefore the erosion is continuing until you re-establish efficiency ratios. You must be willing to say, to your job applicant: The wage is $1000. per week and for that I expect $20k in business completed and deposited per week. After 20k is attained, for the first thousand in excess of your base, there is an extra $50 bonus. For the second thousand (in excess of base) – $60. For the third, $70.

This is an ascending bonus and works to assist completing good weeks. But caution, it can backfire if you do not watch it. A salesman can see he is going to have a bad week he may sandbag for next week and then run it as high as possible. I have found that under these conditions you must measure everything in monthly figures. IE: $20k X 4.3= $ 86k. Bonuses start after this is accomplished.

Ray Hauenstein

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