Plans for techs, advisers, parts people demand new ways of thinking

"You get what you pay for" is one of those bits of folk wisdom that has become a cliche because it's generally — but not always — true. The slogan could summarize the eternal debate over the best way for a dealership to pay its fixed ops employees, especially service technicians and advisers and parts-counter people.

A special report in this issue of Fixed Ops Journal takes a fresh look at service and parts pay plans. We examine how they are, or aren't, doing what dealers intend them to do.

More than a century ago, Ford Motor Co. conducted time-and-motion studies to determine how long various car-repair and maintenance jobs should take. Ford urged its dealers to pay their mechanics on that basis, however long it actually took them to complete the jobs, rather than with a straight salary.

Thus the flat rate system came to service departments in a big way. Under pressure from mechanics who threatened to quit because they considered the system unfair, Ford temporarily backed away from flat rate during the Great Depression.

Today, nearly three-fourths of dealerships still use flat rate as the foundation of their technician pay plans, according to a survey by Carlisle & Co. Dealers and service directors continue to insist that flat rate promotes efficiency and productivity in their shops, keeping customers satisfied and coming back. Techs continue to complain that it leads to disruptive fluctuations in their weekly pay, as well as arbitrary expectations and favoritism in job assignments.

Flat rate advocates say it fairly rewards the most talented, experienced, diligent techs, enabling them to book — and get paid for — far more hours of work than they spend on the clock. But what about everyone else?

Industry analysts cite flat rate as a leading cause of unhappiness and turnover among veteran techs, as well as a big impediment to hiring millennial employees, amid an industrywide tech shortage.

Techs' desire for pay stability is as understandable as dealers' quest for productivity. While flat rate remains the standard, more dealerships are developing hybrid plans that combine wage guarantees for techs with incentives to work quickly and well to boost their pay. You'll find examples of such plans in our story here.

Your approach to developing the best pay plan for service advisers might be affected by whether you think "upselling" is a dirty word. We don't like the word and seek to avoid using it; it tends to sound pejorative even if you don't mean it that way.

Whatever you call it, advisers who fail to inform customers who come in for, say, an oil change that their vehicles need other work immediately aren't doing their job. At worst, they could be risking the lives of the people who ride in these vehicles.

Dealers and fixed ops leaders assert that it's not only proper but necessary to base a substantial amount of advisers' pay on the volume of additional services and products they sell their customers. But many advisers — and ex-advisers — tell of feeling coerced by their bosses into browbeating customers to buy work they neither need nor want, to meet this month's sales goals.

That, they say, depresses their customer satisfaction scores, which also can help determine their compensation.

The balancing act: How do you provide appropriate incentives for advisers to sell what your customers and their cars truly need now, without crossing an ethical line into high-pressure sales tactics? Our story offers some ideas for piercing that Gordian knot.

The primary job of the parts counter would seem straightforward: to ensure that technicians have the parts they need in their bays to get their work done promptly.

But Greg Dryden, vice president of client optimization at Dealer-FX, calls parts departments at many dealerships "the No. 1 cause of lost tech productivity." He proposes tying as much as 30 percent of parts-counter workers' pay to hours turned in the shop.

As dealerships rely on fixed operations for an increasing share of their profits, a lot of stores also are pursuing lucrative sidelines in outside sales of parts, online, by mail and over the counter, both wholesale and retail. How best to incentivize a parts-counter worker to achieve both goals?

Go here for ideas from industry experts and dealers who have used their pay plans to enhance the efficiency and profitability of their parts desks. We hope our special report will provide some starting points for innovation in all aspects of your fixed ops pay packages.