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  Around ASA

Payday’s a Changin’!


Posted 03/11/2013

By Leona Dalavai Scott

More and more shops are thinking outside the box when it comes to compensating employees.

Mechanical

Betty Jo Young, AAM, co-owner of Young’s Automotive, an ASA member-shop in Houston, remembers a time when they paid their technicians a flat rate. She and her husband, Glenn, have been in business for 40 years and have five employees. Today – in addition to regular pay – they are turning to some nontraditional ways to compensate employees, such as offering gas cards and partial payment of cellphone bills when they require employees to be on call for the shop.

Young recently put the finishing touches on a class she will be presenting at the upcoming VISION Conference titled “Compensation – Think Out of the Box.” She developed the class after realizing there are so many different ways shops are compensating their employees today.

Traditional compensation

It used to be that shops often paid employees with one of the following methods:

  • Salary/salary with production bonus
  • Flat rate/flat rate with a guarantee/flat rate sliding scale
  • Hourly/hourly with production bonus
  • Commission/commission with guarantee drawing

In addition, typical benefits included paid vacations, uniforms, paid holidays, technical training, health insurance and an annual bonus. While many shops still offer traditional benefits, some employers are finding that employees – especially younger ones – have different needs and are interested in nontraditional ways of compensation.

Motivation through money

At last year’s Automotive Service and Repair Week, a panel discussion took place on the topic of “Compensation Plans That Work.” Panelists were in agreement that some of the best pay plans have some opportunistic element where employees are rewarded monetarily for their extra effort and/or expertise. Also, a team production bonus or reward can help promote teamwork and boost morale.

Bobby Likis, radio talk show host and owner of Bobby Likis Car Clinic in Pensacola, Fla., said that a few years ago, his business did just that. He instituted a pre-repair program, a new type of service plan that is founded on proactive vehicle ownership. The new program provides bonuses for their floor managers based on outstanding sales results.

“This plan delivered more than 109 percent PreRepair sales last year,” said Likis. “That means for every 100 cars that came through the door, my team sold 100-plus procedures.” Like Likis, Greg Sands launched a new, triangle bonus program for managers recently. Sands owns and operates 31 auto repair shops under the America’s Service Station, Service Street and Driver’s Auto Repair banners. He is also CEO and founder of the direct mail services firm, Mudlick Mail, in Acworth, Ga. Sands said the triangle bonus program measures performance in the areas of gross profit, sales and car count. Managers who beat thresholds in each category (i.e., surpassing the previous year’s car count by at least one car) qualify for a bonus. Performance for specific goals or initiatives (i.e., managers improving phone skills) is also rewarded through fishing trips, Go-Kart racing and other outings.

New workplace, new needs

What has precipitated the changes in compensation plans for service and repair shops? Shop owners point to the changing demographic in the workplace. Younger generations representing Generations X, Y and beyond are replacing Baby Boomers and Traditionals in the workplace. Multigenerational employees are motivated by different benefits programs.

“For instance,” says Young, “I have some employees who aren’t interested in insurance, but they love getting gas cards.”

A recent USA Today article described the key difference between Generation Y (or Millenials) and baby boomers: “Unlike boomers who tend to put a high priority on career, today’s youngest workers are more interested in making their jobs accommodate their family and personal lives. They want jobs with flexibility, telecommuting options and the ability to go part time or leave the workforce temporarily when children are in the picture.” For more on this topic, please see this month’s column of “Just Run It” on page 6. Dick Cross, author, talks about how younger workers see themselves more as “volunteers” and less like “employees.”

Employers take the lead

The burden falls on employers to understand and work with the changing workplace. Young says to know what your employees want, in terms of compensation and benefits, simply ask them.

“I want to do anything I can to help my employees,” she says. For instance, when my office manager had a baby, I let her bring her baby to work for six months. By allowing her to do this, it let me keep a good employee who I didn’t want to lose and it allowed her to spend time and bond with her baby.”

Young says her husband, Glenn, is very intuitive to technician needs. Since he is a technician himself, he explores different ways he can compensate his technicians – like helping them subsidize tool purchases.

Young does advise shop owners to get financial advice from their accountant before compensating their employees with nontraditional benefits so that they still fall under the category of “business expense.”

Sands says a key benefit that his company offers that may distinguish them from other shops is their growth potential.

“We cover all job-related and aftermarket training for our technicians,” he says. “We also provide them with cross-training, so if they want to become a manager or owner they will have the skills needed to be successful. Our owner-operator program offers a path for employees with dreams of ownership and gives those employees the ability to partner with us on future shops. That kind of opportunity motivates people to work for us.”

Young says nontraditional benefits may also be an attractive option for shops because as a result of new tax laws, they may be a good way to prevent more paycheck deductions. Again, she says, you must check with your accountant before offering any kind of new benefit or package.

Pat Grace, owner of Tunxis Service Center LLC, Unionville, Conn., says he gives his employees 192 paid hours a year to use as they will – whether it’s holidays, sick days or vacation. He currently pays his technicians by flat rate, but when business slowed down in 2008-2009, he offered to switch them from a flat rate to an hourly rate. But, he said, they preferred to stay on flat rate since they knew they would be able to make up for the slow time as business increased.

Young says that in all of her research, she found that the successful shops have the needs of their employees in mind when crafting their compensation packages. What works for one shop may not work for another shop, she says. You just have to look at the pros and cons and weigh them before making a final decision, she advises.

 
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