Great techs love to produce billed hours, but do you know if you’re getting your money’s worth?
Editor’s Note: The labor rates mentioned in this article are fictitious and, therefore, should not be considered industry standards.
Many shop owners fall into the trap of thinking their technicians are being paid the hourly wage they calculate each week on their paycheck. Unfortunately, the math tells us something different.
Consider that a technician is being paid for their professional opinion and competencies to inspect, diagnose and repair the client’s vehicle. The effectiveness of what they do is the total billed hours that they produce each day, each week and each month. The more billed hours they produce without comebacks, the more value they bring to the shop. If the technician is not producing the right amount of billed hours, they become a cost to the business.
What is your technician really getting paid per hour? Let’s do the math. We’ll use an example of a technician being paid $25 per hour, working 40 hours a week over five days and, on average, being billed 5.39 hours per day.
Take the current pay per hour and multiply it by the number of hours per week the technician works: $25 X 40 = $1,000 gross pay per week.
Take the average billed hours per day times the number of days the technician works per week: 5.39 X 5 days a week = 26.95 average billed hours per week.
Take the gross pay per week and divide it by the total billed hours per week: $1,000 divided by 26.95 billed hours = $37.11 per hour that the technician is actually getting paid.
Actual hourly pay being paid minus technicians basic hourly paid wage equals the difference in actual pay per hour: $37.11 – $25 = $12.11 difference in pay per hour, plus benefits.
That math leads to a lot of conversations and questions such as:
• If the technicians work eight hours a day, what were they doing the other 2.61 hours they got paid for?
• Why are the technicians, if licensed, not producing and being billed for a minimum of eight, and even up to 12 hours per day on average?
• Is more training required?
• Do we have the right competencies on board for the type of work that comes into our shop?
This article isn’t intended to beat up on technicians. I have the privilege of knowing a number of master technicians around the country, and I have incredible respect for their knowledge and talent. Their depth of technical knowledge and skills at analyzing vehicles often overwhelm me.
What I’m challenging here is management not establishing the proper environment for the technician to be fully productive. Great techs love to go at it all day and produce the billed hours for a shop. They know when they’re consistent in billed hours, beating the clock without comebacks, their own paycheck reflects this.
Management must evaluate the shop’s situation and determine why their team is not fully productive. Slow down and have a frank discussion with your staff to find out how things can be improved. Remember, you’re a team and those billed hours produced truly determine the financial success of the team and the shop.