Capturing the Lost Profit: Profit Sharing with Employees - BodyShop Business

Capturing the Lost Profit: Profit Sharing with Employees

Promise your employees a share of the gross profit from paint and materials, and your shop will suddenly become less wasteful.

With tighter controls on labor prices and
increasing pressure on profits made from the sale of parts, each
area of a shop needs to generate a profit. And the paint shop
can be the primary culprit in the area of lost paint and material
profit – an often misunderstood and mismanaged area. Profits in
this area are usually small or non-existent. But where does the
expected profit in this area go?

$ If you
have a liquid waste drum in your paint shop, look inside, that’s
your money in there.

$ If your
body technicians use primer as body filler; that, too, is your

$ If your
painters don’t mix their own paint – or, sometimes, even if they
do – look around for all the partial cans of paint in your paint
shop; your money is in those cans.

$ Look around
in your paint shop and metal shop. Do you see sanding discs stuck
to the floor, partial rolls of tape scattered around, half-full
cans of body filler or molding clips on technicians’ benches?
This is more of your money.

$ Do your
painters color sand and buff every job? The money it takes to
pay for the extra material that gets sanded off and ends up on
the floor comes out of your pocket.

Maybe we aren’t recognizing what’s going on,
but we see all these things on a daily basis. Yet, when asked
about the reason for a low profit, we usually have plenty of reasons
ready, such as:

  • The insurance companies won’t pay enough.
  • The cost of the material is too high.
  • The new colors are harder to match.
  • The new materials are harder to work with.
  • And, besides, nobody really makes money on paint and material

But who are we kidding – other than ourselves?

Why the Waste?

Our painters usually undergo constant training as part of their
job, and the training offered by all manufacturers stresses proper
mixing, proper handling, safety and a clean vehicle painted by
a clean painter.

But what happens to this training when the painters return to
the shop? Sometimes, it’s as if the training stays in the training
center. But why?

The reality of paint and material profit and whether it’s achieved
or not, can be tied to several items. Often, no goals are being
set for paint and material profit. And the goals that are set
probably don’t have a process to help them be achieved. No one
has the responsibility of material management. And, frankly, employees
don’t care; there’s nothing in it for them. Why should they bother?
(This is why the things employees learn in training often never
get put into practice at the shop.) The manager uses the money
collected for material sales for other things anyway – to cover
labor for technicians, to buy a rental car for the unhappy customer
or to cover a shortage in a supplement. Why should this motivate

Getting Employees Involved

Is there a solution for this problem? Absolutely. The solution
lies with our ability as owners and managers to build the process
that leads to the solution. Set goals that can be attained with
a process that concentrates on the attainment of a profit. And
involve employees in the process as part of the solution – not
part of the problem.

The key here is to involve employees as partners in profitability,
which can be as easy as asking them for the solution to the material
profit problem. Employees should share responsibility of the material
and, in return, they should be rewarded when their wise use leads
to a profit.

To accomplish this, develop a procedure that tracks the technicians
as individuals or small groups. This allows not only the identification
of who might be wasting material, but it also lets the employees
express their own ideas about what contributes to a profit goal.

This process must be one that can be monitored daily by both the
manager and the employees. A process of this type should have
a structured reward system that’s tied to the achievement of profit
goals in the paint and body shop. This new procedure should be
tied to sales, flat-rate hour production and quality. Once installed,
the procedure will have the additional effect of increasing quality
and team work and improving housekeeping.

The material vendor needs to be involved in this process as well.
Our vendor partners are important to any procedure that we develop
for the control of paint and material gross profit. Their support
and willingness to adapt their methods to our needs can ensure
the success of our program. Our vendor often has more contact
with our paint shop than we do as owners and managers. This contact
can be used to help our painters and body shop technicians monitor
their usage, to keep everyone’s enthusiasm high and to remind
technicians of the cost-saving lessons they learned in training.

The Benefits

The promise of a share of the gross profit will prompt your painters
and preppers to use what they’ve learned. Suddenly, they’ll start
their work by washing the vehicle they’re going to repair. The
painters will mix only the material they need, and all the over-poured
paint they’ve been saving will become the "ground coat"
they never used before. In both the paint and body shop, sandpaper
will miraculously be used until it’s used up.

Suddenly, too, quality will improve with the knowledge that any
re-check will cause the anticipated bonus to become smaller. Body
men who’ve never saved materials in the past will concentrate
on using only what they need.

The outcome of this is that metal work will be a little straighter
before the filler is used. Also, painters will now want to inspect
the metal work because coatings sprayed over a poor metal repair
will cause a re-work – and a re-work will waste material.

Quality coming from the paint shop will improve for a variety
of reasons, but one that can’t be overlooked is the inspection
the body man will start giving the painter’s work. How often does
a mysterious scratch appear somewhere between the paint shop and
the body shop? This procedure will help this become a problem
of the past. The body man will now inspect the painter’s work
prior to trim out because a scratch will lower a possible material

Also, if you’ve considered recycling but weren’t sure if your
technicians would support it, this procedure may be just what
you needed. Point out to your painters that recycling on a regular
basis will allow them to use less clean-up thinner. After all,
a reduction of material use in any area can add to the shop’s
material gross profit – and to their prospective bonuses. And
reduced waste-removal costs are a plus to everyone.

Prepared for Profits

The highest material gross profits are achievable if they’re worked
on by a group. The group needs to include the owner or manager,
the technicians as our working partners and the vendor as our
monitoring partner.

And, most importantly, an incentive tied to the attainment of
profit goals needs to be attainable when all the lessons learned
by our technicians are put to work. Once technicians know they’ll
receive a bonus by achieving a goal, they’ll suddenly take interest
in things they never gave a second thought to. This interest will
not only benefit them, but also your bottom line.

Writer Mike Jones is an independent body shop consultant who
also creates video training tapes. He can be reached at (800)

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