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Shop Manager, Show Me the Money

eff Rice, body shop manager, Pace Collision Center, Huntington, Indiana, says, “I always see what you’re supposed to pay techs, but what should managers make?

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Jeff, that’s a question I get asked often. However, it’s not an easy question to answer.

The answer is, in a way, much more complex compared to technician pay ranges because so many factors play into the answer. Since I’m somewhat familiar with your operation, it makes the answer a little easier since I know some of the answers to questions that would be necessary for me to ask.

For this article, I’m going to provide the basis for how manager pay would be considered, and from this, you should be able to determine a typical salary range for your specific question.

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As mentioned, many factors are involved. They include:

  • Duties and responsibilities;
  • Support and technical staffing under your control;
  • Sales volume;
  • Market size and market conditions; and
  • Track record.

Nine charts showing the base pay for general managers of a collision repair facility for different areas of the country.

Duties and Responsibilities

There’s often a difference in what’s paid by an independently owned repair facility and a dealer facility doing the same volume. Why? The only reason I can figure is that in a non-dealer facility, the owner may still be actively involved in daily operations, so the manager’s responsibility level may be slightly less than at a dealer-owned shop – where the dealer principle is less likely to be involved.

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In addition Jeff, you didn’t actually say which management position you were inquiring about. As you know, there are multiple management opportunities other than just a general manager that could be considered in a collision repair facility, such as a parts manager, production manager, office manager and sales manager.

You may be thinking, “I do all of these, so just give me the salaries of all of them combined.”

Unfortunately, it doesn’t work that way, even though it certainly would be nice!

The organizational structure is one of the key factors in determining the general manager’s duties and responsibilities and in creating the baseline – where all the other roles and salaries fall in under.

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As far as duties and responsibilities, two major factors to consider include:

  1. Is the general manager responsible for the entire operation: sales, production, procurement, accounting?
  2. Does the general manager actually “run” the operation? Or does he just “work” there?

    In your case as a dealer-owned facility, factors may also include the authority to purchase capital items as long as you’ve established a budget and financial projections for which you’re accountable. As you’re probably aware, different levels of authority are given to general managers in dealership environments based on the type of dealer principle involved and the organizational structure.

The general rule here is: As your authority and responsibilities increase, so does pay.

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All other management positions would then fall under the general manager’s salary range – again, based on level of responsibility and authority.

Support and Technical Staffing

This one is somewhat tied into both the previous factor and the next one, but it’s still worth looking at separately.

Does the general manager have assistants and/or other managers to whom he can delegate responsibilities? There’s no doubt that indirect costs for non-production-oriented staff can place a financial hardship on any operation, but there’s also no doubt that it costs more in staffing than ever before to provide the services expected today by our customers (both vehicle owners and work providers).

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It’s also very common for dealer-owned facilities to have a smaller indirect staffing ratio (full time) in the body shop. This is often because they share accounting, maintenance, parts and sometimes detailing staff with the entire dealership, not to mention a full service mechanical service department.

Back to a previous factor: If the general manager is also running production and he has 10 techs, he’s probably spending his time with production while someone else is writing estimates, etc. This system would generally lower the value level of the manager because he’s not able to devote time to expanding the business, building relationships and performing higher management functions.

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This is why unless you’re the owner of the business, wearing many hats doesn’t often lead to more pay.

The general rule here is: As the staffing increases (especially production), so does the pay.

Sales Volume

This factor generally dictates how the prior two factors are structured. As the shop produces more sales volume, more techs and indirect staffing are required. In many pay plans, gross profit incentives are created for managers; as volume increases (and gross profit dollars increase), those managing reap some rewards.

However, one of the biggest mistakes still made today in a dealership environment is that incentives are based on labor sales only and/or the body shop gets no parts credit for its purchases. This could be the subject for an entire article devoted to managing a dealer-owned facility and has always been a key issue to resolve (by educating) when I’ve worked with clients of dealer-owned shops.

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The general rule here is: As volume (and gross profit dollars) increase, so does pay.

Market Area and Market Conditions

Of all the factors, this is probably the most influential in determining a manager’s pay. The nine charts show the base pay for general managers of a collision repair facility for different areas of the country.

The charts only list actual base pay levels at the 25th percentile, the median (50th percentile) and the 75th percentile levels. What’s noticeable is that the ranges change based on market area. Cost of living, competitive wages and benefits for the area, etc., all play a very big role in determining the manager’s salary package. These charts do not, however, include production or other incentives and benefits. What’s “market accepted” in Pocatello, Idaho, may be completely different than in Boston.

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Jeff, for your area in Northwest Indiana, the 75th percentile is at $60,478 but doesn’t include any incentives or vehicle, medical or holiday benefits. San Francisco, on the other hand, shows a base pay of $75,187. The difference can be attributed to market conditions, size and what’s a competitive wage.

The general rule here is: The market area is the most influential factor for salary, incentives and benefits.

Track Record

Now finally to the “X” factor of what anyone is worth.

There are those in any field who get the job done – those who aggressively meet or exceed targets and goals every time, no matter what the challenge is. They just hate to lose, and they often don’t, no matter what they’re doing. (These “High A” personalities can also burn out quickly.) The importance of track record is this: Results just cannot be ignored in business.

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Anyone who has a track record for turning an organization around and moving it forward is highly sought after. Those who can lead an organization and produce results consistently will be paid more and make more from incentives than those who don’t. Their total pay may very well end up off the chart.

The general rule here is: Those who can will lead and excel. Those who can’t will often just find a place to be.

Clear as Mud

Any pay in any given market is based on all the factors covered in this article. Primarily, the base pay must be able to meet the normal needs of the individual living in that specific market. To keep someone, however, the total compensation package must be able to provide the recipient the sense of worth he desires and be competitive enough to not lose him to the competition.

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Based on what I’ve experienced, the charts provide a good range for base pays in market areas for a general manager of a collision repair facility (not to be confused, in your case, for a general manager for the entire dealership.)

Incentives, then, will increase the total wage package and are based on the ability of the manager to meet and exceed organizational goals and targets.

The answer to your question, my friend, is not as absolute as you may have liked, but the same would be true for hundreds of other positions in any industry. I hope this provided you with a basis to begin.

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Contributing Editor Tony Passwater is president of AEII, a consulting, training and system-development company. He’s been in the industry for more than 27 years; has been a collision repair facility owner, vocational educator and I-CAR International Instructor; and has taught seminars across North America, Korea and China. He can be contacted at (317) 290-0611, ext. 101, or at [email protected] Visit his Web site at www.aeii.net for more information.

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