Secret “spy cam” teddys aren’t the answer. Techs produce at least 50 percent more when they know you’re watching them. Implementing a production tracking system – along with productivity bonuses – has saved one shop owner $87,200 per year and increased his net profit by 10 percent.
A worker produces at about 50 percent of his potential when he knows that no one’s keeping track.
If he knows you’re watching him, his production potential goes up to about 80 percent.
When he knows for sure that you know exactly what he’s producing, his numbers go up to 100 percent or more.
And if you can motivate him with incentives – cash, trips, wild women, whatever – the sky’s the limit. It’s even possible to double his already good production.
A number of good management systems are out there to help you track the production levels of your employees, and many shop owners have purchased such systems to analyze many tasks very accurately. I’m not one of them. Because neither I nor my staff had the time to learn a system that was already on the market, I created my own tracking system to see how well my employees were producing for me.
It’s a simple system. We’ve been using it for five years now and so far, it works great. The employees do almost all the work and tracking themselves, and all you have to do is total up the data and verify the accuracy.
Need more convincing that it’s a system you’d want to try? Let’s talk money.
We had 17 production people including painters before I created this tracking system. We now have 12 people doing the same amount of production.
The math is simple. Five less people times 40 hours a week is a 200-hour-a-week savings. Let’s use an average wage of $18 per hour (assuming some of the workers weren’t journeymen). That would be a $3,600 savings per week – and I still get every job out the door. So $3,600 times 52 is $87,200 – more than a 10 percent increase in net profit. Of course, the numbers will vary depending on the size of your shop.
Let’s look at it another way. Let’s say that with this system, your techs are averaging 130 percent productivity shop wide. So you’re paying for 100 percent plus bonus. With an average bonus of $20.50, plus 30 percent additional efficiency, each man is producing 30 percent more at your labor rate. Say our rate is $40 per hour. Each man is producing an extra $480 each per week in revenue.
You’ll have to do your own math, but I can tell you this: You’ll have more money for expansion, employee benefits, tools, retirement and pay raises.
This tracking system will not only put money in the bank for you, but your employees also will like it. Why? Because they don’t trust you anyway and are already writing down and doing what little tracking is needed to ensure you don’t manipulate the numbers in your favor. With this system, your employees can learn to track their own jobs in one to two days, and current employees can help out the new hires.
With that said, I first need to explain my tracking form, and then I’ll walk you through some examples, which will show you how simple the system really is. If you decide to implement this system, it might be one the best things you ever do for you and your employees because everyone will be rewarded for a job well done.
Using the Tracking Form
The form is very simple to follow (see “The Weekly Production Report Card”). In column one on the far left, you have the repair order (RO) number, column two is for the customer’s name, column three is for how much labor the body and/or paint technician is entitled to, column four is how many hours they worked that week and column five is claimed hours per week.
You’ll need to decide how to allocate the paint and labor times so all workers are in agreement. In our case, we like our bodymen to put a panel in final prime phase, if at all possible. It really could go either way. A good straightening job doesn’t need primed, but a bad block job by a prep person makes the bodyman’s work look bad. We prefer to make the bodyman responsible for a straight panel, not the prep person.
Like I said, your employees need to be in agreement on how to allocate the labor times. At our shop, our employees were in agreement on giving the bodyman all of the body labor and 30 percent of the paint labor, leaving 70 percent of paint labor for the paint department. This is the same formula we continue to use today, and our people still seem to be happy with it.
Let’s examine how this formula works: Say that RO #12345 has 24 hours in body work and 17 hours paint work. On your estimate, we’d take 17 hours x 70 percent for the painters, which comes out to 11.9 paint hours going to the paint crew. The balance of 5.1 hours would get added to body labor for cut-in work, priming and blocking. So the body technician gets 29.1 hours going into his pool of labor for that week.
Let’s say the job doesn’t get started until Friday (it’s doubtful the job could be done in one day, but I guess it’s possible). On the tech’s sheet, he might just take eight hours of that RO number and save the balance of 21.1 hours for the following week. We don’t care if he wants to take all 29.1 for Friday’s work, but when he finishes it the next week, he can’t put down more hours, since he already accounted for all 29.1 hours.
We, the company, don’t care how they play with the numbers. If they want a certain week to look great, they can do that. They can cheat all they want. Since we do a four- or five-week averaging, it really doesn’t matter in the end.
This is where management comes in. We audit the forms occasionally to make sure employees don’t add up the numbers twice or reflect larger numbers than they had coming. That’s why we need the customer names and RO numbers. They can easily be looked up in our computer system to verify hours on a bid.
Sometimes adjustments need to be made for supplemental damage on a bid and new totals are needed. Management and technicians work closely in this area, as they would anyway, and the additional times get added on to the end of the job.
We figure our numbers monthly. There are eight four-week periods and four five-week periods in a year. An employee only has so many jobs in a four-week period so, in theory, he could put them all on one sheet. But because you average them, it all works out in the end.
The Bonus System
There are many ways to measure production, but I like to look at how efficient the technician is while we pay him to be there eight hours a day. For example, if a tech turned in eight billable hours in an eight-hour shift, that’d make him 100 percent efficient.
But you’ll go broke fast with men who produce only at 100 percent. The industry average is between 130 and 160 percent efficiency in an eight-hour day or a 40-hour week. There are even technicians out there who can do 200+ percent and turn out good work.
Because we pay our men hourly wages, we expect them to do good quality work. The customer has entrusted us with his car, and we need to make it perfect. It’s not the customer’s fault we blew the bid or the tech had a bad week. We don’t accept excuses. I expect them to fix the car and move on to the next job.
In return for a job well done, I created a bonus system that motivates my people to work that much harder.
We have five levels of bonus rewards. Four of the levels are cash awards, and the top award is usually a travel incentive.
Here’s how they break down:
Bonus level No. 1: Once the technicians reach 110 percent efficiency – which is almost an insult to a really good tech – they’ve hit bonus level No. 1. At this level, they receive an extra $100 on their check that week as the monthly bonus, which is equivalent to a $.63 per hour increase in pay based on 160 hours worked in a month.
Bonus level No. 2: This level is available at 130 percent efficiency – still not outstanding, but at least you’re probably making a little money on these techs. Here, they receive an extra $250 on their check for the month, which equals an extra $1.56 per hour for each hour worked. Not bad.
Bonus level No. 3: This is achieved at 150 percent efficiency, and this is the level you want all your techs to be at or above. At this level, they receive an extra $450 on their check for the month. This is a whopping $2.81 per hour increase in their wages. (You’re probably asking how you can afford to pay them this much. Well, you can’t afford not to! They’re producing like 1.5 people for only $2.81 more per hour. Not a bad trade.)
Bonus level No. 4: This goes to the best performer for the month, who gets an additional $100 bonus (on top of the $450 bonus for achieving 150+ percent), the best parking spot and the title “Top Gun” for the next month. At level No. 4, our Top Gun gets a $550 bonus on his check, a great title, a great parking place and the envy of all his co-workers. He’s making $3.43 per hour more on his check.
Bonus level No. 5: Technicians who produce steadily at 150+ percent for four consecutive months hit this level. Once a year, they also have the chance to win a week off with pay and a trip for two to places like Hawaii, Cancun or Jamaica. All expenses paid: air-hotel-car-food. We also pay for a rental car and some food allowances.
As management, you can try to buy an all-inclusive package that has meals included to make it easier on yourself in regard to planning for the trip. But remember not to be cheap at this level. When this guy comes back from this trip and tells all his buddies at the shop about what a great time he had, it’ll help to motivate others to try harder. (On a side note, we send travel brochures to all the spouses informing them of the potential trip that they could be part of if their husband strives to achieve 150+ percent for four months. We can use all the help we can get. Why not get the spouse on your cheering squad?)
A trip can cost about $2,000, plus or minus. But remember, this guy is making you lots of money, and he probably wouldn’t normally take this extravagant of a trip in his whole life. This may be the trip of a lifetime, so help him to make a big deal out of it. This trip will pay you back over and over all year. I promise.
Filling Out the Production Sheet
Both technicians and managers try to make this form complicated, but it’s actually very simple to follow and almost a no brainer for your employees to keep track of. Let’s take a look at an example for Chris Brown for the weeks ending July 4 and July 11.
During the week of July 4, Chris worked on three ROs: #29922-Eardley, #29966-Howland and #29955-Markham. Keep in mind there were only four production days that week, so we only had 32 production hours available per man.
RO #29966-Howland was a carryover job from the week before. Chris had already taken 10.1 hours of the total 20.1 that was allowed on that particular job. He finished it during those four days, so he claimed the last 10 hours of the job and circled them.
RO #29922-Eardley was a new job. The estimate showed 31.8 hours for the body technician. Chris claimed 28.8 of those hours during that week, but still had to reassemble it after paint.
RO #29955-Markham was a 27.0 body labor repair per the bid, and he got a start on that job late in the week. He claimed 7.0 of the 27 hours for that week.
Now we have 28.8 + 10.0 + 7.0 = 45.8 hours billable and 32 hours worked. If you wanted to measure Chris’s efficiency for just this week, you’d divide 45.8 hours produced by his 32 hours worked to come up with 143 percent efficiency for the week. Not too bad. But remember, we’re looking at monthly numbers, not weekly.
Now let’s look at Chris’s week of July 11.
He had to finish RO #29922-Eardley, so he claimed the last three hours of that job. He also finished RO #29955-Markham, claiming the remaining 20.0 hours of that job.
During this particular week, one of the other workers was on vacation so we had Chris finish one of his jobs.
(We usually do this at actual time worked, to be fair.) He claimed 13.0 hours to finish RO #29964-Mays and also painted a bumper for another employee’s job (Bill), so he claimed the paint time on the bumper of 2.4 hours.
For the week of July 11, Chris had a total of 38.4 hours. The time clock said he worked 39.5 hours. (This is probably because he finished his co-workers job, which might have cost him the week.) Now take 38.4 and divide it by 39.5, and you get an efficiency of only 97 percent. A bad week, but if you average both weeks together, Chris still comes out with an efficiency of 118 percent – so all is not lost.
Let’s take a look at a different employee, Greg Hosford, during the same two weeks.
On the form dated July 4, Greg had six ROs he worked on. It looked like five smaller jobs and one large job. (Again, remember this was a 32-hour week with a holiday.) With only four productive days, Greg did the following:
- RO #29885-Stone – 5.9 hours on this job. He took them all that week.
- RO #29798-Gebben – 21.4 hours on this job. He took 18.0.
- RO #29745-Hughes – 13.9 hours on this bid. He took 2.9.
- RO #29986-Wood – 7.3 hours on this bid. He took 7.3.
- RO #30023-Holden – 4.1 hours on the bid. He took 4.1.
- RO #30019-Griffin – 5.7 hours on the bid. He took 5.7.
That brings Greg to a total of 44.9 hours for the week. So we divide 44.9 by 32, equaling 140 percent efficiency.
During Greg’s week of July 11, he worked on four ROs:
- RO #29798-Gebben – He finished and claimed the last 3.4 hours on the bid.
- RO #30012-Betz – He had 38.6 on the bid. He took 8.5.
- RO #30017-Lindley – He had 28.5 on the bid. He took 5.0 hours.
- RO #29869-Deem – He had 8.5 on the bid. He finished it by completing the 8.5.
He had a total of 51.9 hours taken during the 40-hour work week. Now simply divide 51.9 by 40 to come to 130 percent efficiency. Not great, but not too bad if we take July 4 and July 11 and average them together. Then we get an average efficiency of 135 percent.
It’s not rocket science. And there’s really no need to argue over an hour here or an hour there during a single week because it all averages out in the end. Your employees can cheat on this system, but eventually they’ll come up short on hours.
Compiling the Statistics
To show you how we compile our statistics, we’ll
look at five employees for four weeks and show you how to put the sheets together to decide who gets which bonus, if any. The five graphs on the next page represent a four-week period ending July 11.
The efficiency of these technicians averaged out as follows:
- Kevin – 220 percent efficiency.
- Greg – 147 percent efficiency.
- Rob – 144 percent efficiency.
- Chris – 123 percent efficiency.
Given this set of employees, the following bonuses were awarded for the four-week period ending July 11:
- Kevin is “Top Gun” with a bonus of $550 and one month earned toward a trip.
- Greg almost made it to 150 percent. He received a bonus of $250. (Remember, he would’ve gotten $450 had he reached 150.)
- Rob also almost made it to 150 percent. He also received a bonus of $250.
- Chris had some bad luck one week, so his bonus was $100.
Does this really seem that hard? I didn’t think so. This system will work for any number of technicians – two or 22. I have 12 and it works great for us.
Paint Department Bonus
Now let’s quickly look at paint labor. We have two painters and three prep people. The prep people keep the painters busy in two booths all day. We’ve all agreed that 50 percent of the paint labor should go to the prep people or be taken from the paint labor. This should more than cover the cost of your prep people. Traditionally, they make about half of what the painter makes in hourly wages anyway.
Now let’s look at the same four weeks ending July 11 for Jeff, a painter:
Let’s take 577.5, multiplied by 50 percent for the preps, which leaves our painter with 288.8 hours. Now divide 288.9 by 156 hours, which gives Jeff 185 percent efficiency. This isn’t good enough for Top Gun, but it is good enough to earn him $450 in bonus money.
The prep people had 288.8 hours (50 percent of the total paint hours) in their labor pool, which is divided by 240 hours (three guys – eight hours a day), equaling 120 percent efficiency – enough for each of them to get a $100 bonus.
You should monitor your preps to make sure they’re staying busy all day and to be sure they’ll make you money, as well as go on to eventually become painters and bodymen.
And because they know that we’re watching and tracking them, we all make money.
Rules to Live By
These are some simple rules I use with my system. They help it to run more smoothly and make it the fairest production tracking for both the employee and employer.
Rule 1: Have as few rules as possible.
Rule 2: If a tech is on vacation, that specific week doesn’t help or hurt him. Put his production in as 40 worked, 40 produced.
Rule 3: If a person just barely misses the next level, that’s too bad. He’ll just have to try harder next time. Don’t give in to him.
Rule 4: Pay bonuses faithfully. Produce these checks like clockwork every month.
Rule 5: Employees need to turn in their sheets weekly with their time cards. It’s not our fault if they don’t fill out the sheets on time. They’re adults after all.
Rule 6: Create a “brag” sheet highlighting your best man and his bonus level, but also listing all other employees, down to the worst man. Give a copy to all employees to see. Peer pressure is vital in this area. Most guys who almost made the top spot will say, “I’ll get him next month.” Or, on the other end, if you’re on the bottom of the list, that’s the last place you want to appear again.
This really is an easy system to make work for any shop – especially if you aren’t ready to purchase an expensive management system. This is a way to do the same job, simply, and for free.
But you have to make sure that your technicians fill out these sheets. If they don’t or they refuse to, there might be a reason, i.e., they can’t produce at an acceptable level and know they’d lose their job if you could prove their production. Others might say they’re so good that you’d regret having to pay them so well – when, in reality, they’re too scared to track themselves. They don’t want to know if they can produce. Fear is a common problem for hourly people when working for a bonus.
I also need to mention that because my techs are actually paid by the hour – a so-called guaranteed income – there’s no excuse for poor quality. If a job comes back for some reason, that tech has to fix it and all hours are taken from his bonus pool of hours. This hurts his income. Also, we handle comebacks like baseball – three “no excuse” or “no good explanation” comebacks and you’re out. Our techs have seen us suspend employees and even let them go for poor quality.
As I keep saying, my system is simple – but it will tell you how efficient your employees are. It’ll also give you a way to reward them for a job done to your expectations.
Andy Batchelor owns Andy’s Auto Body of Alton, Inc. in Alton, Ill., and has been a self-employed automotive repair owner for nearly 30 years. He’s a certified Automotive Specialist with training from Rankin Technical School and a Platinum-certified I-CAR member, and has Master Collision Certification from ASE and a degree in Business Administration from Lewis and Clark Community College. Batchelor also serves as I-CAR’s Southern Illinois Training Chairman. Batchelor and his wife, Nancy, reside in Alton, Ill., and have two children, both married and living in the suburbs of Chicago. Batchelor can be reached at [email protected].