“How am I doin’ boss?”
“Ok, you still got a job, ain’t ya?” (chuckle, chuckle).
Reality is…frankly, meaningful performance measurements are lacking in the entire pecking order of many dealership environments I encounter. However, there is plenty of “gut feel” around to support job-maintaining performance. A couple things I have noticed: one is when an excellent performance measurement system is finally installed, it isn’t preserved for long. Secondly there usually isn’t near enough measurements versus objectives established to draw significant performance conclusions.
It’s common knowledge that humans are motivated by objectives, and we perform best when we are on a “mission.” Even retired people moan about being bored and unfulfilled by retirement, and it’s usually easy to find retirees ready to join the car-swap crowd, be a greeter, or perform some other needed support task for the dealership. They crave a mission.
Service has a multitude of dimensions management can use to drive employee performance – put them on a mission. By making and consistently monitoring these against reasonable objectives, then rewarding/celebrating success, the profit of the department will be maximized. Since technicians are the literal revenue-generators for both service and parts, let’s review some often-ignored key performance measurements. Keep in mind here that the only inventory service utilizes to produce income is “time,” something which isn’t available the next day – when it click off, it is gone.
1. Productivity percentage – the amount of tech attendance time clocked on repair orders (productive time versus non-productive time) measured daily, weekly, or more – RO clock/attendance clock.
The productivity measurement is not the total flat rate hours produced versus the daily attendance hours – the usual application of this nomenclature. The maximum would obviously be 100% where every minute was spent actually working on a vehicle. Few service managers make this measurement in the U.S. and it receives no attention as a result. However, this is a fundamental part of a successful technician’s workday.
Unfortunately, techs exercise no control over the planning and dispatching of work, and in fact will easily become a victim of a poorly managed system. When no productivity measurement is in place, there is nothing to identify the reality of the shop loading system’s effectiveness other than griping and complaining, which usually falls on deaf ears.
2. Efficiency percentage – the amount of tech repair order clock time versus the amount of flat rate hours paid on a repair order, measured individually, daily, or weekly – flat rate paid/RO clock time.
Since flat rate time is the theoretical clock time, which should be spent completing a defined task, the minimum efficiency percentage should be 100% (one clock hour paid for one clock hour used). Here the clock time and the flat time are the same. Knowledgeable techs who work quickly and effectively can produce up to 1.3-1.4 flat rate hours for every repair order clock hour. When efficiency is measured, service managers can determine which tasks (jobs) have the proper flat rate assigned and which do not. Since flat rate pricing books are essentially just the warranty time with an add of some percentage (i.e. 40%), when the warranty time was incorrectly assigned originally, it is never corrected for the customer pay application.
This tracking also allows the service manager to review how effectively each tech performs on individual operations as well as the entire day. Here, the manager will discover which job types should or should be assigned to individual techs, where techs need additional training, and important performance trends for each tech.
3. Proficiency percentage (output) – the amount of flat rate hours paid versus the amount of total tech attendance time for a day or week or more – flat rate hours paid/tech attendance time.
If any time measurement is done in a shop this is the one I find, and typically management will incorrectly refer to it as “productivity.” It is the result of the combination of productivity and efficiency and when it’s below standard (i.e. minimum 100%) one or both of these are the problem. It should be considered the absolute minimum technician performance measurement to make, collect, disperse and analyze daily.
Measure twice, cut once
Taking these three measurements of tech performance gives an edge to the tech too. Techs will not know how they are performing versus standards, or other techs, if service management doesn’t provide the information. Since the successful service business model is maximum time utilization, measuring how effectively time is utilized is fundamental to success.
Technicians will respond to time measurement objectives since it is the source of their income. Consider a tech with a $22 flat rate pay. The difference in actual clock hour pay (actual earnings) ranges from $13.20 at 60% output to $28.60 at 130% – annually that is $27,456 versus $59,488! Since both productivity and efficiency factor into the ultimate output, teaching a tech the value and objective of each measurement to him or her is enormous for both the tech and the shop.
Are we there yet?
Obviously what is not measured is not managed either. Put it into this perspective – can you imagine a parts manager having no idea of the size, aging or fill rate of their inventory of parts? Well, when time isn’t measured and managed in service it is exactly that situation, except far more expensive when you consider that one minute of tech time is worth about $3 in service and parts revenue! That’s $30 a minute for a ten-tech shop, no small potatoes.
If I got your attention here and you would like an easy to use Excel Workbook to measure your shop’s productivity, efficiency and output, just send an e-mail to email@example.com. Put “I Get It, Time is Money” on the subject line so I will know what to send back. Yes Virginia, tracking performance creates performance; I guarantee it.