When I visit a shop for a first-time consultation, I pull a few reports from the store’s DMS. One of the first reports I look for is technician proficiency and if the technicians have had any unapplied labor. In the simplest of terms, proficiency is the number of hours a technician billed divided by the number of hours you paid the technician to be there. If the technician has less than a 100 percent proficiency rating, then there is some unapplied labor. If there is unapplied labor, that means the technician is not producing your shop any revenue during those unapplied labor hours.
If you have not been measuring your techs, you can get a rough glimpse of this by looking at the total labor dollars billed out on every repair order that a technician has finished. Divide the total dollars billed by your hourly labor rate, and you will get the number of hours your technician billed.
Please keep in mind that proficiency is much different than efficiency. A technician can control many variables in their efficiency, but it is much more difficult for a technician to control their proficiency.
Things That Affect Proficiency:
- Does the technician have to spend a bunch of time looking for the next unit to work on?
- Does the technician spend time talking with customers because the service writer has not written up a proper repair order?
- Does the technician spend too much time at the parts counter waiting to pick up parts?
- Is there enough work in the shop to keep all the technicians busy?
- Do your technicians spend too much time on breaks chatting amongst themselves and disturbing techs who are working?
Let’s do a little math. If you can eliminate small distractions and speed up your tech’s proficiency by a half-hour a day, then that will translate into approximately $42.50 per day in extra billing based on an $85 per hour labor rate. While that might not seem significant, multiply that by 20 days per month, and you get $850 per month. That $850 per month is half the salary you need to pay for a lot technician.
Once you start to look at a technician’s proficiency, you can begin to drill down further and measure their efficiency by having them clock in and out on every job. Technician efficiency is how much time you billed the customer divided by how much time it took the tech. Technicians really can control much of their efficiency, but there are a couple of things that stand out that you can do to help them. Things like:
- Having the proper lifts for SxSs and ATVs. These vehicles are getting bigger, so you need to give your techs the right lifts.
- Having good, workable shop tools like tire machines, grinders, bead seaters, etc.
Many times, I hear from a service manager that the owner does not want to spend any money in the service department. In that same facility, the owner spends tons of money advertising their business to sell new units, and spends hundreds of dollars a month for software in the sales and parts department. I then ask the same owner who his highest paid employees are, and they mention their top techs are some of the highest earners. I always get a curious look when I suggest spending a few dollars to speed up his highest cost employees. The more you speed up your highest cost employees, the more revenue they can generate and therefore more profit.
The math is startling. As a rule, if you spend $300 a month in service department upgrades and those simple little things speed up a tech just .2 hours on half of the shop’s repair orders, you will see a significant increase in dollars billed. If your shop does 150 repair orders per month, and you see a .2 increase in efficiency on half of them, that translates into the potential to bill another $1,275 per month based on $85 per hour. The net gain is $975, and that’s enough to cover the other half of the money you need to pay a lot technician.
The more efficient your techs are, the more revenue they can generate. Once you have enough revenue to pay for a lot tech, your department can use those resources to aid the techs in becoming more efficient. It’s a snowball effect, so start with the small things and measure your success. Over time, you will see the benefits of measuring your team and watching what they do.
C.R. Gittere and the Service Manager Pro team specialize in service department efficiency, elevating customer service and increasing department profitability. His monthly column focuses on best practices and unique ways to get the most out of your service department. More information about Service Manager Pro can be found at www.servicemanagerpro.com.
