#EANF#

It seems to be a universally asked question, whether you run the service department at a large dealership, or the local 4 bay repair shop. How do you know when you have just the right amount of technicians employed? Regardless of how you pay them, if you have too many, you have idle hands, otherwise known as the “devil’s playground”. If there are too few, your technicians are overworked, causing incomplete check outs and possible quality issues.

For the sake of simplicity, let’s assume all of your technicians are flat rate employees, which is basically a fancy way of saying they are paid for the work they do and not the hours they are present. Whatever labor guide you use gives you the billable hours for the repair you are going to perform. For example, your customer’s check engine light came on. Most shops charge a diagnostic fee, assuming, of course, that more than a simple computer scan is required. The labor guide calls for 1 hour. The diagnostic routine shows that the engine is not reaching operating temperature, so it is determined that the thermostat is at fault. To replace the thermostat on this particular car calls for 1.0 hour of billable time, so the entire job pays 2.0 hours. Your more experienced technicians will typically beat this time, which is how they can turn more hours than they work. A rookie technician may take longer than two hours, though, which is how a customer is protected by the flat rate system. Otherwise, it would cost someone more to use inexperienced technicians than it would a professional!

Back to the subject at hand. In order to determine how many technicians you should employ, you will need to do some math. In most of my teaching, I always say to start with the end in mind, and then reverse engineer your way to the answer. In this particular case, let’s start by setting up the foundation of where you are currently.

1. Step one is to determine your productivity per billable hour. Basically, you take your total sales, including BOTH labor and parts, less tax, and divide that by the total number of billed hours. In the case of the thermostat above, let’s say the total repair cost is $300. Your billed hours were 2.0, so $300 divided by 2.0 is equal to your productivity of billable hours on this job, or $150. If you apply that logic to your whole operation for a full week, you will come up with a pretty reliable number to base the rest of your calculations on.

2. The next step is to determine where you are currently at. If you have been regularly turning $16,500 a week in sales, while billing a total of 110 hours, then your productivity of billable hours is $150. This is your starting point.

3. Now you need to determine where you want to go. You would really like to generate $1,000,000 in annual sales, and you know that in your case you have 50 working weeks a year, so that means you need to generate $20,000 a week ($1,000,000 / 50 = 20,000). This is your goal.

4. If you take your goal of $20,000 and subtract your starting point of $16,500, you are left with $3500 between where you are at and where you want to go. You can now divide that by your productivity of billable hours of $150, and what you get will be the number of hours you need to generate to get there! In this case, you need a technician who can turn 23 hours per week (3500 / 150 = 23.3). The way you move from where you are at to where you want to go is called your map, or your plan.

My suggestion at this point would be to look at the technicians you currently have. If you tweak your systems and make other improvements, could they turn the additional 23 hours? If the answer is yes, then make those changes so that your current crew can enjoy the benefits of your solid management skills. If the answer is no, then you need to find a technician that can, and in our business, finding a technician that can turn 23 hours is not that difficult.

One other train of thought, and one that has worked very well for me over the years, is that in a scenario like the one above, you hire a technician that can generate 35 or more hours. This now puts the pressure squarely on your shoulders to generate the business needed to keep all of your techs happy. But now let’s take a look at what happens. Your current staff was generating 110 billable hours at $150, or $16,500. You add a technician that turns 35 hours a week, and then you market your company to generate the additional business to cover the additional hours. You are now billing 145 hours at $150, or a total of $21,750 per week. Do this for 50 weeks and you now have a shop producing annual revenues of $1,087,500. You have exceeded your goal, or worse case scenario, you have given yourself a little breathing room. It is very important, though, for the sake of your technicians, that if you do this, you MUST do the marketing to generate new business within the next 30 days.

Your technicians trust you to help them provide for their families. If you are not going to get the additional business, either stick with a 20 hour tech, or plan on staying where you are.