Automotive News Canada - April 2019 - F10

FIXED OPS JOURNAL

SPECIAL REPORT

"Technicians are racehorses, for the most part. ... They understand that when they
come to work every day, if they're not turning a wrench they're not making any money."
KEN HINES, fixed operations director, Reynolds
Ford of Oklahoma City and Reynolds Ford of Norman

FLAT FLAP
After a century, controversy over the best way
to pay service technicians still roils dealerships

RICK POPELY

foj@autonews.com

he flat rate system for paying service technicians was controversial when it began nearly 100 years
ago. Dealership owners, managers
and technicians still argue about
whether it is fair and the best way to
compensate employees who maintain and repair vehicles.
Under flat rate, a dealership service department assigns standard
"book" times to repair and maintenance jobs. Technicians earn a set
amount for each job, based on their
hourly pay, regardless of how long it takes, as
opposed to getting paid for the time they actually spend to complete the job.
A recent survey of 35,000 dealership technicians by automotive consulting firm Carlisle
and Co. found that the flat rate system is a
prime reason for job dissatisfaction among
techs and a key motivator for them to consider
leaving dealership shops for other fields.
Among the beefs technicians have with flat
rate is that their pay depends on the volume
and type of work that comes into the shop,
and whether they can finish jobs in less than
the book times.
Yet the survey concluded that service departments in nearly three out of four franchised new-vehicle dealerships continue to
use flat rate. Its supporters assert there is a
good reason the system remains so popular:
They say it incentivizes technicians to work
harder and flag more billable hours, increasing their paychecks while boosting revenue
for the shop.
"Technicians are racehorses, for the most
part," says Ken Hines, fixed operations director at Reynolds Ford of Oklahoma City and
Reynolds Ford of Norman in Oklahoma,
which use flat rate. "They want that carrot out

PAGE 10

APRIL 2019

in front of them, and they're built to
produce billable labor.
"In our case, and at most dealerships, they're exceptionally good at
it," Hines told Fixed Ops Journal.
"They understand that when they
come to work every day, if they're
not turning a wrench they're not
making any money."
Hines says he has experimented
with other pay systems, such as
straight salary or salary plus
commission. But for the past
several years, he notes, his technicians have been on a flat rate
plan with a performance bonus, and that has yielded the
highest productivity.

Ups and downs
The typical dealership technician earns
more than $61,000 a year, the National Automobile Dealers Association reports. Under
flat rate, an experienced tech can cram 11, 12
or more billable hours into an eight-hour
work day - on a good day.
But on a slow day, or one in which a job that
normally takes two hours turns into a fourhour nightmare, the technician might flag only five or six hours. His or her paycheck suffers
as a result. A tech might earn $1,500 one week
but only $500 the next.
Adam Robinson is CEO of Hireology, which
provides hiring software to more than 3,000
dealerships as well as other businesses. He
maintains that the fluctuating pay of the flat
rate system makes it harder for dealers to keep
technicians and attract new people to the field
- especially millennials, who make up 60
percent of the U.S. work force.
Hireology has surveyed thousands of entry-level and midcareer employees, mainly
millennials, over the past five years. Robinson

says
the surveys consistently identify the
top three things job
seekers want: a well-defined path for advancement, a stable paycheck
from week to week, and a
work-life balance that gives
them ample time away from
the job.
Making the most money they
can ranks No. 9, Robinson notes.
Two-thirds say they would choose a
guaranteed lower salary over the risks
of variable pay.
Dealers offer prospective technicians "a
really murky career path, really variable pay
and really bad hours," Robinson says. "It's a
see PAY, Page 12

Automotive News Canada - April 2019

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