DETROIT-The way shops pay service technicians to fix cars may be in need of some repair work itself. Critics say the standard flat-rate system is not quality-based, encourages sloppy workmanship and too often leaves customers dissatisfied and angry.
When technicians are paid a salary or an hourly wage, many in the industry believe, the pressure is removed to hurry through service jobs.
Hurry can cause mistakes. Those mistakes bring distressed, sometimes angry, customers back to the service desks of new-car dealerships or independent garages and, eventually, into the service bays of eager competitors.
General Motors Corp. is not interested in steering its dealers away from flat-rate to hourly pay, said Richard Bugno, GM's director of North American Service Operations.
But technician pay is being studied hard at Ford Motor Co. as pilot programs for new dealership operations are being incubated. One target: weaning techs away from the time-honored by-the-book pay.
The argument goes on. Some say technicians being paid by the hour have no real incentive to be efficient. That could drive up shop labor costs.
And, said one service shop consultant, there's no incentive for techs in such operations, called clock-time shops, to do a job right the first time because they'll be paid to do it a second time.
``The thinking is that if yours becomes a clock-time shop, you'll see improvements in quality. But it just doesn't happen,'' said Ed Kovalchick, president of Net Profit Inc., a service industry consulting firm based in Alabaster, Ala.
``I've seen a lot of shops go to clock-time,'' he said, ``but I rarely see quality go up because of it. Paying by the hour is a reasonable way to do business. But there has to be some other kind of incentive plan built into the system to ensure that your people work efficiently and work well.''
Mr. Kovalchick works toward increasing service efficiency with new-car dealerships, independent service shops and automakers.
His list of clients currently includes American Honda Motor Co. and Mazda Motor of America.
Jack O'Neill is manager of service operations with the National Automobile Dealers Association and a veteran of the trade's fre-quent brushes with displeasure over the way dealerships charge for repairs and how the factories pay for them under warranty.
``There's always criticism of the flat-rate system, but it was set up basically by Chilton and the manufacturers mostly to establish time to pay warranty. Before that, back in the 1930s and 1940s, technicians were on salary, or 50-50.
``Now the work has been formulated into times and the biggest complaint is it doesn't give enough time to the techs,'' Mr. O'Neill said.
Chilton Book Co. of Radnor, Pa., and the automakers do research that leads to the time expectations cited in Chilton's Labor Guide and Parts Manual used in flat-rate figuring, Chilton said.
Mr. O'Neill said the chief complaint with the authors of Chilton's and similar factory manuals is they seem to ignore the age of cars, longer warranties and ``rust, crud and broken threads'' and other idiosyncrasies of road-weary cars.
``It gets production through the shop. It establishes a charge to do a job and lets the dealer charge everybody the same. There are flaws, but, overall, it's about the fairest plan,'' Mr. O'Neill said.
According to Joe LaFramboise, leader of the repair process development team at Ford, ``The flat-rate system has been around a long time.
``When you start talking compensation, you better have evidence to show that not only is the customer happier with what is changed but also that there's been no loss of business.''
Ford is learning from quality assurance programs that have worked in manufacturing and assembly operations at the company and its suppliers, and hopes to pass along some of what has been learned to the dealer organization.
In the service department, quality problem symptoms include dissatisfied customers and poor fix-it-the-first-time records.
The answer lies in changing the service process in the dealership or shop, Mr. LaFramboise said.
Consultant Kovalchick preaches a holistic approach to controlling labor costs. He said, for instance: ``Our goal is to increase technicians' pay but not by increasing what they make per hour. We try to get shops to focus on how efficient their technicians are. It's a time-management issue.
``That means it's a management issue, and the word has to come from the top down in order for managers to help their people avoid wasting time.''
Mr. Kovalchick said many every-day delays eat up a technician's time. His list includes reporting for work late and ranges from searching for tools to waiting for next-job cars and sitting idle as parts are chased.
Another efficiency eater may be the way the shop personnel are organized.
Many dealerships use service advisers to talk with customers and process repair orders. Advisers earn less than technicians and they free up technicians to do technicians' work.
But, Mr. Kovalchick said, if the adviser has inadequate technical training, valuable information may get lost between the customer who drops the car off and the technician who has to fix it.
Additionally, a poorly trained adviser is apt to pass along misinformation-or even a complete problem misdiagnosis-as instruction to the technician.
Such miscommunication not only wastes labor time, it leads to shop errors and even customer-service problems.
Ford's Mr. LaFramboise said that based on the company's research, ``We know. . . that employee retention is very critical to customer satisfaction and, more importantly, critical to owner loyalty. The true measure of success is owner loyalty.
``Retention of employees, particularly technicians, has a big effect on customer satisfaction. One of the things we don't know is how to change compensation to affect turnover,'' he added.
``Inherent in any abandonment of the flat-rate system and return to an hourly compensation system is recognition and reward making technicians feel better about themselves as a result of the skills they possess and the education they have amassed over time,'' Mr. LaFramboise said.
``The flat-rate compensation plan almost pits the service technician against that kind of philosophy,'' he added.
As Mr. LaFramboise and his team examine the root causes of process-related dealership problems, they are finding how people are paid is near the top of the heap.
One of the first things the company is looking at is the compensation plan in the shop.
The flat-rate system today, Mr. LaFramboise said, is not built around the customer. It is internal, with a goal of getting as much productivity as possible out of the dealership.
``We're trying to change that focus to one of quality,'' he said. ``A compensation plan should be a quality-focused plan. That's one of the big paradigm shifts that's taking place.''