Measuring technician efficiency may be the key to improving the profitability of your service department.
Progressive tire dealers and service shop operators should know how to read and then interpret this service business barometer.
In my last column, I said that savvy service managers monitor technician efficiency closely and make the necessary adjustments. This maximizes the service department's incomes—not to mention the tech's pay.
To recap this discussion briefly, efficiency is the ratio of labor time charged to the customer vs. the labor time actually spent fixing the car. Suppose the tech spends an hour diagnosing and repairing the vehicle and then the boss charges an hour's labor for the job. If so, one divided by one is one; one times 100 percent equals 100-percent efficiency on that job. Usually, a tech who achieves 100-percent efficiency on general repair work is a standout performer.
Experience shows that it takes a concerted effort from both techs and management to improve efficiency. What's more, perspective is important. On the one hand, all your techs may not reach 100-percent efficiency on every repair job. On the other hand, consistently poor efficiency numbers should be big, red warning flags to both techs and managers.
Naturally, the easier a task is, the easier it is to post big efficiency percentages. What's more, a tech's overall experience and knowledge—not to mention familiarity with the vehicle and the task—are major influences on efficiency. That said, sources have emphasized time and again that they had no idea how bad efficiency in a service department was until they actually measured it.
One successful service shop operator I respect stressed that when he decided to measure efficiency, he resorted to clipboards and stop watches. A few wasted minutes here and wasted minutes there rapidly add up to hours lost per week, he said. Forcing himself to measure and track the actual labor finally opened his eyes to the amount of unpaid time that was occurring, he told me. (Progressive shop management programs include tech efficiency measurements.)
The owners and managers I know who monitor efficiency emphasized that the measurements may uncover a wide variety of problems in the service bays. For example, they may force techs and bosses to recognize the department's tools and equipment are inadequate and/or outdated. Or, a tech may be spending too much time borrowing tools from coworkers because he won't invest in his own toolbox.
They may prompt everyone to take a long look at overall department layout and workshop organization. Are techs walking too much to retrieve commonly used items? Is it taking too long to move vehicles into and out of bays?
In other situations, the root of poor efficiency turns out to be old-fashioned laziness. Or, techs aren't as motivated as they should be. Some bosses use a sliding scale in which a tech's hourly pay increases as his or her efficiency goes up. The sliding scale helps keep techs focused on smaller steps and details that save time.
Last but not least, monitoring efficiency may flag the need for additional training. For example, suppose a good employee seems to struggle on every electrical repair job.
If so, then it may mean it's time to invest in additional electrical training for that tech. But if additional training ultimately doesn't help, then it suggests that he or she shouldn't be assigned those kinds of tasks.
Mind you, measuring tech efficiency is only one element of savvy management. The topic could consume chapters of coverage. Just remember that it's been an invaluable measurement for many successful owners and managers.
It may well be the measurement that uncovers profitability barriers you haven't recognized yet.