a few thoughts on “flat rate” - autonews.com€¦ · •switching a technician from hourly to...

A FEW THOUGHTS ON “FLAT RATE”

•LONG TIME STANDARD FOR TECHNICIAN PAY IN THE INDUSTRY

•A PERFORMANCE DRIVEN METHOD OF COMPENSATION

A FEW THOUGHTS ON “FLAT RATE”

•DOESN’T WORK EFFECTIVELY IN ALL ASPECTS OF OUR BUSINESS

•MANY MILLENNIALS OR PEOPLE NEW TO THE INDUSTRY DO NOT

UNDERSTAND FLAT RATE OR ARE NOT WILLING TO TAKE THE RISK OF 100%

COMMISSION.

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Flat Rate

Flat Rate

CLOCK HOUR PAY PLAN

•THE PRIMARY PAY PLAN FOR NEW HIRE / APPRENTICE TECHNICIAN

•STRAIGHT HOURLY RATE BASED ON CLOCK HOURS WORKED

• DOES NOT ALLOW TECHNICIAN TO MAKE ANY MORE

•NO INCENTIVE FOR TECHNICIAN TO PRODUCE MORE

• LOW TECHNICIAN PRODUCTION RESULTS IN HIGH COST PER FLAT RATE HOUR

FOR DEALER

•DIFFICULT TO CONTROL COST

“HYBRID” PAY PLAN

•ADVANTAGES:

• LESS VOLATILITY THAN FLAT RATE THEREFORE MORE SECURE IN A

TECHNICIANS EYES

•TECHNICIAN CAN STILL PAY BILLS IF HE HAS BAD WEEK

•MORE INCENTIVE THAN HOURLY

•AS A TECHNICIAN GAINS EXPERIENCE AND PRODUCES MORE FLAT RATE

HOURS HIS/HER PAY GOES UP EXPONENTIALLY

“HYBRID” PAY PLAN

•ADVANTAGES (CONT.):

•AS PRODUCTION INCREASES TECHNICIAN MAKES MORE MONEY PER

CLOCK HOUR (THE WAY A NEW OR YOUNGER TECH VIEWS PAY)

•AS PRODUCTION INCREASES DEALERSHIP COST PER FLAT RATE HOUR

GOES DOWN

“HYBRID” PAY PLANTHREE QUESTIONS:

•HOW MUCH PER CLOCK HOUR WAS THE PERSON MAKING?

•ABOUT HOW MANY FLAT RATE HOURS PER WEEK DO YOU THINK THAT

PERSON CAN PRODUCE?

•HOW MANY CLOCK HOURS DID THE PERSON WORK OR WHAT WAS

HIS/HER AVERAGE PAY PER WEEK?

“HYBRID” PAY PLAN

•THIS EXAMPLE THE TECH WAS PAID $11.00 PER CLOCK HOUR

•TECH CAN AVERAGE 20 FLAT RATE HOURS PER WEEK

•TECH WORKED 40 CLOCK HOURS PER WEEK

“HYBRID” PAY PLAN

•HOLIDAYS AND TRAINING WILL BE PAID $11.00 PER HOUR

•CLOCK HOUR PAY IS $8.50 PER CLOCK HOUR WORKED

•FLAT RATE PRODUCTION WILL BE PAID AT THE FOLLOWING RATES: ALL FLAT

RATE PAY IS RETRO TO FIRST HOUR

“HYBRID” PAY PLANPay Rate per FRH From Flat Rate Hours Up to Flat Rate Hours

$5.50 0.0 FRH’s 19.9 FRH’s

$6.00 20.0 23.9

$6.50 24.0 27.9

$7.00 28.0 31.9

$7.50 32.0 35.9

$8.00 36.0 39.9

$8.50 40.0 OPEN

Hybrid Pay Plan

Flat Rate Total

Range Flagged Rate Pay Clock Pay Pay $ per FRH $ per Clock

up to - 19.9 19.0 5.50$ 104.50$ + 40.0 340.00$ = $444.50 23.39$ $11.11

20.0 - 23.9 22.0 6.00$ 132.00$ + 40.0 340.00$ = $472.00 21.45$ $11.80

24.0- 27.9 26.0 6.50$ 169.00$ + 40.0 340.00$ = $509.00 19.58$ $12.73

28.0- 31.9 30.0 7.00$ 210.00$ + 40.0 340.00$ = $550.00 18.33$ $13.75

32.0- 35.9 34.0 7.50$ 255.00$ + 40.0 340.00$ = $595.00 17.50$ $14.88

36.0- 39.9 38.0 8.00$ 304.00$ + 40.0 340.00$ = $644.00 16.95$ $16.10

40+ 42.0 8.50$ 357.00$ + 40.0 340.00$ = $697.00 16.60$ $17.43

$8.50

Clock

Hybrid Pay Plan

Flat Rate Total

Range Flagged Rate Pay Clock Pay Pay $ per FRH $ per Clock

up to - 19.9 19.0 5.50$ 104.50$ + 40.0 340.00$ = $444.50 23.39$ $11.11

20.0 - 23.9 22.0 6.00$ 132.00$ + 40.0 340.00$ = $472.00 21.45$ $11.80

24.0- 27.9 26.0 6.50$ 169.00$ + 40.0 340.00$ = $509.00 19.58$ $12.73

28.0- 31.9 30.0 7.00$ 210.00$ + 40.0 340.00$ = $550.00 18.33$ $13.75

32.0- 35.9 34.0 7.50$ 255.00$ + 40.0 340.00$ = $595.00 17.50$ $14.88

36.0- 39.9 38.0 8.00$ 304.00$ + 40.0 340.00$ = $644.00 16.95$ $16.10

40+ 42.0 8.50$ 357.00$ + 40.0 340.00$ = $697.00 16.60$ $17.43

$8.50

Clock

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Hybrid

Flat Rate

Hourly

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$1,000.00

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Hybrid vs Flat Rate

Hybrid

Flat Rate

Our Results

• Most new technicians coming from a trade school or techs who are paid

hourly at an independent shop will be put on a Hybrid plan

• Switching a technician from Hourly to Hybrid, his/her flat rate hours

normally increase by a minimum 5.0 hours per week

• Every pay plan is custom designed based on the “3 Questions”. Do not use

one size fits all or you may have a plan that fails

Our Results

• Hybrid pay plans can be designed for all pay levels. It is not limited to just

entry level technicians.

• We review entry level technicians quarterly for the first year, semi-annually

the second, and annually thereafter. Raises are to flat rate side of plan

• Currently we have 55 to 60 technicians on a Hybrid Pay Plans. There are

about 20 different design plans for these technicians.