Are You Short-Staffed? Break Out Productivity by the Numbers and Find Out
Let me offer up a couple management tools for your toolbox that will help you decide. When I am asked by dealers if they should hire more people, I first must see what capacity they have today. A simple way for you to test the capacity of your maintenance or tire techs is to ask a few questions. Grab a piece of paper and calculate your store numbers as we go along.
What is the total amount of hours your maintenance/tire techs work per week? For this article, let’s say it is four techs, each who work 45 hours per week for a total of 180 hours/week.
What tasks do your maintenance/tire techs perform? I’m going to use the most common: oil changes, flat repairs, alignments, courtesy inspections, tire installs and rotations.
How many of those tasks do they perform in total per day? It might be eight oil changes, 16 tires, three flat repairs, six inspections, two alignments and three rotations.
How long should it reasonably take to perform each of those tasks? When I have asked this question of the manager/owner, more often than not it is about 15-20 minutes.
Then I multiply the amount of time it should take to complete the total amount of tasks. For the sake of argument, say the manager agrees 20 minutes per job, on average, is a fair amount of time for each oil change and mounting and balancing a tire. It also covers flat repairs, courtesy inspections and tire rotations. We’ll also say each alignment takes double that amount of time, or 40 minutes.
So for this example, we have:
8 oil changes + 16 tires +3 flat repairs + 6 inspections + 3 rotations = 36 daily “events.”
Multiply each event by 20 minutes and you get a total of 720 minutes, which is the amount of time it should take to complete those events per day. We then add to that the amount of time it takes to perform two alignments – 40X2=80 – and the final tally is 800 minutes of total work time per day. Sounds like a lot of minutes, right?
Now, let’s calculate how many hours per day our maintenance/tire techs are available to work. Take 180 hours – 45 hours a week x 4 techs = 180 – divide that by the six working days many dealerships are open, and you get a grand total of 30 hours per day combined, or 7.5 hours a day per tech. Remember the 800 minutes of work actually needed per day? If you divide 800 by 60 minutes, the total number of hours of production needed per day is only 13.3 hours, or 3.3 hours per tech per day.
Does this dealership need another tech in this scenario? No, but it does need better processes and management of the teammates the owner/manager already has.
I will concede that we can’t always be 100% productive. We have busy times and slow times, and the missing wheel lock key happens at least twice a day. While I will push that the correct processes will help smooth many of these things out, I do believe 75% productivity should be a minimum goal. In this case, it is only 44%.
For this example, I will put myself in the shoes of the tire dealer. Let’s assume we are 75% productive or more, and I’m ready to hire an additional staff member. Can I afford it? Here is another tool I would pull out of the toolbox to help me make a better decision than my gut.
I strongly believe total payroll should not exceed 45% of the gross profit dollars I generate. So, if that is the case, before I can add anyone, I calculate how much their payroll is going to be, including the cost of withholding tax, and divide that number by .45. If the payroll cost is going to be $60,000 annually, I divide that number by .45 and get the amount of GP dollars that must be added to make this a good business decision: 60,000/.45=$133,333.
If I divide $133,333 by 52 weeks per year, I get a weekly average of $2,564. So, if I add this one individual, will he or she add an extra $2,564 in GP dollars per week, or $513 GP dollars per day, to my business?
If I can’t answer “Yes” easily, it probably isn’t a great move. One key thing to keep in mind: If you are doing this to calculate the payroll for a customer service teammate, and your technicians get paid via FRH or commission, this won’t give you an accurate number. It only works for adding a customer service teammate if your techs are straight hourly/salary.
Too often we only look at what is the break-even of adding this additional person to payroll. The reason that gets us into trouble is all the things we can’t put into that funnel, like the cost of additional training, an increased risk of claims and other variable expenses.
So do the math when deciding on whether or not to add – or subtract – an employee. It can be one of the most eye-opening things you can discover in 30 minutes with a calculator.
I’d love to hear what you discovered! ■