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Builder's compensation

by Art Little

Transmission Digest Magazine
This article appeared in the June 2015 issue of Transmission Digest.

Have you ever noticed that no matter how well you plan, there is always something that goes wrong and blows up your plan that you did not see coming ? I hate that when it happens. Let me tell you what just happened to me. It might help me blow off a little steam. On Friday, I had my first shop owner sign up for the new Wholesale Club at my website. He signed up both of his shops. I was pretty excited because this launch had been a long time coming.

This is an app that I worked at least a thousand hours on. I spent another hundred hours recruiting, hiring and training salesmen. Another hundred hours finding a lead generation company to generate wholesale leads. I spent at least 50 more hours creating a section on the website for the wholesale club so I could explain how it works to shop owners and give them an easy way to sign up. Then another twenty hours creating an online form that the shop owner members could use to register their wholesale price list. Lastly, on Friday (I know you are tired of ─╝isting to me whine, I am about done) I spent another two hours of final training with the shop owner and the managers of both shops on what their part would be on Monday. We were set to go right? What else is left? Can't think of a thing.

On Monday, at 8 pm the builder for both shops quit. All plans are temporarily called off because of a dispute over the builder's paycheck ! Are you kidding me? Makes me want to but my head into a stump and start walking around in circles......Which leads me to the subject of this month's article regarding how to pay your builder and make sure this doesn't happen to you. I'm done whining. We can move on now.

This is a problem that could have been avoided by using a little common sense and following a few rules when you hire and manage a builder. This builder was a dad with a wife and 2 kids , working 60 hours a week and building for 2 shops. He was getting paid straight commission on his units when they deliver. This week, he had 3 completed units that did not get picked up by the customer on Friday. He gets his check on Saturday before he goes home and does not get paid for the three jobs that were ready to go. He doesn't say anything or let anyone know he is upset but, like they say on Duck Dynasty - "He gone".

Monday at 8 am he is loading his tools. The owner tries to pay him for the three units. Too late. He gone. You see, he got a job after he left on Saturday, so that when he went home to his family with that short check the owner wrote him on Saturday, he could feel like he was doing everything he could do to take care of them and make sure that this does not happen to him and his family again. As a shop owner there is not much you can do except learn from the builder and try to make sure that this train wreck does not happen to your shop again.Let's talk about that.

It has been my experience that not very many people can work on commission. Not just rebuilders. I am one of those that can. When I was a young manager, I always worked on commission. I remember my Dad asking me, " so, you go to work every day and you don't know what you are going to make? " And, I would say "That's right Pop." "So, you might work 10 hours and not make anything ? " " Yes sir ". He never did understand why I would do that. Few do.

When you are on commission you can expect a paycheck roller coaster ride. You have to put the money back when you make it and have it there when the roller coaster dips. That's the problem. Most people working on straight commission don't put the money back. They have a big week and they think " Well, I have figured it all out. Now, the rest of my paychecks will be this much or more". Wrong. You haven't and they won't. Working on commission is a roller coaster now and it always will be a roller coaster long after you get off the ride.

To stay with the analogy, as a shop owner, your transmission shop is the roller coaster and you are on that ride alone . Understand, that is your ride to take and yours alone. You can not expect your builder to take it with you. There are too many other factors he can not control. Straight commission is just not fair to him and never works long term. You need to make sure that your builder's pay is not completely based on that ride. You have to find a little smoother ride for the builder.

  • Base pay Work out a pay structure that takes care of his immediate needs, even on a bad week, without fail. You can not ever send a builder home with a check that does not cover his basic living expenses. You see what happens when you do in the example I provided above.
  • Incentive - Base Pay + Bonus Plan works best for me. Figure out a pay plan that you can live with that gives the builder his basic needs so that he is not distracted and worried about not having enough money to support his family. Then, give him incentive to be more productive and take home more money. When you interview him you ask him what he wants to take home every week. Ask him how many units he can build for you a week if you pay him what he wants.Then it becomes fourth grade arithmetic. As an easy example, the builder wants to make $1,000 a week. He tells you he can build you 10 units a week . Now, everybody understands what is expected. The builder is expected to build 10 units a week. The owner is expected to pay the builder a thousand a week. As an incentive you give him a 150 dollar bonus for every unit over 10. I write this agreement down on a yellow pad during the interview and make the builder sign it. Then, I sign it , we shake hands and he goes to work. Keep the pay plan clear, concise and simple. A lot of builders have been lost because they were not hired right .
  • Track productivity. Make sure you track his work every week to make sure you are getting your money's worth out of the builder.You need to know and keep up with it. Provide a way to track the number of units built and the amount of time spent on each.
  • Grade your builder If you track how long the builder takes on each rebuild you can grade his productivity to see where your builder stands with other builders in the country. You look at what the book hours are for the rebuild. Then, you look at the "actual time" the builder took on the work assignment and you grade him out. Example: If the " book hours " are 10 hours and your builders' " actual hours " are 7 hours, he is a 70% builder on that unit.. On the other hand, if he takes 12 hours for the same 10 hour work assignment, he is a 120% builder. You can check how he stacks up to other builders using this method.
  • Weekly reviews What do you do if that builder is not building 10 units a week? You manage him. You are paying for 10 units with your base pay and the builder must produce that in order for it to be a good deal for you. You should have a meeting with him every week and go over the the production reports without fail. If he does not meet his quota,ask him why he is not getting his quota met and if you can, help him meet his quota. There are factors you can control that he can not control. Like, the manager asks him to diagnose everything , he is out on the floor helping other techs too much, manager pulls him off to drive with customers all the time, he is always waiting on parts and list of other distractions and flaws in the workflow system at your shop that keep him from making his quota . Listen to him and then get with your manager and make the corrections. The main thing is to make him accountable every week for what he promised when you hired him and make sure you give him what he needs to be successful.

The lessons learned ? Don't mess with the builders' paycheck. Don't pay straight commission. Hire the builder right. Get a clear understanding on his pay and responsibilities. Manage him and make the builder accountable by keeping up with his productivity on a weekly basis. Weekly production meetings eliminate small problems before they become big problems.

Thank you for listening to me whine this month. Misery loves company. I just timed how long it took me to read this article and it took me 12 minutes. So, you can call me and I will listen to you whine for exactly 12 minutes this month. 20 minutes for you slow readers. You can whine about anything. There are no rules. I owe you that.

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