International Door & Operator Industry

NOV-DEC 2013

Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.

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SALES&MARKETING; (continued from page 39) Making 8 – The main argument against paying techs on an hourly basis is the perceived tendency that they will fll the eight hour work day with whatever work is assigned with no urgency like piece workers. This is fondly referred to as "making 8". I would agree that this would be true IF there is no production standard in place with hourly techs held accountable for it. My companies found that tying quarterly or annual bonuses to production was a good way to avoid the "making 8" trap. Productivity is the Key – Regardless of how feld techs are compensated, the key to reducing your direct labor costs as a percentage of sales is by getting more productivity from each truck. This starts with setting defnite production goals for each tech and holding them accountable by closely monitoring their progress every week. You can use dollars, units or whatever system you choose. Post the numbers in your service department so they can see where they stand each week versus budget. There may even develop some friendly competition among techs in the process to see who can be the most productive. A critical component of maximizing productivity is scheduling. Make sure that each truck has a full days work and is routed in a way to minimize "windshield time". Technology can help with this but nothing will take the place of someone managing the workload in a way that allows the tech to accomplish a full days production each day. Just by virtue of you and your team paying closer attention to production I can assure you that your company's productivity will improve. When it does, remember to celebrate with your team. Pizza parties, gift cards or small bonuses, whatever....just celebrate the victories and in the process reinforce the behavior you want to replicate. Piecework Works – I have always been an advocate for compensating residential installation techs using a piecework method. It's an easy way to control labor cost and fosters an attitude of pay for performance. The tech sees a clear way to make more money simply by becoming more productive. The more you do, the more you make. I would urge you to review your piecework rates often. Rates should be consistent but can vary between products. Consider a higher piecework installation rate for custom carriage doors versus a lower rate for builder grade pan style garage doors. Of course quality has to be closely monitored and the tech held accountable for call backs related to his installation but in general, piecework works well when considering lowering your direct labor costs. 40 International Door & Operator Industry™ Overtime is a Killer – Usually jobs are estimated using normal hourly rates. Seldom does a project recover from a margin standpoint when the direct labor cost comes in at 1-1/2 times the originally quoted cost. Of course there are times when it is absolutely necessary and cannot be avoided but these should be the exception rather than the rule. Overtime should therefore be monitored in a hawk like manner and reserved for after hours emergency service or other situations where the customer is paying a premium. If you want to control your labor cost, put the tourniquet on your overtime and budget. Congratulations, you've just lowered your direct labor cost and increased your gross proft. Add Ons – It's 3:00 PM and you hear from your installation tech that he's completed his job for the day. Send him home, right? Wrong. Check the dispatch board and see if there are service calls close to him that he can perform which will improve his productivity for the day and provide good customer service. A simple spring change could make the difference in having a good day to having a great day of production. While you may not be very popular with the tech at the moment he may have a different attitude come bonus time. Consider this example on an annualized basis. Let's say this same installation tech gets an extra service call just twice a week. The average ticket price per call is $225. This would add an amazing $23,400 of additional production (sales) per year. Highly proftable production to boot! Add "add ons" to your daily schedule and watch your margins improve. Subs – If you use subcontractors you are in a good situation to control and often lower you direct labor costs. If they truly are subs and not glorifed employees that you are calling subcontractors to avoid taxation and benefts, then they are independent businesses. As such negotiation is far easier than when they are regular employees. Rather than just pay what you've always paid, consider negotiating better labor rates based on the projects size and scope. Perhaps reduce installation work and increase repair projects. While you can value your subs' efforts, they have to be part of the negotiation process when it comes to controlling direct labor costs. When Continued on page 42

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