Which pay plan should it be - straight time or flat rate?

Aconundrum a service manager or dealer principal must face is whether to run a straight-time or a flat-rate shop.

The answer is not always easy.

Of course Consumer Satisfaction and Service Satisfaction Indexes translate into money. If your service satisfaction is unsatisfactory (not enough fixed-right-the- time jobs or too few no fault found), then the manufacturer's service excellence award will be as unattainable as the Holy Grail.

In a flat rate shop, the reason for supposedly repaired vehicle "come-backs" might be your technicians are rushing past the difficult work looking for the gravy work like brake pad replacement and transmission fill and flush.

They aren't spending the time it might take to diagnose an intermittent engine light going on at high speeds.

Some maintenance jobs like the brake pads and the transmission flushes can be done in three-quarters of the alloted time, and the technician is still paid for 100% of the time. If a tech gets enough of those in a day, they've billed an 11-12 hour day even though they've only put in 8.5.

Obviously these kind of situations can make the shop productivity run at 110 percent plus.

In a straight time shop, the emphasis may be more on keeping CSI high. Len Yakashiro, service manager at Sunrise Toyota in Abbottsford, British Columbia, Canada, feels that this is one of the major reasons why that Toyota store is #1 in the region for CSI.

This is probably attributed to the efficiency and the double-checking work done in a straight time shop.

The key is: whichever system is being used it must be managed so that short cutting work will not be accepted if running a flat rate, while productivity must be kept in check if running a straight time shop.

There are certainly pros and cons to both systems.

For example, a straight time system can be easier to manage. On the other hand a flat rate shop can be more productive.

There's no such thing as a pure flat rate shop. There are always going to be straight charges for things like diagnostic, water leaking and some electrical.

However flat rate shops can keep the technicians hungry and quick. This is of course if the "come backs" are few and the fixed-right-first-time repairs are many. Otherwise, your technicians may just be putting in time.