Some People Think I'm Crazy

Fixed thinking hampers fixed operations, says Lee Harkins, who challenges traditional approaches to managing a dealership service department.

“There is nothing traditional about our industry today,” says Harkins, president of ATCOM, a consulting and training firm for dealerships' fixed operations.

He adds: “No two days are alike for service managers. Continuing to do what you always do will get you the same.”

He offers “out-of-the-box” approaches to:

“Some people think I'm crazy when I say to increase production output by your current staff,” says Harkins.

Boosting output that way requires giving up a percentage of gross profit, but increasing bottom-line gross profit through increased sales and performance.

“Would you give up gross percentage for an increase in gross profits?” he asks. “Some people wouldn't. Forget the percentage, go after the dollars. You can't spend percentages.”

His proposal: pay existing staff an hourly rate that climbs as they work more.

For example, a service technician would be paid $18 an hour up to 44.9 hours a week, $20 an hour for 45-50 hours, $22 an hour for 50-55 hours and $24 an hour for anything over 55 hours.

Harkins argues that there must be a downside; in this case a lower hourly rate for fewer hours put in.

“Some people argue with me on that,” he says. “But if you pay up for positive performance, you should pay down for negative performance.”

He adds: “Have you ever heard, ‘If you pay me more per hour, I could produce more hours.’? This plan focuses on the gross profit generated for each clock hour worked.”

He says increasing sales to $15,000 with 62% gross profit results in $9,300 gross profit. That's more than a gross profit of $7,200 on sales of $10,000 with a higher 72% gross profit percentage.

“It challenges everything we have been taught about gross profit,” says Harkins.

But he says easing up on the percentage generates more profit, allows the service department to serve more clients, allows technicians to earn more per flat-rate hour based on their performance and improves employee retention.

If service technicians do quit, Harkins offers some unconventional ways to fill the vacancies.

Hiring good technicians is one of the biggest challenges for dealerships today, as the demand tends to outpace supply.

“Hiring personnel is a marketing effort,” he says. “You have no limits, except your imagination. There are no rules.”

Advertising for technicians in the local newspaper is a waste of money in many areas, he says. On the other hand, radio ads can yield good results in some markets.

He cites a Tallahassee, FL dealership that purchased 48 spots for $1,920 or $40 each.

The ads targeted the spouses of technicians. That may seem odd. But Harkins asks: “Who do the technicians blow off steam to when they had a bad day? What does the spouse tell the technician to do?”

The advertising dealership claimed it offered better working conditions than found elsewhere.

Another offbeat way for dealers to connect with prospective service department employees:

“Go to the local tire store with a used car and ask to speak with their best technician,” says Harkins.

Here's one more:

A Ford dealership in Titusville, FL purchases a socket set and matching storage case from a traveling tool salesman.

The salesman carries the set on his truck. Each time he visits an independent shop, he asks the technicians there if they'd like to enter a free drawing for the socket set. Participating technicians complete an entry form asking their name, address, phone number and ASE certifications.

The entry forms are forwarded to the dealership service manager. He receives nearly 30 leads for a $150 investment.