I’ve made it clear in previous segments on this subject that I’m an advocate of paying technicians via an incentive system such as a commission based on a percentage of labor billed and parts sales, rather than a straight hourly wage regardless of how much revenue an individual generates. And in this segment, I’m going to discuss the Fear Factor.
One fundamental component of human nature is that we want to be secure. And when it comes to our work life, secure means that we are of the belief that we will be able to bring home enough money on a weekly basis so we can pay the bills directly related to the survival and safety of ourselves and those who are part of our immediate family, and have some left over to save, and cover the cost of hobbies, entertainment, and vacations. Of course, if we are not of the belief that all these things are OK, that’s where the Fear Factor comes in.
When it comes to technicians working on a commission basis, the Fear Factor can be more than a gnawing irritant. It can loom large, causing constant worry, thereby affecting their work and the way they treat customers.
The underlying reason behind the Fear Factor is the belief that the day could come when there are not enough service calls to run on a given day, which would result in reduced revenue for the technician who is paid on a straight commission basis. This fear can linger for some technicians no matter what history would show about the consistency of a service organization, and there are some simple ways to deal with it.
One way is to have a back-up system established; one that provides some kind of guarantee that should a series of events ever occur that would drastically effect revenue, the technician will go home with a given amount of money at the end of a pay period. Even though this back-up will never be needed because a quality service organization is constantly in a situation where they always have enough work to go around, it puts people’s minds at ease, reducing the Fear Factor. And, in the end, it provides an environment in which technicians can concentrate on doing the best job they can do for their customers, which perpetuates an increase in volume, which allows them to be even more confident and relaxed and not affected by the Fear Factor, which perpetuates an increase in volume, which…well, you get the idea.
Another approach to keeping technicians on track while pushing the Fear Factor down even further is to establish a quarterly bonus system. If there are at least three technicians in a service department, making this a team bonus can be a good idea. Camaraderie within a group is a phenomenon we can all understand and appreciate, and it’s undeniable that the end result of group of people working together for a common good results in performance far beyond average.
Overall, when technicians are working within a system that pays commission based on their labor revenue and a bonus based on profitability, it goes toward dealing with that age-old problem of people leaving to “go into business for themselves” because they are, in essence, “in business” for themselves already when they are employed by a company that offers commission and bonuses. It’s just that their choice in “business” has been to have one client…..their employer, and they are actually in a best-of-both-worlds situation because of their decision. Their overall risk is minimized. They don’t have to be concerned about marketing, advertising, accounting, bookkeeping, parts inventory, vehicle operating expenses, collections, etc…and the list goes on and on.
All they need to do is concentrate on doing what they do best, and they wind up getting paid for their hard work and dedication to their craft.
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