Dealers: The Benefits of Pay-for-Performance Employees


By Bob Atwood

Are you meet­ing or beat­ing NADA finan­cial per­for­mance guide­lines? If not, why not, and what can you do about it? Every depart­ment has its chal­lenges. In ser­vice, maybe the mar­ket­ing isn’t bring­ing in cus­tomers. Maybe there are delays at the parts counter. Or maybe the techs aren’t moti­vat­ed to hus­tle. Just as finan­cial incen­tives can pick up a salesman’s pace on the show­room floor, pay for per­for­mance can incen­tivize the ser­vice depart­ment.

Pay your peo­ple for what’s impor­tant to you. If you’re pay­ing salary or hourly, and that’s all you’re pay­ing, then your employ­ees’ moti­va­tion is to come to work on time and leave on time. That’s true for ser­vice advi­sors, tech­ni­cians, fore­men, man­agers, war­ran­ty administrators—all your ser­vice employ­ees.

It’s the deal­er who is penal­ized in an hourly or salary shop.

Pay­ing for per­for­mance estab­lish­es expec­ta­tions. It estab­lish­es account­abil­i­ty. Then the peo­ple who per­form at or above a lev­el of expec­ta­tion are reward­ed.

How to con­vert your hourly techs to flat rate:

  • Tell your hourly techs what their pay is for turn­ing 40 hours at their hourly rate.
  • Then tell them that you’ll pay them a dol­lar an hour extra for every hour over 40 hours turned, retroac­tive to the first hour turned.
  • Once the tech­ni­cians start pro­duc­ing more time than they’re actu­al­ly on the clock, that is tru­ly flat rate, and it’s easy to change them over to flat rate.
  • Show them the val­ue of the incen­tive, and watch them reach for all-star per­for­mance.

To find out how your dealership‘s com­pen­sa­tion stacks up to the com­pe­ti­tion, get your copy of the 2012 Deal­er­ship Work­force Study Indus­try Report! Log in to, go to Resource Tool­box and click to pur­chase (requires GM/Exec or Deal­er access lev­el). The Indus­try Report is com­pli­men­ta­ry to Deal­er­ship Work­force Study par­tic­i­pants.

Instruc­tor Bob Atwood teach­es Fixed Oper­a­tions 2 (Ser­vice) in week 3 of 6 in the NADA Acad­e­my pro­gram and can be reached at Vis­it NADA Acad­e­my to down­load the sched­ule and appli­ca­tions for all pro­grams.



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