INCENTIVE PLANS FOR MANAGERS
by Greg Byler
Lube
managers, like lube techs need an effective bonus plan. But just as
managers have different duties at the lube, they also need a different
bonus plan that highlights and emphasizes those different responsibilities.
An incentive
plan can be used as a training tool. A good manager incentive plan
will do just as the name implies, and give the manager an incentive
for a job well done. The manger will quickly learn what you as an
owner want and expect. By carefully constructing the bonus program
clarity is given to the manager as to expectations and requirements.
Pick the
areas that you deem important such as volume, extra service sales,
and human resources management. By setting goals and a dollar figure
associated with that goal you are giving your manager his “marching
orders.” As an example if you want an average ticket of $50 per
car, the incentive should reflect a healthy bonus associated with
reaching that goal while giving no bonus for anything under your decided
minimum of for instance $45 per car. An example below shows a ticket
average that is multiplied by the volume of cars for the month, thus
emphasizing the importance of car count as well as ticket average.
Ticket
Average Bonus (x # of Vehicles Serviced)
$45.00 – 45.99 $
.10
$46.00 – 46.99$
.15
$47.00 – 47.99$
.20
$48.00 – 48.99$
.25
$49.00 – 49.99$
.30
$50.00 – 50.99$
.35
$51.00 – 51.99$
.40
$47.00 – 52.99$
.45
$53.00 – 53.99$
.50
By using
this example a manager operating a lube with a volume of 1000 cars
in a month would receive an incentive of $350 for reaching the desired
ticket average of $50 per car.
Many of
you have experienced a declining car count at your lube in recent
years. The manager can be very effective in increasing car counts.
By lowering bay times and ratcheting up the customer service levels,
car counts can be positively affected. If you have a car wash on the
premises, your manager has the opportunity to siphon some of the wash
traffic into the lube bays, thus increasing car count. Having your
manager compete against the previous year’s monthly volume you
reward him for positive growth. A caveat might be the volume increase
must be met with the aforementioned minimum ticket average of at least
$45 per car.
Volume
Increase Bonus
+
20$2 X the
# of additional cars serviced
+ 30$3
+ 40$4
+ 50$5
+ 60$6
+ 70$7
A manager
who controls shop labor saves the company money. A very common drain
in profits is in the human resources department. Just like the ticket
average, the manager has direct control of the labor. Below is an
example of what a manger might be expect to see for human resources
bonus.
Human
Resources
% of
PayrollBonus
Over 25%----
24.0 – 24.99$10
23.0 – 23.99$
20
22.0 – 22.99$
40
21.0 – 21.99$
80
20.0 –
20.99$ 100
19.0 –
19.99$ 125
18.0 –
18.99$ 150
Some operators
are so serious about labor that they include a penalty for excessive
labor that negatively affects the manager’s incentive pool when
they fail to reach minimum goals. The amount of deducted bonus is
not as important as simply declaring the importance of the labor percentage.
The clarity this stipulation brings is the significant factor.
If our
manager reached the goals of $50 per car, increased car count over
last years monthly numbers by 28 cars and achieved a labor percentage
of 20.3% his monthly bonus would be $490. If he succeeded in doing
this every month he increased he yearly earnings by $5880.00! That
is a significant amount and would certainly get the attention of a
manager stuck getting a straight salary.
Of course
simply giving the manager your expectations will not automatically
make this happen. Training of the manager and his crew is imperative
to success.
Incentive programs should be reviewed annually and be revised according
to the needs of the company at that time. It should go without saying,
but the purpose of revising any incentive program is to improve performance,
not decrease earnings. Needs of the location may change and revising
incentive plans yearly gives you the opportunity to address those
needs.
Before attaching dollar figures to each goal, make sure you can live
with the results if the manager tops out the goals. You should be
happy to write the incentive checks and if you assume the manager
will not get the goals and set the bonus too high for your budget
or your liking it will be a serious de-motivator if you change the
program in midstream.
A well
designed manager incentive bonus plan both motivates the manager and
satisfies the needs of the company. Bonus programs need to be a win/win
situation. When the plan cannot a minimum accomplish these goals,
a new plan is needed.
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