Finance+Operations

Add Value to Your Employee’s Pay

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On average, starting pay for lube techs is around $11.50 per hour, according to the 2020 NOLN Operator Survey. With that, about 64 percent of operators also offer a bonus or commission program, which means one-third of employers don’t offer some sort of extra compensation. In an industry where turnover is higher and quality technicians are hard to come by, it may be time for some operators to incentivize.

Lance McQuirk, director of fast lube operations at Lex Brodie’s Fast Lube, says some employees have been there for more than a decade. Over the eight years he's run the quick lube side of the operation, he’s learned to retain workers with the help of his shop’s pay structure, where technicians can earn up to $16 per hour.

David Fadayel, on the other hand, is new to the game. As the manager of Perfect Lube in San Carlos, Calif., he’s been on the job for two years since his father, Victor, took over the shop. He used to be a mechanic, and becoming a manger was a huge change for him—for the better. He learned all of the ins and outs from the former owner, and as the time passed, he put in place his own strategic pay system to give employees more value than anywhere they’ve worked before.

Here are the different strategies behind each operator’s pay structure and how they got there.


Raises

Based on Training

For McQuirk’s entry-level techs, they earn raises depending on their proficiency level. Within the shop, there are different tiers of lube techs: Tier I, Tier II, and Tier III. 

A Tier I lube tech is a brand new employee who has never worked on vehicles before and needs full training. These technicians make $13 per hour to start at the Kilo, Hawaii, location, and $12 per hour to start at the Hilo, Hawaii, location (the difference of prices is based on each island’s market and cost of living). 

Once these Tier I technicians are trained in and can perform every service, they move up to become a Tier II lube tech. Once they hit this level, they earn an additional $1 to $1.25 per hour.

A Tier III technician needs to be able to perform all services with high efficiency, but also be able to know how to open and close the store and be able to help train in other new employees. Through the Automotive Oil Change Association (AOCA), technicians take computer-based training to evaluate them on their knowledge, and have evaluation forms to see if the employee checks all of the boxes to move up.

The last tier is mainly based on the tech’s performance. McQuirk says they usually hand pick these techs to earn that extra $1 to $1.50 per hour over the Tier II wage.

“We look for someone that shows initiative and wants to move up,” McQuirk says.

The shop’s raise system is strictly based around these three tier levels. After that, Tier III technicians looking to move up can transition into assistant manager and manager positions.

 

Based on Value

At Fadayel’s shop, employees that bring a different set of values to the shop can be paid differently than those making the standard $16.50 per hour—a higher wage than average due to the higher cost of living and a higher local minimum wage. For example, Fadayel just hired a technician coming from the Jiffy Lube down the street. Right off the bat, the employee increased the shop’s air filter sales after advising Fadayel on other services the shop should start providing. 

Perfect Lube had never sold cabin air filters before, but the employee said it’s what he was able to sell constantly at Jiffy Lube. He told Fadayel what his top five brands were, and Fadayel trusted him. The shop bought filters, and they sold well. Now, the employee makes $20 per hour and Fadayel wants to promote him to a supervisor position in the near future.

“If you bring value, you will be rewarded,” Fadayel says.

 

Bonuses

Structured Around Sales

When McQuirk started as operations manager in 2012, he installed a sales incentive program. And instead of having a single sales person reaping all of the reward, everyone participates. Through his 35 years on the shop, corporate, and franchising sides, he says this structure is the only true way to have a fair commission program for everyone. It doesn’t put pressure on a sole person to sell, and everyone is getting a little cut of the pie.

“Everything we do in the fast lube is done as a team.” McQuirk says. “We succeed as a team and we fail as a team,” he says.

Here’s how it works: Every service at the shop has a specific dollar amount attached that goes into the fund. That includes a quick oil change, a radiator service, changing out light bulbs—you name it, it counts toward the shop fund. McQuirk says each item’s dollar amount is based on the profit margin. The bigger cost of the item, the more money that goes into the fund. And money can come out of the pool, too. For example, if a technician misplaced a vehicle’s oil cap and needs to replace it, the replacement cost will come out of the fund.

After the month is over, the total amount in the fund is divided by the total amount of labor hours worked. For example, if the fund has $2,000 and the shop clocked in 1,000 labor hours, you get $2 extra per hour. If a lube technician worked 160 hours that month, they’d earn an extra $320. Since he started running the program, McQuirk says employees can earn an extra 75 cents to $1 per hour, on average.

This whole system wasn’t focused on generating more sales, but to ensure employees follow through on their processes, which means making sure to highlight the manufacturer recommendations every time. If a cabin filter needs to be changed, show the customer the comparison between theirs and a new one, and if it doesn’t, tell them it’s good to go. McQuirk says this builds overall trust with customers.

“It’s a matter of following that process, and if the process is followed, the profits will fall in line,” McQuirk says.

 

Structured Around Tips

Unlike other quick lube shops, Fadayel’s operation just started accepting tips, and it adds up to be a pretty nice bonus, averaging $400 per month per technician. Fadayel says he notices their operation is one of the only places to accept tips, which shocks him because this has made their level of customer service outweigh the competition by a long shot. 

With the amount of services offered that the shop doesn't charge for, like free inspections, cleaning out the engine bay, he says customers notice and want to give a little extra back. On average, Fadayel says one out of every three customers tips, and the staff splits it four ways every week. 

While some managers would take a bigger chunk of the cut, he takes the same amount as everyone else. He said he’s heard of operations that accept tips with managers taking out most of the profits and leaving a little for the workers that are creating the entire shop experience. That’s why an 18-year-old technician that he just hired gets the same bonus he does.

“It’s about treating them equally and like they are worth something,” Fadayel says. “It’s giving them value for what they do.”

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