IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog has been provided by Emily Hoke of Larkspur HR Consulting (www.larkspurhr.com):
Auto Shop Entrepreneurship – How to Attract and Retain Technicians
If you run an auto repair shop or dealership, you have probably felt the shortage of technicians while trying to meet customer demand. There are more technicians leaving the workforce, either through retirement or departing for a different trade or career path, than there are entering the workforce. Overwork and burnout of those who remain are exacerbating the effects of these losses. This is driving the competition for talent through the roof. Dealerships and independent shops frequently see their employees receiving competitive offers of employment that they must combat to retain their staff or risk losing them.
I spent five years as the Director of Human Resources supporting a dealership group with four rooftops and 350 employees. The concern about technician shortages was a top priority for senior management. To combat this concern, it is important to understand why they are leaving the industry or your company, what they need and value from their employer, and what prompted them to pursue their career in the first place. Leverage that information to make strategic decisions to attract and retain your technicians.
Recently, I was at the Olympus Rally and spent time with one rally team’s service crew. The crew comprised of five technicians of various skill levels, two were shop foremen and the other three were mid- to senior-level Subaru technicians. Here are a few snippets of our conversation along with actionable steps for auto shop owners.
Kenny shared that even when given a competing offer to work elsewhere, he’d made the decision to stay with his shop because of the atmosphere the shop owner created and the people he worked with. One of the other technicians agreed immediately and said that is the biggest reason he hasn’t made a change. This sparked a conversation into what makes a good shop culture. The consensus was that technicians want to be respected and valued by management. They want technicians who drag down the shop to be removed from the team. And they want effective shop foremen who contribute and don’t use their authority to create a false sense of control.
Make sure you have processes in place to manage employees who are detracting from your workplace culture. Provide your managers and shop foremen with the tools and training they need to engage with their technicians and manage people. Too often, high-performing individuals are promoted to leadership roles without training, and they lack leadership skills. In addition, they may not want the responsibility of being a leader and prefer being individual contributors. The best leaders aren’t effective because of their title, they are effective because of their ability to influence, motivate, and impact their people.
When asked what brings down their job satisfaction or has led them to evaluate other opportunities, the theme was pay. Collin shared that pay is a huge factor in his job satisfaction and made him look elsewhere in the past. He also shared that he feels like it doesn’t matter where you go, you’ll still be underpaid for what technicians do. Ryan agreed and elaborated that if you look at the pay of technicians from 80 years ago and then factor in inflation, their wages have dropped in value.
How do you combat the need to raise wages while maintaining profitability? Through a compensation and benefits strategy. There’s a lot that goes into developing your strategy and then aligning your processes to reflect that strategy but here are some starting points. First, evaluate your employment expenses and understand where you’re spending your dollars. Determine how to use those funds most effectively; look at what benefits you’re providing and what the utilization of those benefits are. Adjust or remove benefits spend based on the data; there’s no need to invest in a benefit that is not being used. Look at the pay for surrounding shops; as pay transparency laws are enacted, it is becoming easier for your technicians to see if they’re being paid under or over the market. You can take advantage of this, too, by reviewing your competitor’s pay and benefits package compared to yours. If you’re using a salary database, you’ll see pay data broken out in different salary percentiles. Refrain from copying what your competitors are doing or arbitrarily paying at the 90th percentile. Instead, make a deliberate choice that aligns with your shop’s mission and values.
Here are some examples in practice: perhaps your strategy is to pay at the 75th or 90th percentile in wages to attract skilled technicians and reduce your training investment. Or consider whether you’ll increase your training investment and pay at the 25th or 50th percentile to train and develop your own skilled technicians and recruiting directly from high school auto shop programs. Your compensation strategy should also address how you will reward top performers and increase wages. Ensure that your evaluation methods are objective and based on measurable key performance indicators (KPIs). You will be asked by your team how they can earn a raise and why “Joe” got a raise, and paying your people based on concrete data makes it easy to explain.
When pressed further on pay, Kellen shared that pay stability plays a role in the conversation. He shared that in the best places he’s worked, there’s been reliable work and fair pay practices that led to having a steady paycheck without ups-and-downs.
This is huge and while it was an off-hand comment, it deserves serious consideration. To retain staff throughout their career, you have to consider the different life stages and what is important throughout those stages. A new technician that is living with three roommates will have drastically different priorities than a mid- to senior-level technician with two small kids at home. Consider your current workforce and your ideal workforce, then craft a benefits and compensation package that reflects that. This goes back to your compensation strategy: Make sure to align your strategy with your goals.
An approach to add benefits without increasing costs significantly could include creating different benefit classes and offering select high-cost benefits only to employees with a certain amount of experience. Make sure that whatever criteria you’re basing your benefit classes on is objective and measurable and not a protected class (age, race, gender, sexual orientation, religious beliefs, etc.). Best practice is to work with an experienced benefits broker or consultant for this to maintain compliance with ERISA and Section 125 IRS rules.
The conversation morphed into how these technicians first became interested in their career path, there were some unique and funny stories but the theme here was passion. One of the technicians, Ryan, had the most entertaining story. For him, it goes all the way back to potty training. He recalls that while his parents were trying to potty train him, every time he was successful or reached a milestone, they gave him a brand-new Hot Wheels car. Kenny shared that he has a strong memory of being eight years old and watching Paul Walker from the original The Fast and The Furious movies. He said that the movies made working on cars look so fun, cool, and easy. The others shared similar stories that their career path all started from a love of cars and for many of them, it started when they were young.
When attracting new technicians to the industry and to your shop, it takes effort and involves playing the long game. Get involved in schools near you that support trades educational pathways, while there was a huge decrease in these programs for years, they are making a comeback. Utilize programs like Wrenchway’s School Assist to find local schools that need support from local shops and dealerships. Tools like this allow you to build a pipeline of entry-level technicians that are trained through an auto shop program.
There are so many unique ways to attract and retain technicians for your shop. If you’re not sure where to start, talk to your current technicians to figure out what they like and what they wish would change. Start doing exit interviews to understand why they are leaving and act on the feedback. Before you start asking questions, make sure that your shop has a culture where technicians can speak up and talk openly without fear of repercussion. The worst thing you can do is ask for feedback and then get angry or mismanage your reaction, or discipline someone for speaking up. That shuts down the likelihood of effective, future conversations. If you don’t yet have the culture where your techs speak candidly, start building it, otherwise you’re missing out on so many opportunities for improvement beyond attraction and retention.
If you have questions relating to the content of this article, Emily Hoke, MBA, SHRM-CP, and the founder and a senior HR consultant at Larkspur HR Consulting, would welcome inquiries. Emily Hoke can be reached at (425) 516-3920, or emily@larkspurhr.com.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.