If you read the 3-part blog post about Shop Management, you should be comfortable with the idea of creating specific tasks for your work and tracking time on those tasks. Having that information helps you make decisions on which tasks make the most money and which tasks you may not want to perform. In this blog, I am going to show how to utilize the information you collect.
I want to break down how you can use time tracking to analyze employee performance and I will be showing the times from my shop as an example. To start, the tech has to be clocking in and out every day. Without this information, you will not be able to determine their efficiency. If you’re paying them hourly, this is the number you use for their payroll hours.
Here is a look at my times for the past two weeks:
From Jun 24th to July 7th I worked 85.1 hours. Looking at the times, I try to hover around 8-9 hours a day. I have a family, so occasionally I come in late or leave early like Tuesday the 27th. I took off entirely for the 4th of July, and to make up for missing a day, I stayed a little longer on the 6th and 7th.
Every shop treats punctuality differently. I make sure I’m on time for appointments but I’m more concerned with getting work done than being at work by a certain time.
Below is the Time Clock report for the month of June. I clocked 209 hours which averages out to 47 hours per week.
And if I push that report to the first half of 2017, you can see I have logged 1117 hours at the shop. This averages out to almost 43 hours per week. This shows me that I can run the shop with sane hours and still be successful!
Now let’s use this data to see how efficient we truly are. In addition to tracking the number of hours I am at the shop, I also track the time I spend working on every individual task. MSA builds out several reports for this. The first report is called the Employee Service Report.
Below you can see my report for the past two weeks.
Looking at the report, the first thing to note is that there are two options along the top. One is called Tasks Completed and the other is Work Performed. I charge a flat rate on most tasks which means I base the price off the estimated time (or book time in dealership lingo). Typically, we see custom fabrication and restoration shops using the Work Performed report because they are more concerned with the actual hours a tech worked on a particular task in a time range.
Digging into the details of the report, I first look at the totals to make sure the numbers make sense. Over the two calendar weeks, I was at the shop for 85 hours and I completed 92.25 hours of billable work. I know this based off the estimated hours column total at the bottom. Again, because I bill like a dealership would, it’s possible for me to bill more hours then I actually work.
There are several examples of this within this report. The clutch job is estimate to take 9 hours. It took me 6 hours actual in one instance, and 6.8 on another. I charge the customer for 9 hours even if it takes me 12 hours.
Here you can see that clutch job which is estimated at 9 hours but only took me. The text is colored green to indicate it was done faster than estimated.
Sometimes, it takes me longer than estimated. A great example of this is the “Exhaust – Hotside Install” shown above. I charge based on 3.5 hours estimated, but it actually took me 8.5 hours. Needless to say, I lost my butt on that one.
This is the example of a task which takes longer than estimated. The estimate was 3.5 hours and it actually took me 8.28. The text is colored red to indicate it was an overage.
Now that we have the billable hours for the two-week period and the actual hours I was at the shop, I can determine my efficiency: 92.25hr / 85.1hr = 108% efficient. Any tech that can achieve these types of numbers will make you very profitable. And it’s the job of the shop manager/owner to ensure your techs have all the tools and resources to regularly achieve these types of numbers.
Looking at the second part of the Employee Service Report is the actual time I spent on tasks. That number shows 72.6 hours. This number is usually shy of what I actually work because I spent time doing non-billable work such as cleaning, running parts, phone calls, and customer interactions. I don’t stop a timer to take a phone call because I try to keep them short. And I’ve focused on scheduling so that I don’t have customers hanging out at the shop all day.
If I were just a technician, I would be focusing on getting that 72 hours closer to the 85 that I was actually at the shop. Likewise, a manager should be working to make the actual task hours closer to the actual time at the shop for all the techs. If a tech’s estimated hours completed in a time frame is less than the actual time at the shop, the manager needs to look into whether the problem is the estimated times or the actual tech’s skill level.
How do we know if the problem lies with the tech or the estimates on a job? The answer isn’t always cut and dry, but we can certainly use data make the analysis easier. First, it takes months of correctly logging time on everything you do before you can start pulling useful information. In the reports page, there is another report called the Task Report, shown below.
The Task Report gives us insight into individual tasks. These won’t be specific to a single employee, but rather anyone at the shop who works on cars. The goal is to have the average be below the estimated. If its higher, you are not charging enough for the task.
The second thing to consider is the sample size. In the report above, I only pulled data for the past month so many of the tasks have only been performed once. It’s better to run this report over a longer period of time (assuming you have been tracking that time).
If I run the report over the past two years, there is a lot more data available to make decisions. For example, in the case below, I have done 42 clutch installs for 5 speed transmissions on Evo 8/9 vehicles. I estimate 8 hours and I’ve averaged 4.12 over all of those.
If I want to verify the data is correct, I can click on the performed number for the task and see each individual job times. This is shown below.
Looking at the results, there were several instances two years ago that I didn’t record my time (shame on me). It skews the results slightly with the actual average excluding those 0 hours jobs coming to 5 hours. But, I’m still far below the estimated time so I know I’m making excellent profit on these jobs.
I’ve now looked at a couple reports to see that the estimated times are where they need to be. As long as the estimate is higher than my average, I know I’m charging the appropriate number of hours. The only thing remaining is to know if your hourly rate is enough to cover your expenses and make a profit. We put together this equation for determining minimum hourly rate:
Total overhead expenses last year a. ____________
Total payroll expenses last year b. ____________
Other expenses (loans, credit cards, etc) c. ____________
Total billed hours in a year d. ____________
Additional Profit e. ____________
Hourly Rate = (a + b + c)/d + e HR= __________
For me, I can run around 100-105$ an hour and be fine. You can change the amount of work you have by increasing/decreasing your prices. As you increase your prices, you don’t need to work as hard and can maintain a higher level of quality, attention to detail, and better customer service. Fewer customers will be able to afford the work, but the customers who can will keep you busy. If nothing is coming in the doors, simply lower your prices. Using the pricing to control your work load is a nice way to not burn yourself out.
In this blog post, we have looked at how to check a technician’s efficiency and to tell if they are being productive or not. We can evaluate the data to know if a task is profitable. And, we know how to adjust pricing to make sure there is money in our pocket at the end of the day! This is why we stress the importance of tracking your time. Performing these checks every so often will ensure that your business will run strong for many years to come.