It wasn’t many years ago that a large percentage of machinery dealers focused primarily on selling new equipment. But, with the advent of competitive pressures from more successful dealers who began adopting best practices, performance metrics and a customer-focused approach, the machinery distribution business changed dramatically. The primary shift was the recognition that strong aftermarket support can yield a significant competitive advantage.
Today most dealers understand a top performing technician can be the greatest revenue producer in the business. In addition, each dollar of labor sales generates as much as an additional two dollars in parts sales. A skillful service technician can provide more than a three-fold revenue return on wages and benefits.
It’s no secret there is a growing shortage of technicians to maintain and service equipment. Machinery is getting more sophisticated by the day. Dealers have to fight and compete for the same tech school student who wants to work on computers or in aviation, automotive, marine, motorcycles, trucking, material handling, agricultural or construction equipment.
One senior executive at a large dealership just told me this technician shortage is almost catastrophic for a dealer who depends heavily on service revenue to achieve and maintain 100% Absorption Rate. (Absorption Rate is the percentage of dealer fixed expenses covered by gross profit from service and parts revenue.)
Why do so many dealer executives and operations managers stuggle with the issue of technician recruitment? We know there is a shortage of qualified service technicians across all equipment industries: heavy-duty truck, Ag equipment, construction equipment and forklfit. Dealer owners now recognize that each additional service employee, if kept busy, can generate over $110,000.00 in annual labor billing plus at least an additional $150,000.00 in parts on those Repair Orders.
So, let’s look at some of the ways successful technician recuiting is getting done today:
First, Get the Fundamentals Right:
With lots of employment options open to technicians now, why would the top tier candidate be interested in working for you? Does your company offer an employee- friendly environment? Here are some of the basics. If your operations is deficient in any area, your premiere candidate will recognize it and may go somewhere else. However, even if you don’t have all the things to attract top talent, don’t wait to get the people you really need now to run the business. Implementing these recommendations will help you get the revenue you need to further invest in developing your business.
- First-rate facilities
Does your physical plant show quality and professionalism? Is your success at housekeeping the pride of your dealership?
- Competitive compensation
Is your benefits package a positive or a negative? Do you pay for performance?
- Employee Development
Do you offer technicians on-going training and certifications to enhance their professional competence?
- Employee Relations
Do you treat your technicians with respect and as professionals?
The easiest quick-fix is housekeeping. Not long ago I went through a shop that was so littered with junk, scrap metal, old broken parts, grease spills and litter I could hardly walk. Can you image the quality of work coming out of this facility? Do you think this dealership’s customers were willing to pay top price for maintenance? Do you think the technicians were proud of their company? Needless to say, this dealership did not last very long. A facility can be old, but it can still have a fresh paint job, steam cleaned shop floors, organized tool crib, orderly parts area, fresh uniforms, and friendly people.
Here are 10 field-proven technician recruiting and retention techniques that are working today across North America.
1. Employee Recuiting Referral Bonus
Get your current employees behind your technician recruitment effort. Offer a $1,000.00 Referral Bonus to the employee who can bring in a strong candidate that can perform well for six months. The referring employee gets the Bonus if the candidate performs satisfactorily during this probation period. Employees will not recommend anyone who might embarrass them,
so there is some pre-screening inherent in this process.
2. Tool Truck Driver Spiff
Who is on a first name basis with virtually every mechanic in your area? The self-employed tool truck drivers. They know all the best technicians. They know who buys the right tools. Offer them the same $1,000.00 Referral Bonus as employees under the same conditions. You will want to be discrete and careful, because if other companies find out the tool truck guy is recruiting, they may prevent him from coming on their property.
3. Marquee Street Sign Driving Candidates to Your Website
If you are located on a heavily trafficked street, the illuminated portable sign is ideal. Emphasize “Top Wages,” “Apply Within,” “See www.dealerwebsite.com.” The same can be done for a highway sign. Be sure to get some help so your highway sign graphics are attractive.
You want to motivate candidates and their family to investigate your job opportunities on your website. Once on your website landing page, they should be able to access information about the position to easily apply. Go to the websites of major equipment dealers in several product categories. How do they do it? What useful information can you get for your web developer?
4. Work/Study Co-Op Program
Tech school students need to better understand the earnings potential of journeyman technicians. Unfortunately, it appears statistics posted by the U.S. Department of Labor, which are used by these educational facilities to help students decide on career paths are lower than average for most markets. It is important for the local dealer to communicate accurate career earnings potential for technician careers in your industry to tech students, their instructors and career counselors.
Build relationships with your local tech school faculty. Find out how you can partner with them to bring on an interested candidate who is willing to work a semester at your dealership and return to school for the next. Offer to pay/reimburse tuition if the candidate stays on and performs well for at least a year after graduation.
You can begin as early as High School. Offer summer jobs to prospective employees. Check out their work ethic, their attitude, their aptitude. Most dealer principals I talk to prefer to hire for attitude over aptitude. If the summer candidate works our well, you can encourage him or her to participate in the formal Work/Study Program in which you will reimburse them for their tuition. If you are a larger dealership, have you considered creating a scholarship fund, based on academic performance, for children of technicians?
5. Tool Kit Purchase Assistance Program
The other really big expense for new technicians is his tool kit. I have seen dealers set up a five year tool purchase reimbursement program for successful new technicians. For every year the shop employee performs well, the dealer reimburses him for 1/5 of the pre- determined cost of his tool kit. You could further encourage longevity by skewing the annual reimbursement percentages along the line of 5%, 10%, 20%, 30% and 35%. Obviously, if he parts company after only two years, he leaves 85% reimbursement back on the table.
6. Formal Apprentice Program
There is a strong economic reason for you to build an apprentice program. It is to your advantage to reduce your dealership’s average wages and benefits. This is the figure you multiply by 3.3 to calculate your “ideal” external customer billing rate. It doesn’t make sense to have journeymen technicians steam cleaning equipment when these lower skill jobs can easily be performed by an apprentice. See my text, Strategies, Tactics, Operations for Achieving Dealer Excellence, pages 108 – 116, for a detailed approach to structuring a Formal Apprentice Program.
To further encourage retention, set up a “profit sharing” arrangement for service and parts personnel with two or three levels of participation based on position. Newer techs will know there is an upside to their earnings if the company hits aftermarket billing and productivity targets.
For additional technician training and development resources, check out other trade groups that servicing related industries such as heavy duty truck, material handling and construction equipment, as recommended in my Strategies, Tactics, Operations for Achieving Dealer Excellence, Chap. 19. These five trade associations have extensive employee educational resources. Example: MHEDA is currently releasing a certified technician training program.
7. Technician Signing Bonus
As the economy continues to improve, you can expect further tightening of the labor market. Ads and posters like these are becoming more and more prominent. Remember, a successful, productive, qualified technician can generate over $100,000.00 in incremental income each year at over 60% gross profit margin. What is it worth to bring employees of this caliber onto your service team?
8. Hire a Veteran
These brave guys and gals are trained, loyal, disciplined and ready to apply their technical training to help you become more successful. However, you need to do a little homework. Here are eight of many websites that can help put you in contact with highly trained technicians.
www.careeronestop.org and click on “hire a vet.”
www.nafjobs.org & www.careerbliss.com
Also, if you are near a military base of any size, contact them about how to participate in their Job Fairs and other job placement programs. Check with the local VA office to find out how you can identify veteran candidates. For Reservists and Guardsmen, “make up pay” for their 2 weeks annual military training would really be attracive.
9. Appeal to the Technician’s Spouse
It’s important to know two things about the technician and his/her family. First, most have very close family ties. They probably lived in their community for generations and the odds of your successfully recruiting a technician from Oklahoma and moving him or her and their spouse and children to Pennsylvania or even to the next State are close to zero.
Secondly, the spouse is often a very strong driving and motivational force in the technician’s career. Spouses want them to work steadily in a safe enviornment, with opportunities for personal development and advancement. They want them to earn competitive wages. And they want them to work for a prestige company that they and their parents can be proud of.
What does this mean for your recruiting efforts? Your recruiting messages must also reach and appeal to spouses. If they see a position that might fit, they will usually encourage and motivate spouses to apply, especially if they are not entirely happy with how they are being treated by the current employer. For example, run 2” x 3” display ads in the sections of your local newspaper that male or female spouses are likely to read. Post fliers on local supermarket community bulletin boards. Be creative. Dealer executives, ask your spouse what would be appealing to the applicant’s family.
Did you know that a large percentage of spouses of technicians are the ones who encouraged their partners to apply for specific new job opportunities? What are the implications for your recruitment and retention efforts?
10. More Competitive Wages
The economics of supply and demand drive wage rates and this is no different for service technicians. I just presented a workshop in Colorado in which a Dealer Principal told the class that he increased his offering wage by $2.00/hr. and immediately found a totally different and more qualified category of prospective technical talent willing to work for him. He further told the class that if you are a bottom feeder, you know what you will get before you start.
Some Final Thoughts
- A very large forklift dealer just told me that after an analysis of the reasons why new technicians left within six months, they made a startling discovery. These new recruits didn’t leave because of technical challenges. They left out of frustration trying to get through all the clerical hurdles such as learning warranties, how to set up Segment 2 work, how to handle the angry customer, what to say before the ambulance arrives and a hundred other non-mechanical issues. New techs hated asking Journeymen Mechanics how to do simple administrative chores required of techs. Now this dealer has a dedicated “Clerical Trainer” in addition to their Technical Trainer. And, they have significantly increased retention and reduced orientation time from 1 year to 90 days. There must be an empathetic, knowledgeable coach and mentor for this side of the technician’s job and this very successful dealership just solved that problem
- You need to offer apprentices more than steam cleaning assignments. It is essential to build job content.
- Millennials want job enrichment, personal time more than money.
- Avoid “sink or swim” trainer mentality. Learning environment must nurture for growth.
- Create a “hook” to encourage longevity. 5 year Bonus. 10 year Bonus. Otherwise employee tempted to leave after 5 years with his tool kit.
- Be cautious about hiring “family” or “friends.”
- The company culture is a key to attracting any employee and should be emphasized in the recruiting process. The on-boarding process is the key to getting things off on the right foot and sets the tone for ensuring a long term loyal employee. A successful Dealer Principal recommends a note to the spouse that tells them how excited the company is to welcome their family to our family, etc.
A Few Last Words on New Employee Training
Avoid looking at dealer aftermarket training as a cost. Employee development is an investment in your business.
The way to maximize your aftermarket training investment is to focus on improving specific performance weaknesses or skills that can be improved through training.
Aftermarket training should be a process, not an event. There are three critical components to adult learning. The first involves individual needs analysis. The second is mastering new skills and knowledge. The third aspect involves making the new skills and knowledge an integral part of day-to-day performance… application on the job.
Coaching, encouragement and meaningful evaluation of progress will help ensure optimum return on your recruiting and training investment. A knowledgeable, skillful, customer-friendly employee team is your greatest asset and most powerful competitive weapon.
A very successful dealer now reports: “What’s really starting to work for us is to treat the shop (and parts) as a “Business” – not something that is an afterthought to support the sales dept. This includes involving the techs in financial reviews of how the department and branch is doing, what the challenges are, look for their input to turn around a poor performing operation. It’s unfortunate that many techs really don’t understand how they fit in to the financial health of our business. Involving them and sharing the challenges only makes them feel more a part of a winning team – this word is spreading among their peers and I suspect more techs will want to join our business versus our competitors. We’re not perfect in this initiative, but, where we are opening up the communication channel, we are attracting, developing and retaining better technical talent.”
Walter J. McDonald, CMC, is Founder and President of The McDonald Group, Inc., a private consulting firm focusing on marketing and business strategies, executive education and development. For the past four decades, Walter has been a highly respected construction equipment, Ag machinery, material handling equipment, and heavy-duty truck industry consultant and management seminar leader. Since 1975, Walter has conducted well over 2,650 dealer management workshops throughout North America, Europe, the Far East and Australia.