Budgeting Your Benefits

With the variety of retirement plans, insurance companies and compensation programs to choose from, the details of putting together a benefits package can be dizzying. It helps to start with a basic framework, an outline for formulating the best benefits package that will help attract the best employees to your shop, keep them motivated and save you money.

Bob Cooper, a longtime instructor with the Automotive Management Institute (AMI), spent many years running his own repair shop. His experience in his own shop and helping other shops over the years has helped him to develop such a framework. Every business is different, he said, but they can all benefit from a good benefits plan.

Six Elements of a Sound Benefits Plan

"Everybody in the employment world needs to have six elements in their compensation and benefits programs," Cooper said. "If you miss one, you're going to miss some business."

The first element is basic compensation.

"I call that oxygen," he said. "That means you work with me and I have to give you enough money to put a roof over your head and put food on your table. Not to get you ahead in your life, but to make sure you can live."

Basic compensation includes a pay scale that is competitive for that position, paid vacation, paid holidays, ongoing training, uniforms and what Cooper calls "well days."

"They're not sick days," he said. "You have to be sick to use sick days. If you're well, you get the money back at the end of the year for all the days you weren't sick. If you're well all of those days, I double that money at the end of the year."

How do you determine what a "competitive" wage is for a technician?

"What you need to ask yourself is how much does a technician have to earn to live a decent lifestyle where you live," said Cooper. "What is a service advisor going to have to earn? When you land on those numbers, you need to incorporate that into your business model and see how much the payroll needs to be, and work backward from there to see how much volume in sales you need to do to afford that. It doesn't work the other way around."

Cooper calls the second element opportunistic income.

"Opportunistic income is opportunity for the technician to earn more money working for you," he said. "Whatever you can measure in productive results is where he or she can earn more money."

In any area where you can measure productive results, reward your employees for an improvement in those results. More vehicles through the service bay should equal a bigger paycheck in the pocket.

"Now instead of just a roof over their head, they can afford the toys they want," said Cooper.

The third element is exemplary performance rewards.

"Anytime you come to me with an idea that is extraordinary that I can use in the business gets you a reward," explained Cooper. "The ideas come more often the more often you reward them."

And, he pointed out, even if the idea is not one you can use, you can still thank them.

"If it's an idea that brings in a few hundred dollars, certainly I can give a dinner certificate," said Cooper. "If it's an idea that brings in an extra $1,000, I can give something better."

The fourth element is security, and this is where the factors that one normally thinks of as benefits come into play.

"Security means that anybody who has been with the company beyond the probationary period needs to know they're valued," said Cooper. "You can do this through life insurance, health insurance, retirement programs, 401(k)s, IRAs and especially business cards. Everybody needs business cards because they're all part of the business, including the janitor and the driver."

Element No. 5 is rewards for loyalty. There are infinite ways to reward loyalty, but Cooper stresses that these rewards should not be monetary.

"Give them gift certificates, a discount club membership like Sam's or Costco, Disney Dollars if they have small children, certificates to stores the family frequents," he suggested. "All this requires that you know the family, which you should anyway. When you're in business, they're your surrogate family. You spend more time with them than you do your actual family."

Rewards should fit the occasion as well.

"Take them out to dinner on the anniversary of their hire date," he suggested. "After they've been with the company for five years, send them and their spouse on an expense-paid five-day vacation. Did you know it would cost me less as an employer to do that than to give the same person three weeks of paid vacation? You pay the travel and hotel and that's it. Most business owners use charge cards with air miles, so the flight won't cost you anything. It's amazing how powerful that is, and it's a great way to get loyalty."

The sixth element is leadership. How is this a benefit in the same way as a health plan, you may ask? The people operating the company have to have a clear vision so that employees can have hope of reaching their goals, said Cooper.

"When you're sitting down to hire someone," he said, "you tell them, 'In addition to all these other benefits I've told you about, we offer leadership. It's my job to help you earn the income to meet your goals. Sometimes you're going to be off-focus working on stuff, and you have my promise that I'm going to bring leadership to help this company grow and ensure your continued income.'"

How Will These Benefits Help My Business?

Many business owners at this point will wonder how they are going to afford such a generous plan. Cooper believes the problem to overcome is one of operation, not implementation.

"Most guys are afraid," he said. "They'll say, 'I can't afford to give a paid vacation! What if they don't produce?' Well, why are they going to be with you if they don't produce? YOU take the first risk as a business owner."

With those risks come great rewards, Cooper said.

"People never come to work for businesses, people come to work for people," he said. "When people recognize that you care about them and that you know their families, word gets around, and people want to come work for you. Stars gravitate toward you, productivity stays high, and people stay with you. It helps drive morale, which will help you drive the product you deliver, which will help drive sales."

None of this is new or complex, said Cooper. "The best laws of life are too good to be new. Guys are always trying to come up with some new chemistry to make life work, but all this is the sort of thing your mom would have told you."

And what would mom say employees value most? Cooper told his story this way:

"Back in the '70s, I had a tech who was a remarkable producer, and then he started to drop off. I called him in to my office and asked, 'What's bothering you?' 'Nothing,' he said. I told him, 'You're not going to leave until you tell me what's wrong.' He changed my life, and this is what he said:

"He said, 'You do all the things you say you're going to do, but you never say thank you to anyone.' I was wanting to tear his head off right then, because I bought this man his first set of tools and taught him everything he knows about fixing cars and HE never said thank you. But I went home that night and I realized he was right. Employees need to feel valued. Not 'Thanks' at the end of the day, but very serious, walk into the office and tell them how valued they are. Tell them concretely what they're doing that matters to you.

"People won't sell their lives for a million dollars, but they'll give it away for a Purple Heart. They need to feel valued and appreciated."