How To Calculate Technician Efficiency
There are 2 Ways to Calculate Technician Efficiency, be very careful which one you use because one is accurate and the other one is misleading. One way your tech is a super star, the other way he’s average or maybe worse.
One way to calculate Technician Efficiency is pretty easy, you need basic Shop Management Software or you need to be willing to keep track of how many hours each of your techs billed during a week, assuming he works 40 hours.
The 2nd way definitely needs more advanced Shop Management Software, a system that has features that allows a Tech to log all Non Billable Hours during the week.
Calculating technician efficiency accurately is next to impossible without using software that has a built in time clock and technician efficiency reports. Can it be done, yes of course with a fair bit of time and effort, but then you are spending hours on a project that should take minutes.
We spoke about the differences between technician Productivity vs Efficiency in another blog post. We also spoke about why technician efficiency matters to your business, to your bottom line and why it should matter to your technician. Now we are going to talk about How to Calculate Tech Efficiency.
I went looking for the dictionary description and it came back with this:- The ratio of the useful work performed by a machine or in a process to the total energy expended or heat taken in. In repair shops that means how much work did one person get done in one week, 40 hours, vs the amount of hours billed out. If your labor guide says the job should take 2 hours and the technician took 2 hours then he is 100% efficient. If he did it in 1 hour then his efficiency rating went up to 200%.
This is normally called Book Hours vs Clock Hours, how long did the labor guide say the job should take vs how long did it actually take.
1st Way to Calculate Technician Efficiency
Using the 1st way to calculate technician efficiency you only need to know 2 things, (if you’re not accounting for Non Billable Activities)
-Book time (suggested time)
-Clock time (actual time)
X (Book Hours) divided by Y (Clock Time) = Efficiency
30 40 = 75% Eff
Not Let’s calculate the same Technician, but 1st subtract his Non Billable Time from his Clock Hours before comparing it to his Book Hours.This is the only accurate and fair way to evaluate job performance. Real life is a shop varies by management style, Service Writer skills, and job description. This is the real difference between shops that are profitable and those that aren’t.
Road Tests, Parts Ordering, Paid Breaks, Driving a Customer Home, Running for Donuts, Jump Starting a Vehicle, Taking out the Garbage, Going to the Tool Truck, Helping the Shop Next Door, all these activities eat hours that could be used to repair vehicle.
2nd Way to Calculate Technician Efficiency
For this method you need to know 3 things.
-Book Time
-Clock Time
-Non Billable Time
X (Book Time) divided by Y(Clock Time minus Non Billable Time) = Efficiency
30 / 20 ( 40 minus 20) = 150 %
If you compare the 2 methods of working out efficiency you can see that the same technician working the same hours, billing the same number of book or billable hours can be evaluated as being 75% or 150% efficient.
To be fair to the Technician and to the bottom line of the shop, only the second way is really accurate.
It takes advanced Shop Management Software, a Service Writer, an Owner, and a Technician who is disciplined to track Hours Paid (Clock), Hours Billed (Booked), and non billable Hours.
Working out technician efficiency is possible in a repair shop that doesn’t use management software but it is not easy and gets confusing. It’s also not a good use of the repair shop owners time.
Improve Efficiency & Increase Profits
We get asked how to increase technician productivity by shop owners who should really be asking how to improve technician efficiency. Knowing your technician’s efficiency, and working to improve it is one KPI that will improve the profitability of any auto repair shop. If it takes hours of collecting time cards, adding up the numbers and then doing math for every hour of the work day, and every RO, this practice usually fails by the 3rd week.
Scott Johnson CEO and Owner of Profitboost shop management software knew how important technician efficiency was in the mid 90’s, when he owned a transmission and general repair shop. He understood the 2 different ways to calculate it and after years of trying to work it out with paper and pen, then excel, he decided there had to be a simpler way to do it, so ProfitBoost was born, the 1st Web or Cloud based Shop Management program.
Believe me it really is easier to see all your Key Performance Indicators (and just about any other numbers you need) when using the built in features of Profitboost. The features that help you calculate efficiency for technicians include
Time Clock
Each member of staff clocks in and out at the beginning and end of the day, so you can see clocked hours (if anyone is late or clocks out early it will show on a report). Techs can then clock onto each labor line on jobs. They clock off if they stop for Non Billable time, Road Tests, Parts Room Ordering, Paid Breaks, Delivering a Customer, Running for Donuts, Jump Starting a Vehicle, Taking out the Garbage, Going to the Tool Truck, Helping the Shop Next Door the tool truck or lunch, they then clock off as they finish the labor line and then clock onto the next job or go to lunch or home at night.
The times are calculated and added up by the software (no need for time cards, or scribbles on the back of envelopes) and are available in an easy to read report. You can see what labor lines on what RO’s they logged onto and how long they took on each.
The time clock helps with time keeping, payroll and tech efficiency reporting. If your shop does not use a time clock currently you may get some pushback from technicians as to why it won’t work for them.
Don’t listen! Using a time clock for each job will radically affect your profitability.
Technician Efficiency Reports
As mentioned earlier you can work all the numbers out yourself but it is painful and time consuming. The built-in reporting allows you to see exactly how efficient your technicians are, or aren’t, you can see the overall efficiency at a glance or you can drill down and see what jobs caused issues that may be negatively affecting your efficiency numbers.
You can show the reports to your team and discuss individual performance, once they understand that everything is being tracked and looked at most techs have an improvement in personal performance.
Efficiency and Profitability go Hand in Hand
The old management trope about “what can’t be measured can’t be managed” is true.
Measuring technician performance, normally seen as how cars they push through the shop is in some ways the easiest but also most useless metric. If they are not efficient the number of jobs they do a day doesn’t reflect the true potential, improving technician efficiency will naturally increase tech performance. Increased technician efficiency will almost certainly lead to an increased Profit Per Hour and hopefully more money left for you at the end of the month.
Track the efficiency numbers and you may discover you are overstaffed, that you can take on more work, and which one of your team is not pulling his/her weight.
How to Increase Technician Efficiency
As you start to track your tech efficiency you will see it improve, and you will start doing things to make it improve. Look at your systems and procedures, look at your parts ordering process, start taking notice of which parts suppliers consistently send you wrong parts that have to then be replaced.
Every time a tech is waiting around for parts it is killing their efficiency and reducing the amount of cars your shop can work on each day. That means customers have to wait longer and some will get annoyed and not use your shop again. Lack of efficiency in the auto repair business has real costs for the shop owner.
Do you have techs who smoke or take personal phone calls while on the job?
Every disturbance that takes a mechanics concentration off the job in hand uses an extra 10 minutes of his time to get his head back into the job. So a 5 minute phone call uses up 15 minutes of his work time in reality. Techs doing the walk and talk as they go through the workshop is another efficiency killer that may seem inconsequential but when you take 5 minutes off each of the techs they talk to on the way to the service writer and 5 minutes on the way back it adds up.
Increasing tech efficiency requires you to look at the whole process that you go through from when a car comes in right the way through to the customer collecting the vehicle. Small improvements at each step of the process will result in greater efficiencies and efficiency equals profit.
Congratulations you just took another step towards managing your auto repair shop instead of it managing you.
When you use Profitboost repair shop management software correctly it will allow you to do so much more than just write repair orders. Learning How To Calculate Technician Efficiency is easy with the right tools.