With 2009’s uncertain economy, how are dealerships handling pay increases? We certainly want to retain good employees, but at this point is it realistic for employees to expect raises? Several of our employees are asking for raises, but with the uncertainty of the economy and the fact that expenses are definitely up (and sales are questionable), how are others addressing the issue of pay raises (specifically for technicians) without adversely affecting the company? What other means are you using instead of raises to maintain good technicians?
– Alicia Nyborg, SuperTech Inc. (Fayetteville, GA)
Duncan Murphy: Look at the culture of your company and take any steps related to payroll and share them with your employees. Your personnel costs include much more than a rate per hour, although sometimes it is hard for Techs to see past their check. Look at the mix that would be most acceptable to your people. For a start, restrict overtime. Have everyone work 7 or 7.5 hour days. Can you change their participation in paying for healthcare? All of these might allow a small increase in pay and keep your costs about the same. If you do not have any performance pay in place, consider doing so with a year-end bonus potential of $2,000, which is $.50/hr for the year. The bonus could be based on productivity goals, customer service and stewardship. We have one in place now and it works. Ultimately, you need to be open with them and see what the majority are willing to do. You must also set the example with management pay packages. Make it clear that your job one is to make sure they have a job, and you are doing everything in your power to manage your ship through the difficult waters in which we are all sailing.
Richard Donnelly: We have frozen all pay increases in 2009. We have experienced minimal turnover in technicians and other salaried and hourly personnel. I think the main reason is that we have always had open communication with our employees. In January, we had meetings at each of our branches. We discussed our sales trends and what we were forecasting for 2009. We reinforced that our company is financially stable and we have a long-term strategy to grow the business, but we had to make some tough decisions to manage during these economic times. One of those decisions was to freeze wages. While the employees were not happy with this decision, after we reviewed the sales forecast, they understood why we had to freeze the wages. We told the employees that if sales and profits were better than forecasted, then we would share the incremental increase with them. During the last downturn in 2002-2003, we had to freeze wages. Profits were better than forecasted and we shared with the employees. I believe these actions helped improve employee morale and a long-term commitment to the company.
Scott Hennie: We believe you must communicate with all employees as to what is happening in the marketplace, how it affects the company and how it affects each individual in the company. This is the baseline for the actions that must be taken to ensure that there is a company when the economy turns back up. We believe in making sure that each employee has a place on the team, but if there is no team, there is no place for the individual. That being said, we have made some difficult decisions in order to manage our expenses and keep them in line with the revenue being generated. This includes salary freezes, hiring freezes, suspending 401K match and eliminating non-productive staff members. We have also implemented salary re-ductions for everyone but service technicians. However, we are monitoring their billable hours to make sure that each technician we have is generating the income levels that are expected of them.
John Faulkner: There are no pay increases in our organization. In these times, we are doing our best to keep employees employed and working. There could be a merit increase, but no across-the-board pay increase is in the plans for 2009. It is not realistic for anyone to expect a pay increase in this environment.
Steve Strifler: Cisco-Eagle has tied pay increases to the obtainment of financial targets. Once those targets have been obtained, pay increases will be implemented.
Jerry Weidman: We have taken a number of actions related to employee pay. We implemented a wage freeze for all positions for 2009. The freeze applies to technicians as well. We have eliminated all bonuses for 2009 except for one of our divisions that is profitable and growing. For departments that have reduced work levels due to the economy, we have reduced the work hours for employees. For senior managers, we have reduced wages.