Evaluating Flat Rate and Clock Time

I love determining the source of technical problems and administering solutions, and my ability to do it in computing was fostered by my experience as an automotive technician. I was introduced to the concepts of flat rate and clock time during automotive shop in high school. People who earn a wage are very accustomed to the concept of clock time. They earn money on the number of hours that they work. Salaried workers work under a flat rate. They earn a predetermined amount of money over a specified time period, which is usually a year. The manner that a technical person is compensated, flat rate, clock time, or a mixture of both, affects efficiency, and this relationship is worthwhile to explore.

Some automotive technicians opt to be paid an hourly flat rate. Chilton’s service manuals are a common reference for determining how much time a task requires. If a technician is paid $20 per hour and a complete brake job is specified to require one hour, for example, the technician will be paid $20 to complete the task. The technician will be paid only $20 even if he can complete the job in thirty minutes or in six hours. If the technician is highly proficient and a steady stream of customers is supplied, the technician may be able to complete three brake jobs in an hour. This would allow this technician to earn $60 per hour. If this technician was able to perform consistently, the technician will earn the hourly flat rate of $20 per hour for 120 hours in a 40 hour work week. This technician would be earning three times more money than a colleague who is paid on clock time and is earning $20 per hour.

In the event that business is slow, people who work at a flat rate receive some pay that may be less than a worker on clock time, but the amount they receive is usually enough to keep these workers from looking for another employer that can supply them with more work. Retaining a proficient worker with a good average job completion time is generally a good business practice.

In order for the flat rate to be beneficial for both the company and the technician, the technician must possess skills that are above average and the company must be capable of providing a satisfactory supply of work. The worker will be able to produce results faster, which allows the worker to earn more income and generates more revenue for the company. The model seems more effective with smaller task units, since bigger task units tend to overrun their respective estimated completion times. It should be easy to see that a worker will consider abandoning a bigger task when it becomes obvious that the overall compensation is not worth the additional time and effort that is required to complete the task. This results in incomplete or untimely work, unhappy customers, an unhappy company, and a less than happy worker.

The lack of a standard reference for the amount of time a computing task requires is a significant problem in implementing a flat rate compensation arrangement. Technicians are perhaps the most accurate people in measurement, including estimates in the amount of time a task takes. Professional technicians understand that their reputation is always at stake when they express their technical opinions. This includes opinions on subjects such as feasibility, utility, and costs. Buyers should beware. There are also technically inclined laypersons, who perform computing tasks as a side job and are not interested in forming long-term commitments. So-called “technicians” who are looking for a simple “hit-n-run” are the people to avoid.

Making adjustments to the flat rate or estimated completion times to more closely match a proficient technician is a common pitfall among businesses, which can only see short-term cost reduction. This approach encourages the technician to place less priority on these companies’ tasks and seek other companies that are willing to pay a better flat rate or recognize an estimated completion time that is closer to the average. Businesses that focus on the short-term expore themselves to the risk of having their tasks’ completion times extended, losing their proficient technicians, and exposing themselves to technicians that are more expensive or less adept.

Paying technicians on a flat rate with a minimum fee as a retainer is an option to getting more small to medium technical tasks done quickly and efficiently. If a company receives benefit that is greater or equal to the costs incurred, and the technicians are content, then there should not be any reason that this arrangement needs change. Technicians that inflate short-term costs by adjusting time estimates or their flat rate will encourage companies to search for alternatives. Businesses that deflate or underestimate costs by adjusting time estimates or the flat rate encourage technicians to consider servicing other businesses, which are quite possibly competitors. In the long-run, the interests of the technicians and the businesses that they serve will drive their service terms to equilibrium.

5 Responses to “Evaluating Flat Rate and Clock Time”

  1. scoulkreelete Says:

    I read some of the posts and I think it is a great site.

  2. Stillts Says:

    As a young Flat rate technician that just graduated and is now working in the field I realize how much the older techs dont care about the customers vehicles. I always thought that turning wrenches correctly and not taking “BAD” short cuts would be seen in good with the Managers… Instead beating the flat rate system and making them more money even if they dont pay you for some of the task you have to complete is what they care more about. If you ask me the flat rate system sucks…not because I like quality work but they pretty much reward poor work. If there are larger jobs that have to be done on a vehicle they wont get done. Instead you look right pass those bigger jobs and take on smaller jobs increasing your car count instead of the harder more difficult jobs. You can basically be a Senior Technician that does only Entry Level task… how embarassing but profitable…Does it look like a challenging rewarding career anymore to me? No… someone needs to do something about the compensation or alot of new coming technicians will leave the industry just off how they realize that there careers will get boring learning new things and never using there knowledge… Being a Master Technician and doing Entry level work

  3. John N. Says:

    As owner of two shops and an on-site maintenance service, I have developed serious reservations regarding flat-rate payment of techs. We assign work by what needs to be done, not by tech choice so the mix of large and small jobs is management controlled. Still, I have come to believe that flat rate often puts quality at risk. We have eliminated it for all but our most senior tech. He has an ethic that stresses high quality work done quickly and the result is high productivity with very little come back work. On the other hand, other flat rate techs have sacraficed quality for speed and high earnings. Ironically, the low quality high speed work often causes lower earnings because of come backs. I doubt we will ever pay flat rate to another tech, clock hour work with reasonable performance standards is proving superior.

  4. francisco delgadillo Says:

    every year i got payed 8 hours of holliday pay regardless if i completed 8 hours a day for that pay period but this year i was told that me and a couple of the other techs got partial of 8 hours because we havent been flaging 8 or more a day…does that sound correct i just need to know because they are always changing rules,,,,clawson honda of fresno

  5. Lance Francisco Says:

    I have owned an Independant automotive repair business since 2008. I started my studies as a young boy, by reading all the literature I could find in school libraries, and hands on tinkering. During high school, I utilized our BOCES program, taking the courses offered in my junior and senior years. Upon graduation of High school, I entered Nashville Auto Diesel College. Upon graduation from NADC, I started out in the work force as a flat rate technician for a GM dealorship back home (New York). Very bad memories for me. Allthough I had a great backround and was well rounded in my field, I was still (green) to the real world of making a living and how to make “time” on the jobs assigned to me. It took me approximately 5-7 years to come close to making ends meet. Service writers always seemed to feed the “gravy” work towards the guys that they have known for some time. I finally had enough with dealorships, and took a job with an independant shop after bouncing from dealer to dealer. I took a pay cut as far as the wage number goes, but this employer hired me on at an hourly wage. I found that I stopped stressing to make a wage, and focused better on my jobs at hand. I progressed much faster as a tech. and enjoyed my job. I left that employer to work at the shop that I now own, and only for the purpose of buying a business from a retiring owner. When I made the transaction, I changed all my techs pay scales from flat rate to hourly. I find that the quality of work, and employee morals is well worth it. The hardest thing I deal with now, is keeping them focused on the thin line of productivity and quality work.

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