Cropper: The Importance of Performance Reviews
In this industry it’s no secret that employee performance reviews aren’t handled the best way for individual businesses or their employees. In my experience with auto body shops there’s not a lot of consistency between big and small shops, as both tend to focus on getting caught up on the daily grind and push aside those bigger details like performance evaluations.
With Classic Collision right now, we don’t have it as squared away as we should. It falls on a general manager or regional director’s hands to do, but there are a lot of the areas where our leadership gets caught up in the day-to-day management and we don’t do it. What I’ve found to work best is to conduct a performance review at least on a yearly basis. Ideally I’d like to conduct one within 30 days of someone being hired, and then yearly after. And in this industry employee evaluations and pay raise discussions are two separate entities, so we have always tried avoiding having the typical 30-minute discussion about their performance, and then give them a 3 percent pay raise, for example.
The collision repair industry is different in that so much of our workforce is dependent on what the insurance companies pay us per hour of work, it’s not uncommon to go six or seven years and not see an increase if you’re an employee. As a shop you have to fall within a certain ratio where it’s typically 60-40. So for every $100 an insurer pays us to do the work, $60 needs to stay with the shop and we can spend $40 on the employees. If we get out of whack with that ratio then we won’t be able to run the shop for long.
So because of that, especially our body and paint techs don’t get yearly raises. Their increase in compensation comes with whether the market drives the labor rate up. But if we were to compensate our techs yearly, we’d quickly fall out of that 60/40 split. And with administrative staff that might be different, but still you can only dedicate 10-15 percent of your sales to them. Is an employee’s compensation tied to performance? Yes it is, but in this industry it’s best to try to separate the two.
Most of the time it’s employees who are driving the conversation about reviews, and nine times out of 10 you can tell if they’re looking for a pay raise or truly want to know how they are performing because they don’t get to hear it enough from leadership.
At our best, my company conducted reviews at least yearly, and then we threw in a couple of other things that worked well. One was having the employees review themselves first. It’s about an 8-10 page assessment we have them fill out.Their direct supervisor then fills out that same assessment. The goal is that we want to close the gap between what the worker rated themselves versus what their supervisor rated them. For example, if they rated themselves a 9 in one area and their supervisor has them at a 5, what can we do to ensure they become a 9 in their supervisor’s eye, as well?
We also do a survey every few years where we really let the employee rate the company as a whole, and this comes down to things like how are you treated, how is communication in the company as a whole, etc., all the way down to questions like “Is a Christmas party important to you, or would you rather receive a yearly bonus or get a day off?” In a perfect world I’d like to do this survey yearly, but you also have to be prepared to act on it.
It’s a long process because we had to take every employee’s response and put it into an Excel document so we could see which areas were trending up or down. But it’s a great tool to use because it allows you to see what your employees value most.
Regular feedback is key
Generally speaking, in this industry management doesn’t provide daily or weekly positive feedback to their employees, and there’s really no standardized way to measure technician performance. We just don’t have a standardized method to track that like a lot of other industries do. Oftentimes it’s totally open to the interpretation of that manager or body shop owner.
We certainly aren’t proactive when it comes to reviewing employees. Generally speaking, it’s in your best interest to provide feedback more often than not, especially now when trying to retain your technicians. We’re in an environment where most shop owners will hire just about anyone who can fix a car. If there can be better communication from the leadership to the technician side before that person leaves for greener pastures, you’ll likely see an increase in retention.
The bottom line is each shop owner needs to figure out the situation that works best for them and how often evaluations should take place (yearly at the least). On the flip side, however, make sure you follow through on your promises. If you have a handbook that states every employee gets a 30-day review, then set a calendar reminder and make sure you do it. Because if you aren’t following through on your word, how long is the employee going to sit and stew on that before they say something or worse yet, go find a new job altogether?