The ratio of administrative personnel to production staff has changed in recent years, and new strategies for staffing shops properly have been created. Understanding how to properly staff your shop is important to get the most out of your space, your staff and your shop. Leroy Rush, manager of business consulting services with Sherwin-Williams Automotive Finishes, regularly works with shops around the country to help them staff. Rush breaks down the process for placing employees.
The staffing analysis and capacity planner has been designed to help shops determine operational structure and size; determine their appropriate staffing level; and how best to deploy this staff. Doing so can help facilitate the leadership of a collision operation in assessing how to effectively establish sales goals; set staffing levels based on production performance capacity, productive square footage and stall capacity comparisons; and allow management to forecast accurate staffing levels based on historic job tasks and responsibilities.
First, you’ll want to establish a sales goal and determine your desired profit. The calculation for that is:
(Overhead Expenses + Profit)/Gross Profit=Level of Sales
Once we establish our sales goal to reach our desired profit, we will then determine hours needed by department and set sales goal hours by department. We must know these to determine staffing requirements to produce the needed labor hours/sales.
When determining our production capacity, we must consider three key metrics: days available, hours available and historical efficiency. A technician is typically available to work 20-21 days a month. Then you look at the hours worked. As much as we like to believe the techs work eight hours a day, sometimes the reality is that they’re not working a full eight hours. This is important because we’re trying to establish what we’re actually producing. We need to know the efficiency next. We look at historical efficiency with a minimum of two month’s history. I take that math and it gives me the expected produced hours per month. I now know exactly what my current techs can produce moving forward.
Based on that, I can back into my sales goal to determine what the staffing should be. Can I actually improve and meet my sales goals by changing one of those three pieces of data? From that, I can look at what the targets and industry standards are for number of staff employees per technician. I can then determine my exact staffing models based on my sales goal target.
We have a guideline now to determine what the industry average is for number of production techs to support staff, which is typically 1.7. Our current goal would be a 2:1 ratio. It does vary and it can vary significantly based on the book of business.
If you’re a DRP-rich environment, the amount of labor and resource that goes into managing those claims and the claims process, claims management and documentation and uploading, it becomes quite a heavy lift, so we’re seeing that ratio reverse.
There are two other metrics that we look at in trying to determine capacity and those are square footage and stall capacity. Within our capacity planning worksheet, we use it as comparison. It allows us to look at the productive square footage, which is only the areas you repair and refinish vehicles. There are two breakouts for that: We’re looking at production per square foot, which is industry average $18 dollars per square foot and a goal of $35 per square foot. Then we look at sales per square foot total, which is on average $13.50 for the industry and $26 for the target.
Finally, we look at stall capacity. The two of these are great comparisons against themselves because square footage may be poor but stall capacity is fantastic. That could be an indicator that you’re not using your square footage well. Often when we do these exercises, we find we have a tech who’s not very efficient historically and we’ve got them in three or four stalls. That’s going to negatively impact our stall performance. The industry average for sales per production stall is $10,000, while the goal should be $15,000-$25,000. For sales per production tech, the goal should be $22,500 and labor sales should be $15,000-$25,000.
