NMEDA Pay for Performance Pilot Study-2012 Purposes Pay for - - PowerPoint PPT Presentation

NMEDA Pay for Performance Pilot Study-2012

Purposes

• Pay for Performance (PFP) Pilot was launched in May 2012

to test this hypothesis:

• “A Tech with targeted training and incentive pay tied to

efficiency scores will outperform a Tech with out targeted training and incentives tied to efficiency scores.”

• “And the net effect of the PFP hypothesis if proven true will

be to add more revenue to the Dealer’s Service Department.”

Purposes

• Therefore the purposes of this 2-phase project:
• Phase 1: Test the above hypothesis via the PFP Pilot, and if

true:

• Phase 2: develop the NMEDA Certification Pilot to

standardize targeted training associated with improved Tech efficiency scores and increased SD revenues

Current Situation

• Hourly pay packages are typical for Service Department

(SD) Techs in Mobility Equipment Industry

• Because most SD Techs have little at stake in the business

and are not always trained or held accountable for performance, many SD’s are supported by Sales and are not

• perating as profit centers
• And since many Dealers neither invest in targeted SD Tech

training, nor track / reward performance, there is high Tech turnover through transfers within and without the industry

Current Situation

• So, Dealers are less likely to recruit new highly skilled Techs

because there is no industry-wide standard certification pathway to reward and retain them

• Therefore the need for Phase 1 to test the PFP hypothesis

and Phase 2 NMEDA Certification to standardize technical competence and attract and retain the best possible talent for our members

Study Design & Background

• Three NMEDA Member Dealers in US/Canada invited to

participate in Phase 1 PFP Pilot in Jan.2012

• These Dealers were invited to intentionally represent

various sized member operations:

 Small / local single site = Courtland Mobility (Burlington, Ontario)  Medium /regional multi sites = Superior Van (Northern Indiana)  Large /national multi-sites= MobilityWorks (US)

Study Design & Background

• Project Team met Jan.-Apr.2012 to design Pilot and

selected 7 products to be measured for Test Tech efficiency scores (with required trainings & incentives) against Control Tech efficiency scores (no training or incentives)

• The 7 products selected to measure over 6 month pilot:

 MPD/SureGrip HC at 5.0 Std.hrs.  Bruno Joey Lift at 4.0 Std.hrs.  Bruno TAS Installation at 7.0 Std.hrs.  DPA Braun lift and Interlock at 8.0 Std.hrs.  Bruno Curbsider installation at 4.0 Std.hrs.  Generic Inside Scooter Lift at 4.0 Std.hrs.  SureGrip or other Left Foot Accelerator at 2.0 Std.hrs.

Study Design & Background

• “Test Technicians” were given targeted training and Pay for

Performance incentive bonuses based on improved efficiency scores during the 6-month Pilot

• “Control Technicians” were paid hourly and given no PFP

incentives or targeted training

• Each Pilot Dealer devised a customized PFP plan for their

Test Tech

• Two of Three Pilot Dealers had both Test & Control Techs

Study Design & Background

• Efficiency scores for Test and Control Techs were tracked

monthly in a Pilot Scorecard spreadsheet

• Efficiency definition used for the PFP Pilot:
• Efficiency = Billable Hours Produced (BHP) / Clock Hours Worked –

Comebacks

• Example: If a Tech installs a Hand Control in 4.25 hours and creates

4 billable hours with no comebacks, he is 94.1% efficient for that

• job. (4.0/4.25-0.0 = .941)
• Efficiency scores were stored and compared against Manufacturer

Standard Hours

Study Design & Background

• The PFP Pilot was conducted from May-Oct.2012 at:
• Superior Van & Mobility, Northern Indiana, with Test Tech 1 (South

Bend, IN) and Control Tech 1 (Fort Wayne, IN)

• Courtland Mobility, Burlington, Ontario, with Test Tech 2 and

Control Tech 2

• MobilityWorks, Jacksonville, Florida, with Control Tech 3

Phase 1- PFP Pilot Objectives:

1. To test and prove the PFP hypothesis 2. To measure potential revenue impact of PFP on a typical NMEDA Dealer Service Department 3. To compare Test and Control Tech performance levels during the Pilot 4. To confirm need for Phase 2- NMEDA Certification Pilot

Phase 2-NMEDA Certification Pilot Objectives:

1. Create a “standardized level of competency” for Technicians 2. Give Techs strong incentives to improve work performance and productivity 3. Attract best & brightest recruits to our industry 4. Increase Dealer SD BHP and efficiency scores through better trained NMEDA certified Technicians 5. Give Dealers control by linking NMEDA Certification

• wnership to Dealer (i.e., Tech loses Certification if leaves

company)

Study Findings: “Apples to Apples”

• Mike Murphy, Superior Van,

selected “Test and Control 1”

• Test 1 and Control 1 Techs shared similar skills, experience,

knowledge in the industry

• Because of these similarities, represented best “Apples to

Apples” comparison

• This pairing explored the question, “how will 2 very similar

Techs perform given one has PFP and targeted training and the other doesn’t?”

“Apples to Apples-Results”

• Test 1 efficiency improved

10.2% during the Pilot

• Control 1 efficiency improved 3.2% during the Pilot
• Let’s annualize Test 1’s efficiency improvement to see how

it would impact a typical Service Department:

 Assume 40 hrs x 4 weeks/month = 160 available Billable Hrs./mo.  Shop rate is $100 / hour  So 160 available BH / month x 12 months = 1920 available BH/yr  Net annualized impact of PFP to a small, one-Tech SD is about +$20,000 for one or +$40,000 if two Techs

“Apples to Apples-Annual Impact”

Test Tech BH ava. Eff. Rate Annual Impact Test 1-start 1920 93.1% $100.00 $178,752.00 Test 1-finish 1920 103.3% $100.00 $198,336.00 Test 1- NET $19,584.00

Study Findings: “Apples to Oranges”

• Tom Lancaster, Courtland

Mobility, selected “Test and Control 2”

• Test Tech 2 and Control Tech 2 did NOT

share similar skills, experience, knowledge in the industry

• Test Tech 2 was much younger and less experienced than

Control Tech 2

• This pairing explored the question, “how will an

inexperienced Tech perform with PFP incentives and targeted training against a much more experienced Tech who has no incentives or extra training?”

“Apples to Oranges”-Results

• Test 2 efficiency was about

8% behind Control 2 at Pilot’s start

• At Pilot’s end, Test 2 and Control 2 were nearly identical
• Let’s annualize Test 2’s efficiency improvement to see how

it would impact a typical Service Department:

 Assume 40 hrs x 4 weeks/month = 160 available Billable Hrs./mo.  Shop rate is $100 / hour  So 160 available BH / month x 12 months = 1920 available BH/yr  Net annualized impact of PFP to a small, one-Tech SD is about +$5,000 for one or+$10,000 if two Techs

“Apples to Oranges” Annual Impact

Test Tech BH ava. Eff. Rate Annual Impact Test 2-start 1920 97.9% $100.00 $187,968.00 Test 2-finish 1920 100.5% $100.00 $192,960.00 Test 2-NET $4,992.00

Study Findings: “Status Quo”

• Ray Morton, MobilityWorks,

selected “Control Tech 3”

• No Test Tech available at this location
• Control Tech 3 had no Pay for Performance incentives or

targeted training

• This case explored the question, “how will a Tech perform

with no PFP incentives and targeted training in isolation?”

“Status Quo Results”

• Control 3 efficiency declined
• 12.5% during the Pilot
• Let’s annualize Control 3’s efficiency decline to see how it

would impact a typical Service Department:

 Assume 40 hrs x 4 weeks/month = 160 available Billable Hrs./mo.  Shop rate is $100 / hour  So 160 available BH / month x 12 months = 1920 available BH/yr  Net annualized impact of PFP to a small, one-Tech SD is about

• $24,000 for one and -$48,000 if two Techs

“Status Quo” Annual Impact

Control Tech BH ava. Eff. Rate Annual Impact Control 3-start 1920 107.7% $100.00 $206,784.00 Control 3-finish 1920 95.2% $100.00 $182,784.00 Control 3- NET

• $24,000.00

Study Findings: “Multi-year PFP”

• An Anonymous NMEDA Dealer

agreed to supply recent 2012 PFP data from their SD for this report

• The data compares just 4 months with PFP incentives

compared to the previous 7 years with no PFP incentives or targeted training

• This case explored the question, “how will an entire Service

Department perform with PFP incentives and targeted training and complete top-down support?”

“Multi-year PFP Case Study Results”

• This Service Department’s efficiency

improved by 12.7% in just 4 months!

• Let’s annualize this data

to see how it would impact a typical Service Department:

 Assume 40 hrs x 4 weeks/month = 160 available Billable Hrs./mo.  Shop rate is $100 / hour  So 160 available BH / month x 12 months = 1920 available BH/yr  Net annualized impact of PFP to a small, one-Tech SD is about +$25,000 for one and +$50,000 if two Techs!

“PFP Case Study” Annual Impact

PFP SD Case Study BH ava. Eff. Rate Annual Impact SD-previous 7 yrs. 1920 x 2 Techs 60.6% $100.00 $232,704.00 SD- after 4 months PFP (annualized) 1920 x 2 Techs 73.3% $100.00 $281,472.00 Case Study-NET $48,768.00

“PFP Case Study” SD Before PFP

“PFP Case Study” SD After PFP

Learnings

• Apples to Apples =

Pay for Performance outperforms

• When comparing 2 similar Techs, the Tech with PFP

incentives and targeted training will significantly

• utperform a Tech without incentives or training.
• Superior Van & Mobility’s Test Tech 1 improved 10.2% in

efficiency while working with the 7 selected Pilot products compared to just 3.2% for their Control Tech 1.

• This improved efficiency performance would translate

into about +$20,000 gained for a one-Tech SD, and about +$40,000 gained if two Techs.

Learnings

• Apples to Oranges =

Pay for Performance closes the gap

• When comparing 2 dissimilar Techs, the Tech with PFP incentives

and targeted training will comparatively improve against a more experienced Tech without incentives or training.

• Courtland Mobility’s Test Tech 2 gained about 8% in efficiency

while working with the 7 selected Pilot products and nearly closed the gap with the more experienced Control Tech.

• This improved efficiency performance would translate into about

+$5,000 gained for a one-Tech SD, and about +$10,000 gained if two Techs.

Learnings

• Status Quo=

No Pay for Performance is Money left on the Table

• When no PFP incentives or targeted training is invested there is

little or no compelling reason to improve.

• In some cases lost opportunities to improve efficiency

performance can keep entire SD earnings down or unprofitable.

• This status quo example performance would translate into

about -$24,000 lost for a one-Tech SD, and about -$48,000 lost if two Techs.

Learnings

• Multi-year Case Study=

Pay for Performance makes the SD Grow

• When comparing a “before and after” SD

with PFP incentives and targeted training significant improvement can be realized very rapidly.

• The Anonymous SD improved by 12.7% in efficiency in just 4

months after PFP was adopted. This gain was compared against the previous 7 years of performance data.

• This improved efficiency performance would translate into

about +$25,000 gained for a one-Tech SD, and about +$50,000 gained if two Techs.

Hypothesis Supported

• Although not a Scientific study, this Phase 1 Pilot data

supports the hypothesis that a Test Tech with PFP incentives and targeted training will significantly out perform a Control Tech without PFP and training.

Caveats

• PFP record keeping can be cumbersome; there is a need

for customized, integrated software for the Mobility Equipment industry. (i.e., MobiliTrax)

• PFP incentives and targeted training must have
• rganizational top-down buy in to be successfully

implemented.

Recommendations

• 1. Share Phase 1 PFP Pilot findings with Board and publish for

membership 2.Encourage Dealer members to implement customized PFP incentive plans with targeted training 3.Spotlight current Dealer members who have already successfully adopted PFP & targeted training or have developed IT infrastructure to support PFP. (i.e., Cecil Bullard, Tom Lorenz, Tom McGraw)

• 4. Begin Phase 2- NMEDA Certification Pilot, to create a

required standard level of Technician competence for our industry

Q & A