Our recent Shop Owner Roundtable really got people talking.
Rarely does a moment in a webinar kick off questions and interest in learning more. “What was all that talk about commissions?” people asked. “Does repair quality go down with commission wages?” “What is Troy’s secret? TELL US, FOR WE MUST KNOW.”
Well, friends, ask and ye shall receive. We asked Troy Willich of TDI Fleet Services if he’d tell us more about TDI’s commission structure—specifically how it worked, why they built it the way they did, and whether this type of program was workable for other shops large and small.
Troy, being the awesome person he is, agreed to sit down with us and walk us through the basics of TDI’s program. Bear in mind this isn’t meant to be a top-down deconstruction—more a high-level look at how one shop handles commission and how a shop owner might switch to a similar structure.
Ready? Let’s go!
The first thing to understand is that TDI isn’t solely commission based. Troy describes their operation as a blend of commission work and incentivized bonuses, which we’ll get into later on.
When Troy and his co-founder Steve started TDI, they were both reefer techs. They stuck to a simple commission program for themselves. A commission, they reasoned, gives everyone some skin in the game. It’s often the extra motivation a tech might need to do good work.
As they grew, they eventually purchased a trailer shop that had, in Troy’s eyes, a very complicated commissioning program. Too complicated, in fact. If you have to re-learn your commissioning structure every time you do payroll, well, that’s a lot of brain power best spent elsewhere.
So they set out to create a simple, effective commission structure.
IMPLEMENTING A COMMISSION STRUCTURE
At TDI, technicians are viewed as production employees—”[They’re] paid on what they produce.” That means a flat rate commission per dollar that TDI invoices. When TDI hires a new tech, they are assigned a commission rate based on their experience and the expectations the shop has for them. It begins in the low to mid-20s and may go all the way up to the mid-40s. They revisit these numbers based on market conditions, how the company is doing, and so on.
Here’s a very broad example: if the shop invoices $1,000 in labor to a customer, and a tech is at 35% commission, then they’ll get $350 on that job.
That’s the key right there: it’s labor only, and it must be invoiced.
But Fullbay, you might be saying, invoices can change!
It’s true. While we all complete our work hoping an invoice is final, they can occasionally crop back up and need adjusting: comeback repairs and so on. That’s part of the risk associated with a commission; while the tech is motivated to do their best work, they are aware that sometimes things can shift (and not necessarily against them—invoices can change in their favor, too).
This method does run into some difficulty when your shop is offering a customer discounts, or if a long-standing fleet is grandfathered in at a lower rate. Sure, it might be a lot of work for your shop, but that’s fewer dollars for them to earn commission on.
Hmm. That, friends, is what we call a quandary. How do we get around it?
The shop’s response to this issue is to make sure they’re charging their customers fair rates.
“We’ve realized over the years that if we don’t value what we do, no one else will,” Troy says. “We try not to ever put a technician in a position where he’s doing favors for people.”
GETTING THE BUY-IN
Those considering shifting to a commission structure should know that it isn’t always met with 100% enthusiasm.
“It’s like selling your business to someone,” Troy says. “You can’t just show up and say ‘You should use us, we’re awesome!’ You have to show them.”
Often, this means sitting down with your existing techs or someone you’re interviewing and showing them: here’s what you make now, and here’s what you’d make with the commission structure. Run the numbers.
Not to toot our own horn too much, but Troy has used Fullbay to help with this. TDI does occasionally hire someone who isn’t totally sold on commissions; if they really like this tech and want to give them a shot, they’ll give them an hourly rate and start them at 40 hours a week.
Then, when their probation ends and it’s time to evaluate how the new tech is doing, they’ll fire up Fullbay and show the tech their efficiencies and clocked hours vs. their billed hours, as well as where they’re doing well or not. They also use Fullbay to calculate what the tech’s commission would have been. “Generally,” Troy says, “they’ll switch to commission before their probation period is up.”
(Hey—if you’re a Fullbay customer and aren’t sure how to look this information up in the app, just give us a call or send an email! We’d be happy to walk you through pulling this kind of data.)
WE ALL SWIM TOGETHER
As we mentioned above, TDI implements further incentivization programs like department-based bonuses, management bonuses, and shop bonuses. It’s typically tied to profit and margins. This doesn’t just keep money coming in—it also incentivizes people to work together so they all benefit.
Troy made this comment in the webinar: “Everybody is tied to everybody’s success—if you see a parts runner struggling, you go to help him.”
His success is your success. But so often, this isn’t the case in the diesel industry (or beyond, frankly).
“It’s always bothered me that a lot of companies divide their businesses up into competing departments,” he says. “They didn’t reconnect them as one team—offense and defense are still one team—so everything we do here is to bond the team together.”
You’ve probably heard versions of this over the years: “It’s not my department” is a famous one. Or, “I’m not paid to do this.”
Well, at TDI, you are paid to do this—even if this isn’t necessarily your department—because portions of your paycheck depend on others doing a good job. If the parts department is having trouble keeping up and ends up not meeting their goals for the month or quarter, that could be money out of everyone’s paychecks. So everyone pitches in when someone needs a hand, Troy and Steve included.
“You can’t have an upset customer and reach a goal,” Troy says. “You can’t have an upset technician and reach a goal. You can’t have an upset vendor and reach a goal. You get everybody tied to everybody’s success, and then suddenly everyone is looking out for each other, asking, ‘Where can I help?’ That’s the culture we want.”
WHEN EVERYONE BENEFITS, EVERYONE WINS
So, who benefits from a commission structure? Just a big shop? Or can a smaller operation swing it, too?
Troy thinks commission can work for any size of shop. “You should use it from day one, even if you’re a one-person operation. That gives you incentive to go work. If you’re a one-man show, and you’re using Fullbay—and you should be using Fullbay*—you should still pay yourself a commission because you’re not always the owner. Sometimes you’re a technician. It absolutely works with the smallest and the biggest.”
We hope you’ve found this exploration of commission interesting—we know we did! Does your shop have a commission structure? Are you thinking of implementing one? Let us know how it’s going.
*We did not prompt or pay him to say that; he came up with that himself!