Happy Wife Leads to Technician Retention

I have well over $10,000 of tools in my garage at this very moment rusting away. Now that’s nothing compared to what most of your technicians have invested in tools. Very easily they have $20,000 to $30,000 if not more invested in their own tools. Why not take care of your current technicians and entice other technicians to come and work for you by offering a tool allowance? It’s an investment in your employees and an investment in your company. The better tools that your technicians have the more efficient they will be. If you do not believe me, ask any Matco or Snap-On truck salesmen.? You can either pay your technicians another $5 an hour to retain them or try to steal a technician from your competitor for another $5 an hour or just give them a $ 10,000-a-year tool allowance.

By the way, the $10,000 tool allowance is a cost and therefore a tax deduction.? Versus you paying FICA taxes on the extra $5 an hour.? If the tech only works 2080 hours (no overtime) you will pay an extra $795 a year in taxes per tech.? Now if your technicians, like most technicians, work overtime, and for this example let’s just say they work 10 hours of overtime a week.? Then the $5 an-hour overtime rate, you would have to pay them an additional $3,900 a year. Taxes on that are $298 and you add that to your $795.? Now you have a tax liability of $1,093 per technician versus having a $10,000 tax write-off per technician.? If you want to see what your tax savings could be take your effective tax rate and apply it to the $10,000 tool allowance per technician to see how much money, you will save in taxes every year versus paying $1,093 of extra FICA taxes every year on just $5 an hour.?

OK, if you would have given that technician a $10,000 tool allowance and he still worked the 10 hours of overtime every week you would have saved an additional $3,900 a year on payroll. Because the tool allowance stays the same no matter how many hours they work.? I would imagine most technicians at busy shops are working 15-20 hours overtime.? At 20 hours of overtime, you would have saved $7,800 in payroll plus $1690 in FICA tax savings.? That is a total savings of $9,490.? One more cost savings. $5 at 2080 hour is not $10,000, but $10,400.? So, in reality, the $10,000 tool allowance is $400 cheaper than an extra $5 an hour.? Add the $400 to the $9,490 and you get $9,890.? The result is if your technicians are working an average of 20 plus hours of overtime a week then the $10,000 tool allowance pays for itself.? Not to mention your technicians are more efficient and your technicians feel more valued and empowered. One last thing, your technician’s wives hate and despise the fact their husbands spend thousands of dollars on tools every year.? They will always ask, “Why doesn’t the company pay for your tools?”? Happy wife, happy life, happy life, happy technician, happy technician, productive technician, productive technician, higher recovery rate, higher recovery rate, higher profits.??

Jordan Sitter Associates (reputablerecruiting.com) has been recruiting in the heavy equipment industry since the late 1970s. If you need help recruiting and retaining great talent, we would love the opportunity to help you and your dealership.? Our proven process guarantees results (speed, quality, and value), and our 5-star ratings (over 500 collectively and growing) are evidence of our reputation and consistent performance.? If we can help with a confidential search, succession planning, or top-grading we would appreciate you keeping us in mind.

*Please consult your CPA or tax professional regarding any Tax liabilities or deductions