Time is Money
One by one, the technicians quit—four out of five of them, to be exact.
Looking back, Kelly Callas understands why. With no automotive back- ground, she had moved into her husband Tony’s shop, Callas Rennsport in Torrance, Calif., two years ago as the financial manager, and soon became an ambassador for change alongside office manager Sadie Durning.
“These guys have years and years of experience,” she says. “And here come two newbies, telling everyone about these new changes.”
For what they lacked in mechanical understanding, Callas and Durning made up for with their histories as managers in the hotel and healthcare industries, where they developed a keen attention to detail.
To the naked eye, everything seemed fine. Technicians were pushing out vehicles, moving in sync, constantly working. But as Callas and Durning examined shop processes from a KPI standpoint and dug deeper into the timesheets, only 65 percent of clocked hours were being billed to the customer.
Upping that number to 100 percent—which, through a team effort, the shop eventually accomplished—didn’t happen overnight. It took over a year of discipline, record-keeping, careful tracking, and holding employees accountable to increase the average repair order by $739.
Growing up in his father’s Porsche shop, very little of Tony’s life hasn’t revolved around luxury and high-performance vehicles. At age 10, he was servicing Porsches. By age 18, Tony was attending weekly training seminars and working the pits during races on the weekend. Moving into his 20s, he worked in the mechanical department at various Porsche dealerships in the Los Angeles area.
It was all preparation for opening his own auto repair shop, Callas Rennsport, in February 1993. Specializing in high-end vehicle servic- ing and restoration, the shop’s ARO has always been extremely high, resting around $1,800 at the end of 2013, leading to $1.3 million in total sales (31 percent of revenue comes from restoration work).
Callas describes Tony as the artist, and herself as the businesswoman—a former business owner herself, she was brought in to view the shop from a broader perspective and pinpoint ways of making the company more profitable.
Durning came on board in June 2014, and immediately began working with Callas on overhauling shop processes. They revamped the phone-answering procedures, fixed the shop’s IT issues, and streamlined its accounting system. Then the two collaborated with a consultant on reversing the problem of under-billing customers.
It’s easy to gloss over technicians’ timesheets when employees appear to be constantly working and your ARO is so high, says Callas. But once she and Durning saw that number—of the billable hours available between five technicians, only 65 percent were being charged to customers—they started observing processes and technician movement more closely.
“The issue was more the lack of accountability,” she says. “It’s not that people weren’t working hard. It’s just that their hours weren’t getting on paper so that my service advisor could bill out for it.”
Because there was no formal tracking system, technicians were under billing the proper amount of hours for vehicle service when communicating with the service writer. In addition, the tech staff was often spending time on menial tasks, such as unloading parts from a truck or reassembling jobs that could have been handled by shop helpers.
Throw in the fact that Callas Rennsport performs restoration work on high-end vehicles that require dozens of hours of billing, and, all in all, Callas estimates the shop was losing over $200,000 a year in underbilled hours.
Deep down, Callas and Durning knew it wasn’t the technicians’ faults—holding employees accountable for billing the right amount of hours and keeping focused on doing repairs throughout the day starts from a managerial standpoint.
“Shop owners look around, and they know people are working 40 hours,” Callas says. “But they don’t understand where the money went. That was the thing we really learned. If you’re not measuring it, you can’t manage it.”
Callas and Durning drafted a weekly time tracking sheet for technicians to fill out, which, as of today, has evolved into a set of three forms that allows the shop to track hours billed from a monthly, weekly and daily perspective.
The weekly tracking sheet was simple enough: Write down the amount of hours you worked, the amount of hours credited to the customer, and turn it in at the end of the week.
But when numbers weren’t actually improving, Durning and Callas implemented a daily tracking sheet, which required a date, repair order number, a brief description of the labor, the labor hours, and the hours credited.
“They wrote down in more detail about how long it took for them to do each part of the job. So it’s not just changing the brakes, but it’s each part of the brake change,” Durning says. “It created a common understanding of, ‘OK, how long does it take our techs to do certain tasks?’
“I pulled the data from everything the techs wrote down and organized it in a way that we could see how we need to improve and how well we were doing,” Durning says.
What may seem as simple and rudimentary as logging daily labor became a point of contention at Callas Rennsport. During morning meetings, Callas and Durning would review the tracking sheets and continually drill technicians to get their credited hours closer to their labor hours, leading to four employees quitting.
“When you’ve been doing something for 22 years, it takes hard work to really change how you work each and every day,” Callas says. “And we were making sure that everyone knew that this was a permanent change.”
With more detailed tracking sheets and new employees willing to fill them out, the weekly tracking sheets allowed Callas and Durning to see the numbers gradually improve over a period of several weeks. Eventually, the monthly tracking sheet allowed them to observe how well their discipline was working over longer periods of time. Comparing the monthly, weekly and daily charts together allowed management to see where improvements were needed. They could now look over the timesheets each day and find answers in a real-time fashion.
“Whereas we were looking at everything before in the rearview, at the end of the month or week, now we’re looking at it at the end of every day,” Callas says. “Sometimes we’re even breaking it down in the middle of the day.”
Six months into 2015, Callas Rennsport had 100 percent of hours clocked billed to customers. The ARO now rests at $2,539 ($1,791 excluding restoration), and Callas achieved an annual revenue of $1.67 million in 2015.
Enhanced note taking has improved the service writer’s ability to communicate the details of repairs and justify higher bills.
“It gives him more information of how to explain to the customer what the process is,” Durning says. “They love the time and detail that we take. We now have all these details about the history of their cars and their restorations.”
Beyond the numbers, Callas says shop culture has improved overall, and the tracking sheets have created an improved workflow and sense of camaraderie among employees.
“It’s not that they’re rushing to get work done. It’s more so that, as a team, they’ve grown to understand that their time is very valuable to us,” Durning says.
“It became a symbol for change overall,” Callas adds. “After a year and a half, we have a completely different team now. It’s helped us develop into a shared sense of responsibility, a better outlook for the shop, and a much more team-centered attitude overall.”
For any future changes to be implemented, Durning and Callas have learned that communal buy-in is essential for shopwide prosperity. “It wasn’t just us asking for the information. It was something we all had to do together as as a shop,” Durning says. “Everyone had to be dedicated to making this change, which led us as a whole to go toward being more successful. It can’t just be us up here brainstorming and them in the back working. We had to come together.”
For the Callas Rennsport management team, the lesson has really come down to sticking to a plan through thick and thin—people will always fight change, but, eventually, the results will speak for themselves.
“The task of getting it done was really Sadie and I teaming up and saying, ‘What are we going to do today? What are we going to do at this meeting? How do we get this idea across the people?’” Callas says. “I think a lot of shops go through the same thing. It can be really daunting to change something that large. But we’re proof that it can be done.”