The Four Kinds of Leaders

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The Ratchet+Wrench Industry Survey asked respondents what leadership category they fell into—by far, “direct involvement” won out, followed distantly by “visionary.”

Which best describes your leadership style?

  • Direct involvement: I get my hands dirty on the shop floor and lead by example: 40.6%
  • Hands off: I trust my team with key decisions and am not afraid to delegate: 16.8%
  • Democratic: I encourage staff input in decision making: 15.5%
  • Visionary: I focus on the big picture and inspire my team to succeed: 25.1%
  • *1.3% responded “Authoritarian: It’s done my way or it doesn’t get done”

 

Altogether, those respondents posted meeting these KPIs in their businesses:

Averages of All Survey Respondents

  • 42.9% had a revenue of over $1 million.
  • 35.7% had an effective labor rate above $90.
  • 20.9% had an average tech efficiency of over 100 percent
  • 29.1% had average tech productivity
  • 53.2% had an overall net profit margin above 10 percent.
  • 51.6% had an average repair order over $400.

 

After sifting through the same numbers as noted above individually for each leadership category, however, Ratchet+Wrench was able to note in which categories certain leadership styles post the best KPIs.

 

1. Direct Involvement

Direct involvement is by far the most popular leadership style with shop owners, with over 40 percent of respondents picking this option. However, it had some of the weakest overall KPI numbers.

Only 26 percent of the respondents reported having an annual revenue of over $1 million, below the overall survey average of 42.9 percent with a revenue above that number.

Averages of Direct Involvement Leaders

  • Annual Revenue over $1 million: 26%
  • Sales Closing Ratio over 70%: 55.8%
  • Average Repair Order Above $400: 44.1%
  • Overall Gross Profit Margin Above 50%: 39.2%
  • Gross Profit Margin on Parts Above 50%: 33.7%
  • Gross Profit Margin on Labor Above 60%: 43.1%
  • Overall Net Profit Margin Above 10%: 47.5%
  • Posted Labor Rate Above $110: 20.4%
  • Effective Labor Rate Above $90: 21.5%
  • Efficiency Above 100%: 13.3%
  • Productivity Above 90%: 24.3%

 

2. Hands Off

The hands-off, delegating decision seems to be fairly popular with many of our recipients, and it led in three KPIs: average repair order, gross profit margin on parts, and posted labor rate.

Averages of Hands Off Leaders

  • Annual Revenue over $1 million: 48%
  • Sales Closing Ratio over 70%: 54.6%
  • Average Repair Order Above $400: 61.3%
  • Overall Gross Profit Margin Above 50%: 65.3%
  • Gross Profit Margin on Parts Above 50%: 56%
  • Gross Profit Margin on Labor Above 60%: 58.7%
  • Overall Net Profit Margin Above 10%: 62.6%
  • Posted Labor Rate Above $110: 54.7%
  • Effective Labor Rate Above $90: 48%
  • Efficiency Above 100%: 25.3%
  • Productivity Above 90%: 33.3%

 

3. Democratic

Respondents with the democratic leadership style saw some strong stats, with over 60 percent of those shop owners having a revenue above $1 million. Nevertheless, the AROs, effective labor rates, and net profit margins in this category were all below the survey’s average.

Averages of Democratic Leaders 

  • Annual Revenue over $1 million: 60.8%
  • Sales Closing Ratio over 70%: 62.3%
  • Average Repair Order Above $400: 47.8%
  • Overall Gross Profit Margin Above 50%: 56.5%
  • Gross Profit Margin on Parts Above 50%: 49.2%
  • Gross Profit Margin on Labor Above 60%: 49.2%
  • Overall Net Profit Margin Above 10%: 49.3%
  • Posted Labor Rate Above $110: 42%
  • Effective Labor Rate Above $90: 31.9%
  • Efficiency Above 100%: 24.5%
  • Productivity Above 90%: 30.3%

 

4. Visionary

Just over one-fourth of our respondents chose the visionary leadership style, but this style led in seven of the 11 main KPIs.

Annual revenue, overall net profit margin and average repair order in this category was well above the overall survey average.

Averages of Visionary Leaders 

  • Annual Revenue over $1 million: 62.5%
  • Sales Closing Ratio over 70%: 45.5%
  • Average Repair Order Above $400: 59.9%
  • Overall Gross Profit Margin Above 50%: 67.8%
  • Gross Profit Margin on Parts Above 50%: 50.9%
  • Gross Profit Margin on Labor Above 60%: 69.7%
  • Overall Net Profit Margin Above 10%: 68.7%
  • Posted Labor Rate Above $110: 50%
  • Effective Labor Rate Above $90: 54.5%
  • Efficiency Above 100%: 28.5%
  • Productivity Above 90%: 35.7%

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