Labour Efficiency Explained

If you operate a garage workshop, you need to know how efficient all of your technicians are. But just what is labour efficiency?

What is Labour Efficiency?

Labour efficiency is an integral part of your business, as it tells you how efficient your mechanics are, over time. It is also a key performance indicator (KPI) which defines how much of the technician’s time is spent working productively. There are numerous factors that can influence the efficiency of labour. The following are a few to consider:

• Training and Skill – A technician with good technical knowledge and experience will be more efficient compared to a trainee/apprentice with no experience.
• Wages and Benefits – If a technician has competitive wages, bonuses and benefits, it is more likely that they will be motivated to work harder, therefore increasing their efficiency.
• Working Hours – Efficiency will be higher if working hours are reasonable. Asking your technicians to work longer hours for no extra pay is likely to cause a decrease in efficiency due to a lack of motivation and tiredness.
• Environment – A pleasant and stimulating working environment makes for a more efficient technician.

How to Work Out Labour Efficiency

To work out the labour efficiency for each of your technicians the calculation is as follows:

Number of hours worked

÷
Number of hours in attendance (at work) x 100
= labour efficiency %

For example, if Technician 1 had been present at work for 40 hours in a week and had worked 36 hours in that week (data taken from job cards) the sum would be:

36 ÷ 40 x 100 = 90%

Ideally, workshop managers should be looking for their technicians to achieve a labour efficiency rate of anywhere between 85 and 95%.

Labour Efficiency in DragonDMS

Dragon2000’s award-winning Dealer Management System, DragonDMS, makes it easy for workshops to not only see how efficient their labour force is, but also improve their efficiency.

The recent launch of the Technician Scheduler tool to the software allows workshops to view the capacity of their garage at any time. It also suggests which technician should be assigned to a particular job, with it taking in to account the technician’s own skill set and the requirements of the job. This allows for each job to be completed as efficiently as possible by the technicians that workshops have at their disposal.

For those workshops that employ apprentices or trainees, managers are able to set their efficiency at a lower rate compared to their more experienced technicians, therefore allowing them extra time to complete a job and helping to ensure that there are no unforeseen delays to work.

Shift patterns, technician absences, delays and emerging work can all be identified and accommodated in to the schedule, allowing workshops to ensure that their bays are always loaded as efficiently as possible.

In terms of monitoring labour efficiency, using a combination of data from Job Cards, the optional workshop clocking system, and the Efficiency Reports available, workshops are able to identify areas where efficiency could be improved, allowing them to reduce non-productive time and sell more labour, increasing their workshop profit.

Dragon2000 have been helping dealers and garages drive their businesses forward since 1995. Talk to our team today on 01327 222 333 or email sales@dragon2000.co.uk to find out how our dealer management system, car dealer websites and mobile apps can help your business increase profits and reduce costs.