How to Build a Commission Plan for Your Advisor or Manager Without Getting Burned [E211]

Thanks to our partners Promotive and Wicked File

You already know how to pay your technicians, but what about everyone else? Your service advisors, your counter staff, your shop manager… how do you build a pay plan that actually motivates them to perform?

In this follow-up to last week’s technician pay plan episode, Hunt Demarest walks through the three most common commission structures for front-office and management staff: paying off total sales, paying off gross profit, and paying off net income. Using a real client example, a shop owner who wants to reward his son for growing the business from $2 million to $2.5 million in annual sales, Hunt breaks down exactly how to calculate each structure, what percentage makes sense, and how to stress test the plan before you hand it to your employee.

The big theme running through all three structures is: only reward people for what they can actually control. Paying a manager based on net income sounds fair in theory, but what happens when you buy a $30,000 side-by-side for the shop and write it off?

Hunt explains why net income plans almost never work in practice, why gross profit plans are more aligned but more complex, and why a simple percentage of sales, with a few key guardrails around gross profit floors, is often the most transparent and motivating option for most shops.

Whether you’re building a plan from scratch or rethinking one that isn’t driving the behavior you want, this episode gives you a clear, repeatable framework and a reminder that none of it matters unless your employee actually understands the plan and knows how their daily actions will move the needle.

What you’ll learn in this episode:

1. (03:15) The benchmark that might surprise you about flat salaries
2. (05:15) The rule every pay plan must follow relating to compensation and penalization. (08:30) A real case study and step-by-step instructions on building a payment plan.
3. (10:20) The base pay ratio that makes or breaks a commission plan
4. (12:00) How to protect yourself from a sales-based plan backfiring (including gross profit floors and percentage-of-increase structures)
5. (17:40) Sales vs. gross profit plans
6. (19:50) Shop management software vs. QuickBooks: why Hunt is adamant you should only use one of them to calculate commissions
7. (23:40) The $30,000 side-by-side problem: why paying a manager off net income almost always ends in resentment and what to do instead.

Thanks to our partner Promotive

It’s time to hire a superstar for your business; what a grind you have in front of you. Introducing Promotive, a full-service staffing solution for your shop. Promotive has over 40 years of recruiting and automotive experience. If you need qualified technicians and service advisors and want to offload the heavy lifting, visit https://gopromotive.com/

Thanks to our Partner WickedFile

Turn chaos into clarity with WickedFile, the AI for auto repair shops. Transform invoices into insights, protect cash flow, and stop losing parts, cores, or credits to maximize your bottom line. visit https://info.wickedfile.com/

Paar Melis and Associates – Accountants Specializing in Automotive Repair

Visit us Online: www.paarmelis.com

Email Hunt: podcast@paarmelis.com

Text Paar Melis @ 301-307-5413

Download a Copy of My Books Here:

1. Wrenches to Write-Offs
2. Your Perfect Shop

The Automotive Repair Podcast Network: https://automotiverepairpodcastnetwork.com/

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