Muffler Magic is a fast-growing cha

Muffler Magic is a fast-growing chain of 25 automobile service centers in Nevada. Originally started 20 years ago as a muffler repair shop by Ronald Brown, the chain expanded rapidly to new locations, and as it did so Muffler Magic also expanded the services it provided, from muffler replacement to oil changes, brake jobs, and engine repair. Today, one can bring an automobile to a Muffler Magic shop for basically any type of service, from tires to mufflers to engine repair.

Auto service is a tough business. The shop owner is basically dependent upon the quality of the service people he or she hires and retains, and the most qualified mechanics find it easy to pick up and leave for a job paying a bit more at a competitor down the road. It s also a business in which productivity is very important. The single largest expense is usually the cost of labor.Auto service dealers generally don t just make up the prices that they charge customers for various repairs; instead, they charge based on standardized industry rates for jobs like changing spark plugs or repairing a leaky radiator. Therefore, if someone brings a car in for a new alternator and the standard number of hours for changing the alternator is an hour, but it takes the mechanic 2 hours, the service center s owner may end up making less profit on the transaction.

Quality is a persistent problem as well. For example, rework has recently been a problem at Muffler Magic. A customer recently brought her car to a Muffler Magic to have the car s brake pads replaced, which the service center did for her. Unfortunately, when she left she drove only about two blocks before she discovered that she had no brake power at all. It was simply fortuitous that she was going so slowly she was able to stop her car by slowly rolling up against a parking bumper. It subsequently turned out that the mechanic who replaced the brake pads had failed to properly tighten a fitting on the hydraulic brake tubes and the brake fluid had run out, leaving the car with no braking power. In a similar problem the month before that, a (different) mechanic replaced a fan belt, but forgot to refill the radiator with fluid; that customer s car overheated before he got four blocks away, and Muffler Magic had to replace the whole engine. Of course problems like these not only diminish the profitability of the company s profits, but, repeated many times over, have the potential for ruining Muffler Magic s word-of-mouth reputation.

Organizationally, Muffler Magic employs about 300 people, and Ron runs his company with eight managers, including himself as president, a controller, a purchasing director, a marketing director, and the human resource manager.He also has three regional managers to whom the eight or nine service center managers in each area of Nevada report. Over the past 2 years, as the company has opened new service centers, companywide profits have diminished rather than increased. In part, these diminishing profits probably reflect the fact that Ron Brown has found it increasingly difficult to manage his growing operation ( Your reach is exceeding your grasp is how Rons wife puts it).

The company has only the most basic HR systems in place. It uses an application form that the human resource manager modified from one that he downloaded from the Web, and the standard employee status change request forms, sign-on forms, I-9 forms, and so on that it purchased from a human resource management supply house. Training is entirely on-the-job.Muffler Magic expects the experienced technicians that it hires to come to the job fully trained; to that end, the service center managers generally ask candidates for these jobs basic behavioral questions that hopefully provide a window into these applicants skills. However,most of the other technicians hired to do jobs like rotating tires, fixing brake pads, and replacing mufflers are untrained and inexperienced. They are to be trained by either the service center manager or by more experienced technicians, on-the-job.


Ron Brown faces several HR-type problems. One, as he says, is that he faces the tyranny of the immediate when it comes to hiring employees. Although it s fine to say that he should be carefully screening each employee and checking their references and work ethic, from a practical point of view, with 25 centers to run, the centers managers usually just hire anyone who seems to be breathing, as long as they can answer some basic interview questions about auto repair, such as, What do you think the problem is if a 2001 Camry is overheating, and what would you do about it?

Employee safety is also a problem. An automobile service center may not be the most dangerous type of workplace, but it is potentially dangerous. Employees are dealing with sharp tools, greasy floors, greasy tools, extremely hot temperatures (for instance, on mufflers and engines), and fast-moving engine parts including fan blades. There are some basic things that a service manager can do to ensure more safety, such as insisting that all oil spills be cleaned up immediately. However, from a practical point of view, there are a few ways to get around many of the problems such as when the technician must check out an engine while it is running.

With Muffler Magic s profits going down instead of up, Browns human resource manager has taken the position that the main problem is financial. As he says, You get what you pay for when it comes to employees, and if you compensate technicians better then your competitors do, then you get better technicians, ones who do their jobs better and stay longer with the company and then profits will rise. So, the HR manager scheduled a meeting between himself, Ron Brown, and a professor of business who teaches compensation management at a local university. The HR manager has asked this professor to spend about a week looking at each of the service centers, analyzing the situation, and coming up with a compensation plan that will address Muffler Magic’s quality and productivity problems. At this meeting, the professor makes three basic recommendations for changing the company s compensation policies.

Number one, she says that she has found that Muffler Magic suffers from what she calls presenteeism in other words, employees drag themselves into work even when they re sick, because the company does not pay them if they are out; the company offers no sick days. In just a few days the professor couldn t properly quantify how much Muffler Magic is losing to presenteeism. However, from what she could see at each shop, there are typically one or two technicians working with various maladies like the cold or flu, and it seemed to her that each of these people was probably really only working about half of the time (although they were getting paid for the whole day). So, for 25 service centers per week,Muffler Magic could well be losing 125 or 130 personnel days per week of work. The professor suggests that Muffler Magic start allowing everyone to take 3 paid sick days per year, a reasonable suggestion. However, as Ron Brown points out, Right now, we re only losing about half a day s pay for each employee who comes in and who works unproductively; with your suggestion, won t we lose the whole day? The professor says she ll ponder that one.

Second, the professor recommends putting the technicians on a skill-for-pay plan. Basically, she suggests the following. Give each technician a letter grade (A through E) based upon that technicians particular skill level and abilities.An A technician is a team leader and needs to show that he or she has excellent diagnostic troubleshooting skills, and the ability to supervise and direct other technicians. At the other extreme, an E technician would typically be a new apprentice with little technical training. The other technicians fall in between those two levels, based on their individual skills and abilities. In the professor s system, the A technician or team leader would assign and supervise all work done within his or her area but generally not do any mechanical repairs himself or herself. The team leader does the diagnostic troubleshooting, supervises and trains the other technicians, and test drives the car before it goes back to the customer. Under this plan, every technician receives a guaranteed hourly wage within a certain range, for instance:
A tech * $25 $30 an hour
B tech * $20 $25 an hour
C tech * $15 $20 an hour
D tech * $10 $15 an hour
E tech * $8 $10 an hour

Third, to directly address the productivity issue, the professor recommends that each service manager calculate each technician-teams productivity at the end of each day and at the end of each week. She suggests posting the running productivity total conspicuously for daily viewing. Then, the technicians as a group get weekly cash bonuses based upon their productivity. To calculate productivity, the professor recommends dividing the total labor hours billed by the total labor hours paid to technicians, in other words, total labor hours billed divided by total hours paid to technicians.

Having done some homework, the professor says that the national average for labor productivity is currently about 60%, and that only the best-run service centers achieve 85% or greater. By her rough calculations,Muffler Magic was attaining about industry average (about 60% in other words, they were billing for only about 60 hours for each 100 hours that they actually had to pay technicians to do the jobs). (Of course, this was not entirely the technicians fault. Technicians get time off for breaks and for lunch, and if a particular service center simply didn t have enough business on a particular day or during a particular week, then several technicians may well sit around idly waiting for the next car to come in.) The professor recommends setting a labor efficiency goal of 80% and posting each teams daily productivity results in the workplace to p

Results (Indonesian) 1:

Muffler Magic adalah rantai berkembang pesat 25 pusat layanan mobil di Nevada. Awalnya dimulai 20 tahun yang lalu sebagai toko perbaikan muffler oleh Ronald Brown, rantai berkembang pesat ke lokasi baru, dan sebagai itu sehingga Muffler Magic juga memperluas layanan ini disediakan, dari muffler pengganti minyak perubahan, rem pekerjaan dan perbaikan mesin. Hari ini, satu dapat membawa mobil ke toko Muffler sihir untuk pada dasarnya semua jenis layanan, dari Ban untuk mufflers untuk perbaikan mesin.Layanan Auto adalah bisnis yang sulit. Pemilik toko pada dasarnya tergantung pada kualitas layanan orang-orang dia menyewa dan mempertahankan, dan mekanik paling memenuhi syarat merasa mudah untuk mengambil dan meninggalkan pekerjaan membayar sedikit lebih di pesaing di jalan. Itu s juga bisnis produktivitas yang sangat penting. Satu biaya terbesar adalah biasanya biaya tenaga kerja. Layanan Auto Dealer umumnya don t hanya membuat harga yang mereka biaya pelanggan untuk berbagai perbaikan; Sebaliknya, mereka dikenakan biaya berdasarkan harga standar industri untuk pekerjaan seperti perubahan spark plugs atau memperbaiki radiator bocor. Oleh karena itu, jika seseorang membawa mobil untuk baru dan standar jumlah jam untuk mengubah alternator adalah satu jam, tetapi dibutuhkan montir 2 jam, pemilik s pusat layanan mungkin berakhir membuat keuntungan lebih sedikit pada transaksi. Kualitas adalah terus-menerus masalah juga. Sebagai contoh, ulang baru-baru ini telah menjadi masalah di Muffler Magic. Pelanggan Baru saja membawa mobil ke Magic Muffler untuk memiliki mobil bantalan rem s diganti, yang pusat layanan lakukan untuknya. Sayangnya, ketika dia meninggalkan Dia pergi hanya sekitar dua blok sebelum ia menemukan bahwa dia memiliki kekuatan rem tidak sama sekali. Itu hanya kebetulan bahwa dia akan jadi perlahan-lahan dia mampu menghentikan mobilnya dengan perlahan-lahan menggulung melawan bumper parkir. Kemudian ternyata bahwa montir yang menggantikan bantalan rem gagal untuk benar mengencangkan pas pada tabung Rem hidrolik dan rem cairan telah habis, meninggalkan mobil tanpa daya pengereman. Dalam masalah yang sama bulan sebelum itu, seorang mekanik (berbeda) diganti sabuk kipas, tapi lupa untuk mengisi ulang radiator dengan cairan; mobil itu s pelanggan panasnya sebelum dia mendapat empat blok jauhnya, dan Muffler Magic harus mengganti seluruh mesin. Tentu saja masalah seperti ini tidak hanya mengurangi profitabilitas perusahaan s keuntungan, tetapi, berulang kali, memiliki potensi untuk merusak Muffler Magic s kata-of-mulut reputasi.Organizationally, Muffler Magic employs about 300 people, and Ron runs his company with eight managers, including himself as president, a controller, a purchasing director, a marketing director, and the human resource manager.He also has three regional managers to whom the eight or nine service center managers in each area of Nevada report. Over the past 2 years, as the company has opened new service centers, companywide profits have diminished rather than increased. In part, these diminishing profits probably reflect the fact that Ron Brown has found it increasingly difficult to manage his growing operation ( Your reach is exceeding your grasp is how Rons wife puts it).The company has only the most basic HR systems in place. It uses an application form that the human resource manager modified from one that he downloaded from the Web, and the standard employee status change request forms, sign-on forms, I-9 forms, and so on that it purchased from a human resource management supply house. Training is entirely on-the-job.Muffler Magic expects the experienced technicians that it hires to come to the job fully trained; to that end, the service center managers generally ask candidates for these jobs basic behavioral questions that hopefully provide a window into these applicants skills. However,most of the other technicians hired to do jobs like rotating tires, fixing brake pads, and replacing mufflers are untrained and inexperienced. They are to be trained by either the service center manager or by more experienced technicians, on-the-job.Ron Brown faces several HR-type problems. One, as he says, is that he faces the tyranny of the immediate when it comes to hiring employees. Although it s fine to say that he should be carefully screening each employee and checking their references and work ethic, from a practical point of view, with 25 centers to run, the centers managers usually just hire anyone who seems to be breathing, as long as they can answer some basic interview questions about auto repair, such as, What do you think the problem is if a 2001 Camry is overheating, and what would you do about it?Employee safety is also a problem. An automobile service center may not be the most dangerous type of workplace, but it is potentially dangerous. Employees are dealing with sharp tools, greasy floors, greasy tools, extremely hot temperatures (for instance, on mufflers and engines), and fast-moving engine parts including fan blades. There are some basic things that a service manager can do to ensure more safety, such as insisting that all oil spills be cleaned up immediately. However, from a practical point of view, there are a few ways to get around many of the problems such as when the technician must check out an engine while it is running.With Muffler Magic s profits going down instead of up, Browns human resource manager has taken the position that the main problem is financial. As he says, You get what you pay for when it comes to employees, and if you compensate technicians better then your competitors do, then you get better technicians, ones who do their jobs better and stay longer with the company and then profits will rise. So, the HR manager scheduled a meeting between himself, Ron Brown, and a professor of business who teaches compensation management at a local university. The HR manager has asked this professor to spend about a week looking at each of the service centers, analyzing the situation, and coming up with a compensation plan that will address Muffler Magic’s quality and productivity problems. At this meeting, the professor makes three basic recommendations for changing the company s compensation policies.Number one, she says that she has found that Muffler Magic suffers from what she calls presenteeism in other words, employees drag themselves into work even when they re sick, because the company does not pay them if they are out; the company offers no sick days. In just a few days the professor couldn t properly quantify how much Muffler Magic is losing to presenteeism. However, from what she could see at each shop, there are typically one or two technicians working with various maladies like the cold or flu, and it seemed to her that each of these people was probably really only working about half of the time (although they were getting paid for the whole day). So, for 25 service centers per week,Muffler Magic could well be losing 125 or 130 personnel days per week of work. The professor suggests that Muffler Magic start allowing everyone to take 3 paid sick days per year, a reasonable suggestion. However, as Ron Brown points out, Right now, we re only losing about half a day s pay for each employee who comes in and who works unproductively; with your suggestion, won t we lose the whole day? The professor says she ll ponder that one.Second, the professor recommends putting the technicians on a skill-for-pay plan. Basically, she suggests the following. Give each technician a letter grade (A through E) based upon that technicians particular skill level and abilities.An A technician is a team leader and needs to show that he or she has excellent diagnostic troubleshooting skills, and the ability to supervise and direct other technicians. At the other extreme, an E technician would typically be a new apprentice with little technical training. The other technicians fall in between those two levels, based on their individual skills and abilities. In the professor s system, the A technician or team leader would assign and supervise all work done within his or her area but generally not do any mechanical repairs himself or herself. The team leader does the diagnostic troubleshooting, supervises and trains the other technicians, and test drives the car before it goes back to the customer. Under this plan, every technician receives a guaranteed hourly wage within a certain range, for instance:A tech * $25 $30 an hour
B tech * $20 $25 an hour
C tech * $15 $20 an hour
D tech * $10 $15 an hour
E tech * $8 $10 an hour

Third, to directly address the productivity issue, the professor recommends that each service manager calculate each technician-teams productivity at the end of each day and at the end of each week. She suggests posting the running productivity total conspicuously for daily viewing. Then, the technicians as a group get weekly cash bonuses based upon their productivity. To calculate productivity, the professor recommends dividing the total labor hours billed by the total labor hours paid to technicians, in other words, total labor hours billed divided by total hours paid to technicians.

Having done some homework, the professor says that the national average for labor productivity is currently about 60%, and that only the best-run service centers achieve 85% or greater. By her rough calculations,Muffler Magic was attaining about industry average (about 60% in other words, they were billing for only about 60 hours for each 100 hours that they actually had to pay technicians to do the jobs). (Of course, this was not entirely the technicians fault. Technicians get time off for breaks and for lunch, and if a particular service center simply didn t have enough business on a particular day or during a particular week, then several technicians may well sit around idly waiting for the next car to come in.) The professor recommends setting a labor efficiency goal of 80% and posting each teams daily productivity results in the workplace to p