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Automotive service management: Principles into pratice
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Upper Saddle River, New Jersey
Columbus, Ohio
Automotive Service
Management
Principles into Practice
A NDREW A. R EZIN
Columbus State Community College
Library of Congress Cataloging-in-Publication Data
Rezin, Andrew.
Automotive service management : principles into practice / Andrew Rezin.
— 1st ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-13-199863-6 (alk. paper)
ISBN-10: 0-13-199863-3 (alk. paper)
1. Automobile repair shops—Management. I. Title.
TL153.R46 2009
629.28'72068—dc22 2007047251
Editor-in-Chief: Vernon Anthony
Acquisitions Editor: Wyatt Morris
Associate Managing Editor: Christine Buckendahl
Editorial Assistant: Christopher Reed
Production Coordination: Satishna Gokuldas, TexTech Inc.
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Design Coordinator: Diane Ernsberger
Cover Designer: Bryan Huber
Operations Specialist: Laura Weaver
Director of Marketing: David Gesell
Senior Marketing Manager: Jimmy Stephens
Marketing Assistant: Les Roberts
This book was set in Stone Serif by TexTech Inc. It was printed and bound by Bind-Rite Graphics.
The cover was printed by Phoenix Color Corp.
Copyright © 2009 by Pearson Education, Inc., Upper Saddle River, New Jersey 07458.
Pearson Prentice Hall. All rights reserved. Printed in the United States of America. This publication is protected by Copyright and permission should be obtained from the publisher prior to any
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10 9 8 7 6 5 4 3 2 1
ISBN-13: 978-0-13-199863-6
ISBN-10: 0-13-199863-3
iii
Preface xi
About the Author xiii
S ECTION 1 S ERVICE OPERATIONS
1 The Automotive Service Industry 3
2 Physical Resources 10
3 Manpower Resources 21
4 The Service Workflow 34
S ECTION 2 M ANAGEMENT S TYLES
5 Classic Management 53
6 Being a Leader 63
7 The Complex Role of Management 74
8 Ethics and Stewardship 86
S ECTION 3 M ANAGEMENT S TRATEGIES
9 Long-Range Planning 99
10 Strategic and Short-Range Planning 110
11 Decision Making 120
12 Quality and Continuous Improvement 135
S ECTION 4 F INANCIAL M EASUREMENT
13 Income and Expenses 153
14 Compensation Plans 164
15 Production Plans 179
16 Analysis and Action 192
BRIEF CONTENTS
■ Brief Contents
S ECTION 5 ORGANIZING AND M ANAGING
Y OUR E FFORTS
17 Managing Yourself and Your Time 205
18 Organizing Tips and Tools 217
S ECTION 6 C USTOMER R ELATIONS
19 The Value of Satisfied Customers 229
20 Building Basic Communication Skills 242
21 Resolving Customer Disputes 254
S ECTION 7 E MPLOYEE R ELATIONS
22 Recruiting and Selection 269
23 Motivating Employees 283
24 Progressive Discipline 294
S ECTION 8 M ARKETING , M ERCHANDISING , AND
S ELLING S ERVICE
25 Marketing and Mass Media 307
26 Target Marketing and Building an Identity 321
27 Point-of-Purchase Merchandising 331
28 Selling Service 340
S ECTION 9 T H E L EGAL I SSUES AND
R ESPONSIBILITIES
29 Legal Guidelines for Service Operations 355
30 Workplace Safety 365
Index 377
iv
v
Preface xi
About the Author xiii
SECTION 1 SERVICE OPERATIONS
CHAPTER 1 THE AUTOMOTIVE SERVICE
INDUSTRY 3
Chapter Objectives 3
Key Terms 3
Introduction 4
The State of the Industry 4
Service Market Segments 5
Summary 8
Practicing the Principles 8
CHAPTER 2 PHYSICAL RESOURCES 10
Chapter Objectives 10
Key Terms 10
Introduction 11
Facilities 11
General Facility Guidelines 11
Facility Needs 11
Support Space 13
Customer Space 15
Tools and Equipment 16
Planning Your Investment 19
Summary 20
Practicing the Principles 20
CHAPTER 3 MANPOWER RESOURCES 21
Chapter Objectives 21
Key Terms 21
Introduction 22
Service Cashier 22
Dispatcher 23
Claims Administrator (Booker) 24
Shop Foreman 25
Service Advisor 26
Lead Technician 27
Porter 28
Parts Specialist 28
Technician 29
Customer Relations Specialist 30
Service Manager 30
Service Director 31
Summary 32
Practicing the Principles 32
CHAPTER 4 THE SERVICE WORKFLOW 34
Chapter Objectives 34
Key Terms 34
Introduction 35
Traditional Management View 35
The Systems View of an
Organization 37
Advanced Systems 39
Systems Thinking 40
The Repair Process 41
Charting the Workflow 44
Summary 48
Practicing the Principles 48
CONTENTS
■ Contents
SECTION 2 MANAGEMENT
STYLES
CHAPTER 5 CLASSIC MANAGEMENT 53
Chapter Objectives 53
Key Terms 53
Introduction 54
Traditional Management 54
Scientific Management 57
Management by Objective 59
Comparing Management Approaches 59
Leadership (Goal Orientation) 61
Summary 61
Practicing the Principles 62
References 62
CHAPTER 6 BEING A LEADER 63
Chapter Objectives 63
Key Terms 63
Introduction 64
What Is Leadership? 64
Management versus Leadership 64
Leading 24/7 71
Summary 72
Practicing the Principles 72
Notes 72
References 73
CHAPTER 7 THE COMPLEX ROLE
OF MANAGEMENT 74
Chapter Objectives 74
Key Terms 74
Introduction 75
An Ever-Changing Enterprise 75
More Art Than Science 76
The Major Management Roles 76
Qualities of a Manager 81
Delegating 83
Summary 85
Practicing the Principles 85
CHAPTER 8 ETHICS AND STEWARDSHIP 86
Chapter Objectives 86
Key Terms 86
Introduction 87
What Is Ethics? 87
Applied Ethics 88
Ethical Leadership 89
Stewardship 92
Summary 95
Practicing the Principles 95
SECTION 3 MANAGEMENT
STRATEGIES
CHAPTER 9 LONG-RANGE PLANNING 99
Chapter Objectives 99
Key Terms 99
Introduction 100
Vision 100
Mission 102
Values 105
Long-Range Goals 106
Tracking Progress 108
Summary 109
Practicing the Principles 109
References 109
CHAPTER 10 STRATEGIC AND
SHORT-RANGE PLANNING 110
Chapter Objectives 110
Key Terms 110
Introduction 111
Levels of Planning 111
vi
Contents ■
Strategic Planning 112
Environmental Scan 113
SWOT Analysis 114
Tracking Progress 116
Operational Planning 116
Tactical Planning 117
Summary 119
Practicing the Principles 119
CHAPTER 11 DECISION MAKING 120
Chapter Objectives 120
Key Terms 120
Introduction 121
Is It Worth It to Me? 121
Return on Investment (ROI) 122
The Ben Franklin Decision Model 124
Risk versus Reward 125
Control, Influence, and Frustration 127
The Three Levels of Performance 129
Practical Principles 132
Summary 133
Practicing the Principles 133
Reference 134
CHAPTER 12 QUALITY AND CONTINUOUS
IMPROVEMENT 135
Chapter Objectives 135
Key Terms 135
Introduction 136
Quality 136
The Gurus of Quality 137
Practical Approach to Achieving
Consistent Quality 145
Summary 148
Practicing the Principles 149
References 149
SECTION 4 FINANCIAL
MEASUREMENT
CHAPTER 13 INCOME AND EXPENSES 153
Chapter Objectives 153
Key Terms 153
Introduction 154
Income 154
Expenses 155
Profit 159
Summary 163
Practicing the Principles 163
CHAPTER 14 COMPENSATION PLANS 164
Chapter Objectives 164
Key Terms 164
Introduction 165
The Flat Rate System 165
Variable Rate Pricing 168
Technician Skill Levels 169
Technician Pay Plans 170
Pay Plans for Other Service
Employees 175
Fringe Benefits 176
Summary 177
Practicing the Principles 177
References 178
CHAPTER 15 PRODUCTION PLANS 179
Chapter Objectives 179
Key Terms 179
Introduction 180
Technician Organizational Plans 180
Increasing Capacity 185
Summary 191
Practicing the Principles 191
vii
■ Contents
CHAPTER 16 ANALYSIS AND ACTION 192
Chapter Objectives 192
Key Terms 192
Introduction 193
Achieving a Net Profit 193
Increasing Income 193
Controlling Expenses 197
Summary 202
Practicing the Principles 202
SECTION 5 ORGANIZING AND
MANAGING YOUR
EFFORTS
CHAPTER 17 MANAGING YOURSELF
AND YOUR TIME 205
Chapter Objectives 205
Key Terms 205
Introduction 206
What Do You Do Best? 206
Doing What Makes You Feel
Fulfilled 207
Establishing Your Priorities 209
You Choose: Fireman or Fire
Prevention Specialist? 210
Focusing Your Efforts and Taking
Control of Your Time 211
Getting Organized: The Three-Step
Process 212
Summary 216
Practicing the Principles 216
CHAPTER 18 ORGANIZING TIPS AND
TOOLS 217
Chapter Objectives 217
Key Terms 217
Introduction 218
Sorting Your Workload 218
Tracking Tools 220
Organizing Your Surroundings 224
Summary 225
Practicing the Principles 226
Reference 226
SECTION 6 CUSTOMER
RELATIONS
CHAPTER 19 THE VALUE OF SATISFIED
CUSTOMERS 229
Chapter Objectives 229
Key Terms 229
Introduction 230
Customer Orientation 230
Measuring Customer Satisfaction 233
The High Cost of Cultivating New
Customers 235
The Low Cost of Repeat
Business 235
Word-of-Mouth Advertising 237
Customer Loyalty 237
Fundamentals of Human
Behavior 238
Quality Customer Service 239
Summary 240
Practicing the Principles 240
CHAPTER 20 BUILDING BASIC
COMMUNICATION SKILLS 242
Chapter Objectives 242
Key Terms 242
Introduction 243
Basics of Communication 243
Nonverbal Communication 245
Questioning Techniques 249
Summary 252
Practicing the Principles 252
References 253
viii
Contents ■
CHAPTER 21 RESOLVING CUSTOMER
DISPUTES 254
Chapter Objectives 254
Key Terms 254
Introduction 255
The Rules of Complaint Handling 255
Diffusing the Situation 261
The Power of Thinking Win-Win 262
Complaint Handling Process 263
Summary 264
Practicing the Principles 264
SECTION 7 EMPLOYEE RELATIONS
CHAPTER 22 RECRUITING AND SELECTION 269
Chapter Objectives 269
Key Terms 269
Introduction 270
Defining the Job 270
Job Descriptions 271
Finding Candidates 276
Screening and Selection 278
Summary 281
Practicing the Principles 281
CHAPTER 23 MOTIVATING EMPLOYEES 283
Chapter Objectives 283
Key Terms 283
Introduction 284
Setting Clear Expectations 284
Tracking Performance 285
Measuring What Is Important 285
Performance Evaluations 287
Employee Compensation 289
Incentives 289
Summary 292
Practicing the Principles 292
ix
CHAPTER 24 PROGRESSIVE DISCIPLINE 294
Chapter Objectives 294
Key Terms 294
Introduction 295
Progressive Discipline Process 295
I Did Not Realize It 295
In the Wrong Place 296
Discipline or Punishment? 297
Steps in the Process 297
Summary 303
Practicing the Principles 304
Reference 304
SECTION 8 MARKETING,
MERCHANDISING,
AND SELLING SERVICE
CHAPTER 25 MARKETING AND
MASS MEDIA 307
Chapter Objectives 307
Key Terms 307
Introduction 308
The Five Basic Goals of Marketing 308
Establishing Value 309
Characteristics of Value 309
How Much Is Too Much? 315
Advertising 316
Summary 320
Practicing the Principles 320
CHAPTER 26 TARGET MARKETING AND
BUILDING AN IDENTITY 321
Chapter Objectives 321
Key Terms 321
Introduction 322
Defining Your Market 322
Market Research 323
Wants versus Needs 324
■ Contents
x
Awareness 325
Building Identity 326
Establishing an Image 328
Communicating Your Message 329
Summary 330
Practicing the Principles 330
CHAPTER 27 POINT-OF-PURCHASE
MERCHANDISING 331
Chapter Objectives 331
Key Terms 331
Introduction 332
The Goal 332
Merchandising Locations 332
Signage 333
Product Displays 334
Impulse Items 336
What Should I Merchandise? 337
Summary 338
Practicing the Principles 338
CHAPTER 28 SELLING SERVICE 340
Chapter Objectives 340
Key Terms 340
Introduction 341
Support Services 341
Selling in the Service Drive 342
Selling in the Shop 347
The Value of Increased Sales per Vehicle 349
Some Words of Warning 350
Summary 351
Practicing the Principles 351
SECTION 9 THE LEGAL
ISSUES AND
RESPONSIBILITIES
CHAPTER 29 LEGAL GUIDELINES FOR
SERVICE OPERATIONS 355
Chapter Objectives 355
Key Terms 355
Introduction 356
Customer Issues 356
The Repair Order 356
Quality of Repairs 358
Repair Warranty 359
Safety and Reliability 360
Civil and Criminal Liability 361
New Vehicle Issues 362
Summary 364
Practicing the Principles 364
CHAPTER 30 WORKPLACE SAFETY 365
Chapter Objectives 365
Key Terms 365
Introduction 366
Workplace Safety Legislation 366
OSHA 367
Summary 374
Practicing the Principles 374
Index 377
xi
Automotive service is a very complex business. It is rare that a service management employee has the luxury to specialize in just one area. Just as in most
small businesses, a manager in automotive service is expected to be a jack of
all trades. As a result, an effective service manager must possess a wide range of
knowledge and skills to effectively address daily challenges, skills ranging
from accounting and advertising to customer relations and scheduling—and
beyond.
In addition to the diversity of knowledge and skills required, there are few
industries where employees perform under more pressure than automotive
service. The automobile that you purchase or lease is the second largest investment that you will probably make in your lifetime. The sheer dollar value makes
your car an important commodity, but a car’s value goes beyond that. Not only
does the average person invest heavily in his or her car, he or she depends upon
a car more than any other purchase. The public’s extreme dependence on an
automobile as a key to maintaining their way of life makes keeping a car in
proper running order essential to maintaining their lifestyle.
Whether you own a mansion in the countryside or share a small apartment in the city, you could wake up any morning with problems ranging from
an air conditioner that doesn’t work to a leaking faucet. Even though these
problems are upsetting, you can still go to work, go to church, go shopping, go
out to eat, and have a social life while you’re waiting for the technician to
schedule a visit to fix your problem. That is not true when you have a problem
with your car. Without reliable transportation you can’t get anywhere, and
loss of use of your car may even result in the loss of your job—your means of
income to support your family, your home, and your lifestyle. This scenario is
not rare. It applies to just about everyone you know. Now, that is high stakes!
This book is an effort to share my 30-plus years of experience in the automotive service industry. It is an overview of what I believe are the basic knowledge and skills needed to succeed in this challenging business. It will not
provide you with all of the answers to all of the situations that you will
encounter in the automotive service industry, but it will provide you with a
broad-based foundation upon which to build a fruitful career.
The book is divided into the following sections:
• Section 1: Service Operations
• Section 2: Management Styles
• Section 3: Management Strategies
• Section 4: Financial Measurement
• Section 5: Organizing and Managing Your Efforts
• Section 6: Customer Relations
• Section 7: Employee Relations
• Section 8: Marketing, Merchandising, and Selling Service
• Section 9: The Legal Issues and Responsibilities
PREFACE
■ Preface
Supplements
To access supplementary materials online, instructors need to request an
instructor access code. Go to www.prenhall.com, click the Instructor Resource
Center link, and then click Register Today for an instructor access code. Within
48 hours after registering you will receive a confirming e-mail including an
instructor access code. Once you have received your code, go to the site and log
on for full instructions on downloading the materials you wish to use.
Acknowledgments
Special thanks to my wife, Shelley, and my entire family whose patience and
lifelong support have allowed me to undertake this project and my lifelong
career in the field that I dearly love, automotive service.
I thank Mark Hambaum; Timothy Gilbert, Northwood University; Drew
Carlson, Cosumnes River College; Carl Eric Anderson, Fullerton College; and
Tom Grothous, University of Northwestern Ohio, for their assistance with the
text review of the original manuscript.
I also wish to thank my friends and business associates at Germain Motor
Company, Ricart Automotive Group, Clintonville Auto Repair Service, Boyd’s
Goodyear Tire and Service, and Midwestern Auto Group in Columbus, Ohio,
for allowing us “free access” to their facilities to shoot the photos for the book.
And, finally . . . thanks to all of those who I have worked with and
learned so much from during my automotive career. Without your friendship,
support, and examples, I would have had nothing to write about!
I hope that you enjoy the journey and that it provides you with a solid
foundation for a long and prosperous career in automotive service. I hope you
enjoy it nearly as much as I have enjoyed my association with this industry
and the great people that I have been privileged to meet and work with over
the years.
—ANDREW A. REZIN, PH.D.
xii
xiii
ABOUT THE AUTHOR
Andrew A. Rezin, Ph.D., brings a unique perspective to the subject of service
management based on his diverse automotive background. Drawing upon
twenty years of private sector experience working for major automotive manufacturers and as a manager in large retail service departments, combined
with his more recent experience as college instructor and department chair, he
provides a unique and informed perspective based on real-life experience of
the critical topics students need to be successful in the modern automotive
service industry.
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