In Fixed Operations there are several closely watched numbers. In this article we will discuss one of the most important measurements, Hours Per Repair Order or HPRO.
If you are a Service Advisor in Dealership today, you have heard of HPRO. It is the measuring stick by which not only Advisors are measured; it is also how many Managers and Departments are measured as well.
Lately there has been debate about the importance of HPRO with some Managers and Directors eschewing HPRO for Profitability or Total Labor Sales. At the end of the day though, you may have Labor Sales but how do you really compare an Advisors performance or counsel them based on total Labor Sales?
HPRO is the universal measurement. It is easily understood and can be an excellent Coaching and Counseling point.
So what is HPRO and how is it measured?
HPRO is the Labor Time sold on a Repair Order. It is expressed as a unit of time. Each hour is divided into units of time called tenths of an hour. In each hour there are 10 units, each representing 6 minutes of time.
When a Service Advisor sells one Labor Hour he/she has sold 10 units of time. If your labor rate is $100.00 an hour, then each labor hour sold is worth $100.00. Six tenths would be $60.00; three tenths would be $30.00 and so on and so on.
When HPRO is calculated, the amount of money collected from the Customer is used to determine the Hours Per Repair Order sold. Let me explain. If an Advisor sells 1.5 hours of labor @$100.00 that would be $150.00 in Total labor Sales. Say the Advisor only collects $135.00 from the Customer because he/she gave a 10% discount. This would reduce the HPRO. Why?
Because the Advisor only collected $135.00 from the Customer and the Customer Pay labor rate remained the same. $135.00 divided by $100.00 equals 1.35 hours sold not 1.5. In the Technicians case, the amount of collected money does little to affect the actual flag time. The Technician would still have earned the 1.5 hours of labor time. What happens is the Dealership loses not only the 10% discount; it also affects the Effective Labor Rate (another key measurement we will cover in another article.)
If you take that same 1.5 hours sold and divide the amount collected by the time sold, the Effective Labor Rate is $90.00 and not $100.00. Getting back to the question of whether or not you measure HPRO, if you are not, you must be keeping track of the amount of time sold some other way. And if you do it by total Labor Sales, you could be contributing to the career of an underachiever.
Let me explain.
What if Sally Service Advisor has been having slightly above average total Labor Sales yet achieves this by writing more repair orders that the other Advisors by 10%? Or Sally has higher than average Total Labor Sales and is accomplishing this by only writing Repair Orders with Maintenance or Accessories scheduled, in other words, cherry picking the appointments.
In both cases Sally may have high Labor Sales yet be a very poor Advisor.
Using HPRO as a measuring tool will ensure that you have a very clear picture of the performance of your Advisors. As you can see the Hours Per Repair Order is not only an important measurement, it is one that is vital to determining the performance of your Advisors and your Service Department.