Other Labor Hours are for extra diagnosis or inspection time needed to finish a repair beyond the quoted time. Your "TBD" margin of hours for labor work. The sum of which is "to be determined upon further investigation" after the time of the quote.
The hours often come from comparing labor guides like Alldata, Real-Time, SureTrack, and Tekmetric. Real-life examples include:
- Interior Cleaning: Extensive cleaning needed after repairs, such as removing stains from upholstery.
- Electrical Diagnostic: A tune-up write-up that turned faulty electrical and required extra diagramming and diagnosis.
- Removal: Removing extra components to get the job done correctly.
- Rust Buckets: ...
Synonyms:
- Diagnostic Hours
- Inspection Hours
- Indirect Labor Hours
Departments Affected:
- Service Technicians: Track OLH for reporting, fair pay, and accurate billing.
- Service Managers & Advisors: Track OLH margins closely, requiring approval for specific thresholds and accuracy of quotes. Use time intervals to sharpen performance data and identify training gaps.
- Accounting & HR: Ensure OLH is logged and counted in payroll calculations and performance evaluations.
OLH and Commissions
OLH influences commission structures. Most dealers agree that technicians need pay for extra repair time. Yet it's not unheard of for dealers to make technicians responsible for extra OLH. Either way, proper tracking ensures labor profitability and accurate billing. It's a small but important factor in a dealership's service efficiency.
Types of OLH:
- Customer Pay: Extra labor billed directly to the customer.
- Warranty: Additional labor covered under manufacturer warranties.
- Internal: Extra labor for dealership-owned vehicles or pre-sale preparation.
Managing OLH in commissions:
- Put in place clear guidelines for logging OLH.
- Outline how to handle OLH details in warranties.
- Determine what OLH situations need management authorization.
- Use service management software to track OLH accurately.
- Train technicians to document OLH thoroughly: diagnostic, inspection, actual, upsell, or other.
Other Labor Hours, commissions, who cares?!
Understanding OLH is essential for managing service department efficiency and profitability. Advisors, accounting, and HR teams must track OLH. It is key for fair pay, labor profit, and customer satisfaction.
