For many shop owners, financial numbers are private. Sharing them with employees feels risky, even taboo. Ken Martin believes the opposite is true, and that opening the books, at least in part, can take a business to the next level.
Ken is a process mastery instructor, consultant, and analyst at ATI. He owned a collision repair center for 17 years and has served on I-CAR’s National Advisory Council. In episode 47 of Maximum Octane, he and Kim Hickey explore why metrics matter, how sharing them builds trust and productivity, and how numbers can improve your incentive and pay systems.
What You Will Learn
- Why metrics are so vital for any company
- What sharing metrics with your internal customers can do for your business
- How sharing metrics can debunk wrong assumptions about you and your business
- How to make your internal customers know their voice is heard in the company
- How metrics can help you improve your incentives and compensations system
- Ken shares his thoughts on unproductive habits and how to get rid of them
Why Metrics Are Vital
Ken opens by explaining why metrics are so important for any company. Without measurement, owners are guessing. Metrics show what is working, what is not, and where to focus. They turn opinions into facts and make it possible to set goals and track progress.
Common shop metrics include car count, average repair order, gross profit on parts and labor, effective labor rate, technician productivity and efficiency, and closing ratio. Collision shops add measures such as cycle time and severity. ATI’s Your Checkbook Is Balanced, but How Are Your KPIs? explains why these numbers matter more than a balanced bank account.
Metrics also provide early warning signals. A gradual decline in average repair order, a rising comeback rate, or a drop in closing ratio can reveal problems weeks or months before they show up in profit. Owners who review key metrics weekly can spot these trends and act quickly. Without metrics, problems often go unnoticed until they become crises.
What Sharing Metrics Can Do for Your Business
Around the 4 minute mark, Ken describes what happens when owners share metrics with their internal customers. Employees who understand the numbers can see how their work contributes to the shop’s success. That understanding builds ownership. Teams become more transparent, trustworthy, loyal, and productive, and goals become easier to reach because everyone is aiming at the same target.
ATI’s The Power of Transparency in Your Auto Repair Shop supports this approach.
The idea of sharing financial information with employees is sometimes called “open-book management.” Popularized by Jack Stack in The Great Game of Business, the approach teaches employees to understand the numbers and gives them a stake in improving them. Companies that use open-book practices often report higher engagement, because employees see how their work affects the results and feel like partners in the business.
Debunking Wrong Assumptions
One of the most practical benefits Ken describes is correcting assumptions. When employees see a $3,000 invoice, many assume most of it goes into the owner’s pocket. They do not see parts cost, payroll, rent, insurance, equipment, utilities, and taxes. Sharing metrics shows the reality of shop margins and reduces resentment built on misunderstandings.
ATI’s 60 Percent Gross Profit: Fact or Fiction? is a useful resource for explaining margins to a team.
A simple exercise can help. Show the team where a typical dollar of revenue goes: parts, technician pay, advisor pay, rent, utilities, equipment, insurance, software, marketing, taxes, and finally profit. Many employees are surprised by how small the profit share is. That understanding often reduces resentment and increases appreciation for efficiency and pricing discipline.
Making Employees Feel Heard
Around the 9 minute mark, Ken explains how to make internal customers know their voice is heard. When employees see the numbers, they can contribute ideas to improve them. Asking for their input, and acting on it, shows that the business values their perspective.
When employees understand the numbers, their suggestions become more practical and informed. A technician who sees the cost of comebacks may propose a better quality check. An advisor who sees closing ratios may suggest a new way of presenting estimates. Leaders who listen to these ideas and implement the good ones show employees that their voices matter.
Closing the loop matters as much as asking. When an idea is not adopted, explaining why, and thanking the person for raising it, keeps people willing to contribute. Silence after a suggestion teaches employees that speaking up is pointless.
Better Incentives and Compensation
Ken also discusses how metrics can improve incentive and compensation systems. Pay plans tied to clear, shared metrics feel fair, because employees understand exactly how they can earn more. They also align individual goals with the shop’s goals. Poorly designed incentives, on the other hand, can encourage the wrong behaviors.
When designing incentives, consider:
- Which metrics each role can directly influence.
- Whether the incentive rewards quality as well as volume.
- How often results are reviewed and paid.
- Whether team incentives would encourage collaboration.
Incentive plans should be easy to understand and directly tied to factors employees control. Complicated plans that depend on numbers employees cannot influence often create frustration rather than motivation. Reviewing incentive plans regularly ensures they still drive the right behaviors as the business evolves.
Bringing the Team Together
Ken explains that sharing metrics brings teams together as a whole. When technicians, advisors, and managers all see the same scoreboard, they start thinking as one team rather than separate departments. Celebrating progress together builds momentum.
Shared scorekeeping creates a sense of team. Some shops display key metrics on a board in the break room or shop floor, updated daily or weekly. Celebrating when the team hits a goal, such as with a lunch or recognition, reinforces the idea that everyone contributes to success.
Breaking Unproductive Habits
Ken closes by sharing his thoughts on unproductive habits and how to get rid of them. For many owners, keeping the numbers to themselves is one of those habits.
For many owners, the most important habit to break is avoiding the numbers altogether. Reviewing financial reports can feel uncomfortable, especially when results are disappointing. But avoiding them only allows problems to grow. Scheduling a regular time to review key numbers, ideally with a coach or advisor, turns an uncomfortable task into a routine habit.
Collision Industry Perspective
Ken’s background in collision repair adds a useful perspective. Collision shops track metrics such as cycle time, touch time, severity, supplement rates, and customer satisfaction scores, often because insurance partners require them. Those shops have learned that sharing metrics with technicians and estimators helps everyone understand how their work affects the shop’s relationships with insurers and customers.
Mechanical shops can learn from that approach. Making performance data visible and understandable helps teams focus on improvement. Whether in collision or mechanical repair, metrics shared openly become a tool for collaboration rather than a source of anxiety.
Common Mistakes When Sharing Numbers
Opening the books works best with some preparation, and a few mistakes can undermine the effort. The first is sharing numbers without explaining them. A profit and loss statement handed to a technician without context can create more confusion, or more suspicion, than it resolves. Teaching what each number means, and how the team’s work affects it, is the foundation. The second is sharing only bad news. If metrics come up only when results are disappointing, employees learn to dread the conversation. Sharing progress and wins as well builds a healthier relationship with the numbers.
A third mistake is choosing metrics the team cannot influence. Showing a technician the shop’s rent or insurance costs is useful for context, but their scoreboard should focus on measures such as efficiency, comebacks, and inspection completion that they control. A fourth is using shared numbers to single out individuals publicly. Team results can be posted openly, while individual performance discussions belong in private conversations. Finally, owners sometimes start sharing and then stop when things get busy. Consistency is what builds trust, so a simple, regular routine is better than an ambitious one that fades.
How to Start Sharing Metrics
- Choose three to five metrics that your team can influence.
- Explain each metric and why it matters in a team meeting.
- Post progress weekly where everyone can see it.
- Ask the team for ideas to improve one number each month.
Bruce Spencer describes how transparency motivates his team in Don’t Be Cheap! Pay Your Freedom Tax. George Zeeks explains how standards and accountability fit together in Three Questions That Can Solve (Almost) Every Problem, and David Boyd explores data in Use Your Data or Miss the Truth.
Frequently Asked Questions
Should a shop owner share financial information with employees?
Many owners find that sharing at least some numbers improves trust, engagement, and performance. Employees who understand where revenue goes, and how their work affects results, make better decisions and are less likely to assume the owner is keeping most of every invoice. Owners do not have to share everything. A common starting point is a few key metrics the team can influence, along with a general explanation of costs and margins. The goal is understanding, not exposure of every detail.
What is open-book management?
Open-book management is an approach where a business shares key financial and operational information with employees, teaches them how to understand it, and gives them a stake in improving it, often through incentives tied to the results. It was popularized by Jack Stack and The Great Game of Business. The idea is that people who understand the numbers think and act more like owners. In a repair shop, it might start with a weekly scoreboard and grow into regular reviews of financial results.
Which metrics should an auto repair shop track?
Common metrics include car count, average repair order, gross profit on parts and labor, effective labor rate, technician efficiency and productivity, closing ratio, and comeback rate. Collision shops also track cycle time, touch time, severity, and customer satisfaction scores. The most useful set depends on the shop’s goals, but a focused group of key measures reviewed weekly usually works better than a long list reviewed rarely. Each metric should have a clear owner and target.
How do you tie employee incentives to shop metrics?
Choose metrics each role can directly influence, such as efficiency for technicians or closing ratio for advisors. Include quality measures, such as comebacks, so the plan does not reward speed at the expense of good work. Keep the plan simple enough that employees can calculate their own results. Review and pay incentives on a regular, predictable schedule. Consider team incentives to encourage collaboration. Revisit the plan periodically and consult an accountant or advisor to make sure it is sustainable and compliant.
How do I explain shop profit margins to my employees?
A simple visual works well. Take a typical invoice or a single dollar of revenue and show where it goes: parts, technician and advisor pay, rent, utilities, equipment, insurance, software, marketing, taxes, and finally profit. Use general proportions from your own books rather than exact private details if you prefer. Many employees are surprised by how much it costs to run a shop. That understanding helps them see why efficiency, accurate estimates, and pricing discipline matter to everyone’s job security.
Resources and Links From This Episode
Connect With the Guests
- Ken: LinkedIn
