Version: 1.6.4.04
	Annual Price: $149.95
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	5x5 Support
	System Requirements

The 5X5 ASM Pay Plan is a computer-driven method of creating and administering performance-based compensation for dealership service departments, parts departments, and body shops. Although it was originally designed for service advisors, commonly called Assistant Service Managers or ASM's, it has proven to be applicable and effective for use with other production-related persons, shop parts personnel, and others whose job effectiveness can be measured by objective means.

The need for a new approach to ASM pay plans arose out of the long-standing difficulty of designing shop pay plans that are truly responsive to the needs of both employees and the business in general. Traditional approaches have been as varied as one's imagination. Over the years, many have been based on percentage commissions on sales or gross profit. Although common and still in popular use, experienced and intuitive managers have recognized the shortcomings of 100% commission pay plans and modified them or adopted other performance criteria for making pay responsive to the jobs actually being done. Those have included flat rate hour pay plans, hybrids of salary, commission, and flat rate hours, and others that can only be called "Complicated Favorites". One of the more common hybrids is called the 40/40/20 pay plan. The 40/40/20 refers to the percentage of total employee compensation allocated to three different pay elements. Here pay is determined by a combination of (1) a base salary of approximately 40% of total expected earnings that is intended to provide a foundation of earnings security, (2) a 40% portion devoted to some kind of performance-based commission, and (3) a special incentive component (or spiff) designed to make up about 20% of their expected wages. Over the years, the 40/40/20 pay plan has been widely used and found to have significant advantages over many other traditional methods.

One of the less obvious, yet important, advantages of a 40/40/20 plan is that employee sales expense as a percent of sales is "non-tracking". In other words, employee cost does not increase (or decrease) in the same proportion as the volume of sales or gross profit. For example; in a simple 5% sales commission pay plan, doubling sales would double the employee's earnings. Smart managers discovered that it is possible to provide adequate incentive for excellent performance and control sales expense by using a little more mathematics which results in paying a little bit less and leaving more on the business's bottom line. If a manager can get a 100% increase in sales and buy it for less than a 100% increase in employee wages, both the employee and business win to some degree.

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5x5 ASM Pay Plan System Requirements: