Keeping employees busy 40 hours a week can be a big problem for service businesses. Employees need and want reliable 40 hours per week income to support themselves and their families, while customers want prompt service and are not willing to wait days which would allow service businesses to keep a backlog of work for their employees. Service businesses have to keep enough employees for peak demand periods to satisfy their customer demands for prompt service.
There are several ways to minimize the problem and inefficiency. One of my SCORE clients pays their service employees on a commission bases rather than on a 40-hour-per-week basis. The employee gets a percentage of the customer revenue from the employee’s services. Each service employee has a base of loyal repeat customers. The commission pay provides an incentive and motivation for the employee to recruit enough customers to keep them busy.
Another alternative is to create productive fill-in work for the employees to fill their idle time. I know one car body repair shop that operated a secondary business of buying old clunkers, repairing them and reselling them at a profit. The owner and employees worked on the clunkers when they were idle. A retailer could have sales staff restock shelves when not needed in sales. A computer repair service could have computers in the shop needing major repairs for employees to work on when they don’t have service calls to make.
Another alternative is to offer discounts on large projects on the condition that the customer will allow extra time for employees to work on the project as fill-in work when they are not on service calls. A plumber might be able to use new construction plumbing as fill-in work between service calls.
Another alternative is to outsource peak workloads to self-employed independent contractors rather than keep employees on payroll for peak loads. Independent contractors work for many different customers and are better able to fill up their 40-hour work week. Make sure the independent contractor provides services that meet your standards for quality and service.
Some service businesses partner with their competitors and refer peak load work to the competition. However, you should agree not to steal each other’s repeat customers and ensure the competitor’s service meets your quality and service standards.
About The Author:
Ralph Coker, a retired refinery manager, volunteers with the Corpus Christi chapter of SCORE, counselors to small businesses.