Business mentor: Answer to staff ransom demand

Q. My business is in the service/repair industry and we employ a small number of specialised service people. But they seem to be holding my business to ransom with unreasonable wage demands and work not being completed on time and I end up working late to keep my customers happy and the revenue coming in.

The stress is having an effect on me and my family and I feel like I should sell my business and look for other opportunities. Do you have any suggestions to help my business?

A. Mike Wiggins, managing director of Icon Business Solutions replies:

Yours is not an uncommon problem in smaller service industries where specialist staff are required to repair or service products.

Part of the problem is "familyosity".

You work beside and with your staff, and probably find it hard to be their boss as well as their buddy. They are taking advantage of that.

In some of my previous replies to business owners, I have said that systems and procedures are the answer to accountability and control in most businesses, and certainly I would suggest working toward the same for your business.

But that takes time and I feel you would like a faster solution.

I would like to suggest that you offer all your service staff a service contract instead of wages.

Under the contract, employees would be paid per piece, enabling them to earn more money if they are prepared to put in the time.

How do you make this happen?

Make a list of all the services and repairs that you offer, then put several columns beside your list.

The first column heading will be the average time it takes to repair or service that particular item.

You should involve your staff in agreeing on the time, but it should somewhere between the time you know it can be done and the time they take to do it.

In the second column put your business's labour charge for the time spent servicing or repairing the item. This charge needs to be apportioned and should reflect the rate of pay for the time it takes to service that particular item by the service person ( 1/3), your overheads ( 1/3) and your profit ( 1/3). Parts should itemised and be charged separately.

This gives the basis for your service contract and gives you accountability and known prices for any service or repair that comes through your business.

If your service person can complete the work faster than the average time, they are then getting paid more for their time and can substantially increase their income.

At the same time you are increasing your income for overheads and profit as well.

"But," you say, "if they do it more quickly, you get returns and comebacks from jobs not done properly and it will cost more money and unsatisfied customers."

Write in as part of your service contract that any repair or service must be ready on time, and any returns because of poor or faulty workmanship are done in the service person's time at no charge and they pay for any parts that have to be replaced. This is then self-policing and returns are few.

I have introduced this system to a number of industries and the effect has been dramatic in service and repair income for the service person and for the business.

* For more information contact Mike on 09 579 8720 or email

* Send Mentor questions to ellen_read@nzherald.co.nz. Answers are courtesy of Spring - A State of Mind for Business.