How to set out your after hours work policy with customers
While we like to keep it to a minimum, after hours work is a fact of life in most service businesses. As technology consultants, we need to have some guidelines about after hours work. There are lots of reasons to do this. You have costs in time and money. Your clients should have costs (because you should be charging them for the work). And if you have employees, you need to compensate them for after hours work.
I recommend you have a statement of philosophy and a few documented policies (procedures) regarding after hours work.
First the philosophy.
One of my constant arguments with technicians is about the "requirement" for after hours work. It is only under truly extreme circumstances that you need to work after 6PM on regular business days. That is a fact.
But, all too often, we get into this business assuming that we need to work after hours. I can't count how many times I've been in a meeting when someone made the casual comment that "of course" you need to work after hours.
No. You choose to work after hours.
No matter how loudly you protest, it is simply a fact that most companies never have people work after hours – even in service businesses. Even in IT shops.
We have a tendency to concoct emergencies and then work after hours. Very often, these so-called emergencies simply amount to an urgent need to get something done and an unwillingness to figure out how to do it during business hours.
If you examine your after-hours labor, it is overwhelmingly normal, straight-forward tech support. It is not rebuilding a crashed server or fixing the machine needed for payroll the night before payroll is due. No, it is more likely to be just plain tech support that you felt somehow obligated to perform after hours.
I know that you don't have to work after hours, because so many companies have figured out how to avoid it. You can too.
On many occasions I have challenged technicians to set up the first policy we discuss below. And guess what? At least 95% of their after hours work simply disappeared. Gone. It becomes a non-issue immediately.
I encourage you to implement the same.
So the statement of philosophy goes something like this:
“Our work day is 8AM to 5PM Monday through Friday. Employees must receive prior authorization to work past 5PM. Our clients are aware of this policy and know that after hours work is billable at a higher rate.”
Policy 1: After Hours Rates
Now for the big policy that will make your life easier. This policy has wide-reaching implications. And yet it is very simple:
“Regular business hours are 8AM to 5PM Monday through Friday. All labor outside these hours is billable at 1.5-times the regular hourly rate. This includes evenings and weekends. ‘All labor’ includes labor on managed service agreements.”
In other words, all labor covered under a managed service agreement (MSA) must be between 8AM to 5PM Monday through Friday. Even labor that would be covered under an MSA is billable at 1.5-times the regular rate if it is performed during evening or weekend hours.
(Note: We prefer to use two times the regular rate. We get even fewer requests for after-hours with that rate.)
Implementation: Client permission
You implement this policy by placing it in all of your service agreements. It is very reasonable and you will get no argument from clients. They may not be happy on the day they ask you to work late, but they will be very cooperative on the day they sign the agreement.
You need to have a very clear policy with your employees: If you are still working on a task at 4:30PM, and you think you will not finish by 5PM, you must contact the service manager and ask how to proceed.
In general, this is how you proceed:
First, determine whether the technician is able and willing to work after 5PM. If not, you need to determine whether anyone else is willing to do this work. (Anyone else includes you, the owner.)
Second, you need to talk to the client. Inform him that work may be needed at 5PM. Any such work would be billed at the after-hours rate. Tell the client this rate. For example, if your regular rate is $120/hour, you need to make sure the client understands that the after-hours rate is $180/hour.
If possible, give the client an estimate of the time required and ask whether they want the work done after hours or whether you should start up again in the morning.
Our experience is that clients overwhelmingly say that the work may be completed in the morning.
Note that this applies to all work – whether remote or onsite.
Implementation: Your PSA
You need to create a work type and labor rate in your PSA system specifically for after-hours labor. When you are working a ticket, you need to make sure that you stop putting time on the regular agreement (managed service or time and materials) and start allocating time to the after hours rate.
The precise process varies depending on your PSA. But the habit of allocating time properly is the same.
Policy 2: Onsite access after hours
If after hours onsite work is requested, inform the client that there must be someone from the client's company available to get your technician in and out of the building and office as needed. In addition, someone from the client's company must be present at all times in the office while your technician is on site.
This limits your liability in case that happens to be the night when something goes missing or something gets broken. In addition, this will probably cost the client extra money. Therefore, it is a further deterrent to after-hours work.
A Few Comments
I am not sure why so many of us have convinced ourselves that it's "bad service" to refuse to work after hours, or to charge extra for it. Try to get an electrician to your house at 6PM. Or an attorney. Or a plumber. Or an accountant. In most cases you'll hear that after hours appointments are simply not an option. Period. When they are available, you can bet the price will be at least 1.5 times normal.
It is perfectly acceptable and reasonable to limit your hours to "normal" work hours. On a very personal level, you need to have a life outside work. You need to balance work and play. If you have a family, you need to tend to them. The work will really always be there. Balance and perspective will help you to see that years of working until 9PM or 10PM will never make the work go away. You will never get caught up. You will only lose contact with a very important (non-work) portion of your life.
One entrepreneurial approach to labor boils down to this: If you are willing to pay me enough money, I will work for you. How much I'm willing to take to sell you my time varies. There is also a limit on your willingness to pay me. So it is very natural that we come to an agreement on terms for trading dollars and hours.
Three takeaways from this blog:
1. Set a high rate for after-hours work and put it in all your contracts and materials.
2. Do not be afraid. You will not lose clients over this. You will make more money. And you will have more free time.
3. If you do not have a “life” or do not wish to go home, you need to fix that problem. Working all the time won’t fix it.
(Used with permission of Karl W. Palachuk, SmallBizThoughts.com)