January 23, 2022 | By Neil Ducoff | No Comments
We recently received an email from a stylist expressing her concerns about the business she works for converting to Team-Based Pay. Specifically, that dealing with change is a challenge for her.
We always welcome questions from employees so we can provide thorough, and reassuring answers.
To help both owners and employees better understand the benefits of Team-Based Pay, we thought we would share our response on how we addressed this employee’s concerns:
Thanks for reaching out with your questions and concerns about Team-Based Pay.
Yes, change can be scary. Especially when there’s a change in the method of compensation. Our job is to prepare and coach the owner through the conversion and beyond.
- Our goal at Strategies is to create amazing growth opportunities … not just for the business and owner … but for every employee. We focus heavily on developing and refining the leadership abilities of owners. Why? Because the majority of owners are technicians that lack essential leadership skills, systems skills, financial skills, communication skills, consistency skills, etc.
- Strategies has been teaching and coaching the Team-Based Business Model for over 28 years. We know what it takes for owners to make it work and to realize all the wonderful opportunities it offers to everyone in the salon/spa. The owner you work for is in good hands. Our job is to teach, coach — and hold the owner accountable — to do the work so Team-Based Pay is a win/win for all.
- Commission has an inherent earning ceiling for employees. You only have two hands and so many hours you can work a day. You can only raise prices so much. You can only squeeze in so many clients. You should be able to grow your income when your overall performance is high and consistent … even when you can’t squeeze another client in. That’s why we teach/coach that your pay advancement is actually in the hours available for sale on other columns on the appointment book.
- We want employees to be paid for all time at work — not just when your hands are busy. Meetings, required training, time training new talent, assigned projects during work time … is, by law, the time you must be compensated for. Commission doesn’t automatically ensure that all hours at work are compensated. On Team-Based Pay, the hours you are at work, except breaks and lunch, are paid at your regular rate.
- True employee benefits are severely lacking in the salon industry. With the Team-Based Business Model, we can help owners budget for benefits like paid time off, vacation, holiday, company-paid education, health insurance … and team bonus when the salon/spa hits its monthly goal.
- Not everyone is paid the same hourly rate on Team-Based Pay. Paying everyone the same hourly rate is an assumption that couldn’t work in real life. Team-Based Pay has pay ranges for different positions. Each employee’s pay rate is based on his/her length of service, overall performance, technical/non-technical skill, culture contribution, and individual strengths.
- On commission, you already work on a “variable hourly rate.” Take your gross pay for the last pay period and divide it by your scheduled hours at work (service time and downtime). That’s what you’re making per hour (on average) on commission. Team-Based Pay brings clarity and consistency to paid time at work. More importantly, you’re paid based on your overall performance and contribution to the company — not by just how much money you bring.
- We work very hard to make sure the salon/owner you work for is fully prepared to implement the Team-Based Pay. We won’t allow an owner to implement Team-Based Pay until he/she is ready. We go beyond just communicating Team-Based Pay, the company vision, and goals with clarity. We make sure the owner is prepared to lead and grow a Team-Based company.
- Your pay will not be cut. In fact, your starting pay rate on Team-Based Pay will be just a bit higher than the average hourly rate you currently earn on commission.
- Flexibility in work schedules is part of what a team-based salon and its culture are all about. The one thing both owners and employees realize after using the Team-Based Business Model is how the culture rises to a level of teamwork that commission, by design, just can’t achieve. It’s not about sucking the life out of service providers for the sake of making money.
Here’s my challenge to you: Team-Based Pay is more than just a pay method. It’s part of the highly refined Team-Business Model that offers growth opportunities to employees, employers, and the company as a whole.... Read More
December 26, 2021 | By Neil Ducoff | No Comments
The Team-Based Pay Awards were created to celebrate and honor the superior performance and financial successes of salons, spas, and medspas that are currently using Strategies’ Team-Based Business Model.
Here are this year’s winners in their own words from their Team-Based Pay Award Applications:
Identity Atelier | Columbus, OH | @identityateliercolumbus
Owners: Megan Schmidt & Autumn Queen
“As the world was beginning to open up a little more from all of the Covid restrictions, we did all we could to ensure our clients felt we were making responsible decisions for the safety of our team and guests. With smiles behind our masks and shields, standing with a partition separating us from our team, and no more welcome or goodbye hugs, we were back in business.
Our productivity was through the roof, our phones ringing off the hook. It was almost too much to handle. From May through December 2020, our productivity was at a solid 100%. Oh, and did we forget to mention we did ALL of this while Autumn, a key service provider, was pregnant with her second child.... Read More
December 20, 2021 | By Eric Ducoff | No Comments
Congratulations to the 2021 Team-Based Pay Award winners!
- Productivity Award
Identity Atelier | Columbus, OH | @identityateliercolumbus
Owners: Megan Schmidt & Autumn Queen
- Profitability Award
Blush Salon | Fargo, ND | @blushfargo
Owner: Lacey Spaulding
- Staff Retention Award
LiveEdge Eco Salon | Gladstone, OR | @liveedge_ecosalon
Owner: Sydnie Bray
- Customer Loyalty Award
Libelle Beech Salon | Lebanon, TN | @libellebeechsalon
Owner: Rachel Beechboard
- Culture Shift Award
Salon Skanda | Roswell, GA | @salonskanda
Owner: Kristal Kaiser
- Turn-Around Award
OlyCurl | Olympia, WA | @olycurl
Owner: Yukiko Taylor
- Coaches’ Choice Award
The Curl Boutique | Westbrook, ME | @curlboutiqueme
Owner: Debbi Burns
- TBP No-Compromise Leadership Business of the Year
Omagi Salon Spa | Louisville, KY | @omagisalon
Owner: Marian Sang
Strategies created the Team-Based Pay Awards to celebrate and honor the superior performance and financial successes of salons, spas and medspas that are currently using Strategies’ Team-Based Business Model.... Read More
November 7, 2021 | By Neil Ducoff | No Comments
As a salon/spa owner, you want and expect the highest levels of teamwork in your company.
You want everyone on the same page.
And, you want your team to work together to grow your company so you can reward them better.
All owners want these things.
But in the salon/spa industry, there is a “way” things are done — the accepted way.
But what if that “way” is flawed?
What if there was a “different” way that was more effective, efficient, productive, stimulating, motivating, exciting, … and revolutionary?
What if this different way was the breakthrough you’ve been hoping and searching for?
And what if your response to this breakthrough way was, “This isn’t the way things are done.”? Poof … you watched opportunity pass you by.
In business, traditional ways of doing things are merely accepted habits. When time, circumstance, and new thinking merge, those habits are challenged. The flaws are revealed. A different way … a better way … emerges. Team-Based Pay was one of those “different” ways.... Read More
June 20, 2021 | By Neil Ducoff | 2 Comments
THE DANGEROUS QUESTION: “I own a salon and I’m hiring a stylist. I was going to do a 60/40 split, with me getting 60% and providing the supplies. Is that accurate or favoring one party over the other?”
OK, on the surface, 60% going to the salon — even with the cost of providing supplies — seems straightforward.
But the problem with the “what’s the best commission rate” question is that it demonstrates the massively oversimplified approach that many owners take concerning their single largest business expense. So much so, it’s created a history of devastating results.
THE MOST HONEST ANSWER ON PAY YOU’LL EVER GET:
As simple as, “What’s the right commission rate?” appears, it is a very complicated question to answer. Here’s why:
- There’s the financial reality of your business: Only a review of your financials and expenses can determine what your ideal payroll % should be. But that ideal percentage changes as your expenses, productivity rate, and pricing change.The problem is that once your commission percentage is set, any change in operating expenses, product cost, productivity rate, and more — you are stuck with your selected commission rate. Simply put, once commission rates are set, they are extremely difficult to lower without upsetting or losing employees.
FACT: Product cost deductions and service charges are nothing more than smoke and mirror tactics to lower commission rates.
- The “performance and behavior” aspect: Commission is “piece work.” It’s a “you do this — you make that” pay system. It doesn’t address negative behaviors, attitudes, lateness/absenteeism, retail indifference, or, contrary to popular belief, motivate everyone to perform/produce. Commission motivates the few — not the many. Simply put, commission rewards the wrong behaviors and performance just as much as it rewards the right behavior.FACT:
Commission still pays an employee their commission rate for his/her bad attitude, low client retention, lack of retail, behavior, and performance issues.
- The “culture” of your company: Everyone is beating the “culture” drum. Yet, highly refined and dynamic salon/spa cultures, that attract and retain the best workers, are a rarity. The proof is the industry’s horrendous employee turnover rate and high incidence of walkouts. And when employees would rather work alone in a booth or suite, than be part of a great company culture — it’s more than a trend — it’s a crisis for employee-based salons/spas.FACT:
Commission is an “I/me/mine” pay method and conflicts with teamwork and culture. As long as “what I bring in and get my piece of” comes before company and culture, commission will do its damage.
- You must control your payroll cost: Sorry, you can’t control commission payroll costs. You can implement new or higher product/service charges before commission — but that’s a pay conversion. You can lower commission rates and sliding scales — but that’s a pay conversion. “Selling” a lower commission to employees is a recipe for disaster.FACT:
Service payroll is a percentage on your Profit & Loss Statement. After all your commission level systems and multi-level pricing, service payroll is still a percentage on your Profit & Loss Statement. That percentage is either manageable or sucking the financial life out of your company.
Here’s my challenge to you: For all those reasons and more, Strategies has been teaching and coaching the “Team-Based Business Model.” The foundation is Team-Based Pay which is hourly pay plus bonus. There is no commission — not even on retail.... Read More
April 11, 2021 | By Neil Ducoff | 2 Comments
This is not a simple question. Commission has been the defacto pay method at salons/spas forever. For most, “commission” is the way it’s done.
The most common response to the question is, “Commission motivates them to perform and sell.” But does it really?
Commission’s origin is actually in sales-based businesses and industries. If you sell something, you get paid a percentage of that sale. Products, cars, equipment, systems, real estate, services, etc.. The key difference is that the one earning commission doesn’t make or deliver the product or service being sold.
The salon/spa industry is very different because the individual doing the “selling,” or providing the actual service, gets the commission. That seemingly simple difference is far from simple — it’s massively different.
Stylists, estheticians, barbers, massage therapists, nail techs, and other service providers are primarily attracted to our industry for its creative and therapeutic aspects — not because they’re passionate about “selling” or making a commission on what they sell.... Read More
March 21, 2021 | By Neil Ducoff | No Comments
Tipping in salons/spas has always been an emotional topic.
When doing business seminars, I would ask attendees, “How many of you feel there is something unprofessional about tipping in salons/spas?” Just about all hands would go up.
Then I would say, “Keep your hand raised if you would eliminate
tipping in your business to be recognized as truly professional.”
Every hand would go down.
Tipping becomes super emotional when it comes to tip processing, proper reporting of tip income, professionalism, and especially, the thought of going no tipping.
There are many owners and employees that believe that tip income should be tax-free. Or that only reporting a small percent of service revenue is good enough. Or that only tips on credit cards should be reported and taxed. Sorry, all tip income is taxable.
And then there are salons/spas that try to eliminate the processing
fees on credit card tips by implementing “no tips on credit cards”
policies. Some even install ATMs. Many say, “Clients don’t complain,” but in those situations, clients really don’t have a choice.... Read More
February 28, 2021 | By Neil Ducoff | No Comments
A salon/spa business begins with an idea that quickly evolves into a vision with amazing opportunities.
Once that entrepreneurial seizure grabs hold, you’re willing to “bet the ranch” on building your vision.
If you were an experienced service provider at another salon/spa, it’s likely that part of your plan involved clients following you to your new business.
You hire some service providers, some with followings, and pay them some form of a commission (straight, sliding scale, level pricing, product charges, etc). Why? Because that’s the way it’s always been done.
From the day you open the doors, the prime objective is to “build” your service providers. The reasoning is simple. The faster you build “them” … the faster your company grows.
The energy of a newly opened salon/spa is exciting and empowering. Sustaining that energy is the biggest challenge — especially for owners that are more skilled at doing services than leading a business.... Read More
February 21, 2021 | By Neil Ducoff | 2 Comments
The salon/spa industry’s longstanding approach to compensation is built on one seriously simple method: If a service provider delivers a service, or sells a product, he or she gets a piece.
In order to get that “piece,” the salon/spa must determine “who gets the credit” for the service or product sale.
Here are the four most common “who gets the credit” challenges:
- One or more service providers work on one client and each expects to get “a piece” of the ticket.
- A front desk/guest services employee sells a retail item to client at checkout. The service provider has a fit because he/she didn’t get the credit.
- Front desk/guest services employees disengage from closing or selling retail because the credit and commission automatically goes to the service provider.
- A service provider says, “I’m not doing [insert service/product sale] unless I get a piece.”
These four challenges may seem extremely basic, but they’re far from it. Why? Because the moment an employee feels short-changed or cheated, it contaminates your culture and spreads like wildfire.... Read More
January 11, 2021 | By Neil Ducoff | No Comments
Every business goes through good times and bad. Sometimes, the bad times get so excruciatingly painful, the sleepless nights, and feelings of hopelessness so debilitating that some owners lose all hope.
No one opens a salon/spa expecting his or her business to fall into the fiery pit of hell. Yet, many owners find themselves there. The fiery pit of hell is real, it’s ugly, and emotionally demoralizing. So much so, many businesses never emerge from it.
In this post, we put the spotlight on one owner that found herself in the most unimaginable situation a business could be in.
This owner’s name is Lisa Cochran, owner of The Studio in Hattiesburg, MS, and R3 in Laurel, MS.
Lisa is the winner of the 2020 Team-Based Pay Coach’s Choice Award.
We first met Lisa in 2006 at her first Incubator seminar. Her business was in the deepest point of the fiery pit of hell. She was over $700,000 in debt, most of which was back taxes to IRS.... Read More