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Salon/Spa Compensation: It’s Time to Look Beyond an Individual’s “Numbers”

September 20, 2021 | By Neil Ducoff | No Comments

It’s every owner’s favorite time…performance/wage review time.

Just kidding.

Actually, it’s probably not every owner’s favorite time. That’s why my, “Do you do quarterly performance reviews at least once a year?” question always receives a painful chuckle.

Why IS there so much procrastination, fear, and apprehension over performance/wage reviews? Here’s the short-list of answers we hear from owners:

  • Performance/wage reviews are viewed as “confrontational” both by owners and employees.
  • Employees will want more money than the business can afford to pay.
  • Addressing an employee’s performance and/or behavior issues is uncomfortable.
  • Employees may leave if they’re held accountable or reject the amount of the raise.

FACT ONE: Performance/wage reviews are non-negotiable.  No excuse justifies delay or avoidance.

FACT TWO: Most owners see performance and wage reviews as one and the same. They are not.  They are TWO entirely different and separate reviews — and should never be done at the same time.

  • A performance review addresses the overall performance of an employee. A series of excellent performance reviews indicate that a wage review has been earned.
  • The purpose of a wage review is to discuss a change in pay, or what needs to occur for a change in pay to occur.

So, when it’s performance or wage review time, to most owners, it’s time to start running a ream of reports of everyone’s “performance” numbers.

The blessing of salon/spa software is that it tracks massive amounts of individual performance data.

The curse of salon/spa software is that it tracks massive amounts of individual performance data.

KEY ONE: All that individual performance data is a historical ticker tape on what they did over a period of time.

KEY TWO: Data and numbers cannot and do not tell the whole story of an employee’s overall performance and contribution to growing your company.

  • Is the employee a team player?
  • Does the employee’s attitude and personality fit your company’s culture?
  • Is there an attendance/lateness issue?
  • Is the employee committed to advancing his/her skills and knowledge?
  • Does the employee adhere to your company’s rules and policies?
  • Does the employee set a good example and mentor others?
  • Other than bringing in a lot of money, does the employee add value to the company?

QUESTION: How would you evaluate the performance of an employee if you didn’t have access to his or her numbers?

Front desk/guest services employees generate very little data on individual performance but you can talk at length about their contribution to the company — or lack of contribution. You give them raises or set expectations to achieve a raise.

The problem is that the mountain of individual service provider data has become the de facto basis for defining the right performance and wage increase.

The bigger problem is that when YOU become all about numbers, employees become all about the numbers — especially when paid commission. It becomes all about getting “their piece” of every sale.

In our Team-Based Pay Business Model, we use a tool called a Broadband to communicate earning potential and expectations.

There are four key elements in the Broadband:

  1. Technical and non-technical skills
  2. Team behaviors (culture)
  3. Individual strengths and behaviors
  4. Company performance and growth targets for the current year. (Is the employee driving up company performance and growth targets, or holding it back?)

What’s important here is that there are no individual critical numbers in the Broadband. That means there isn’t a ream of paper computer reports. It doesn’t mean individual numbers are ignored or don’t matter. It means that individual numbers are used as backup insight.

More importantly, if an employee is excelling in all four key elements of the Broadband, their individual numbers will reflect it. KEY: individual numbers are backup insight and far from a total picture of overall performance.

Here’s my challenge to you: Stop using reams of individual employee data as the primary basis for performance evaluations and wage reviews.

Take a higher-level approach to evaluate and determine the true performance of an employee.

Even if it takes the jaws of life to separate you from the reams of individual numbers, it’s worth it.

Without all the reams of paper, you’ll have better and less stressful conversations with employees that will focus on developing the right thinking and behavior to grow a truly dynamic company.

And you’ll be saving a lot of trees.

📅  Want help building and implement Broadbands for your company? Schedule a free 60-minute strategy session and we’ll help you get started … CLICK HERE

Categories: Compensation

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