I used the word “wacky” in the title because when it comes to employees and pay, things can definitely get pretty wacky.

Here are some givens about employee pay expectations:

• There is a high emotional component to what an individual gets paid.
• There are employees that feel they should be paid significantly more, even though their performance and behavior say otherwise.
• There are employees that want to be paid more, but are unwilling to do more — or want to do less.
• There are employees that feel underpaid that never address the issue with owners/leadership, become resentful and devolve into a “problem employee.”
• There are employees that consistently deliver their best efforts, strive to advance themselves, and have earned the right to have conversation about their pay.
• Employees that view work as a “job” and do enough to get by, will rarely achieve their pay expectations.
• Employees that view work as a “career” and apply the necessary determination and commitment to advance themselves, are most likely to achieve their pay expectations.

As all salon/spa owners know, managing employees is an ongoing and challenging responsibility. Work needs to be done, bills need to be paid, problems need to be addressed and employees need/want to be acknowledged.

Even in the smallest salons/spas, it is a challenge for owners to understand and address employees’ needs and pay expectations.

Here are some No-Compromise Leadership strategies to help you navigate the wacky world of employee pay expectations:

• Accessibility and approachability: An owner once told me that he avoids hanging around employees because, “They always ask me for raises.” I really wasn’t sure how to respond other than, “Maybe you’re overdue to have those conversations.” KEY: It’s easy for owners to become so focused and preoccupied in their work that it makes it difficult for employees to connect with them. Make time for employees. Take a sincere interest in their career aspirations. Ask what the company can do better to help them grow. The intent is to sincerely show that you care and are willing to listen.

• Being OPEN is a good thing: Many owners don’t like to share the true financial reality of their salons/spas. They say, “We don’t want them to know how much the business brings in … they’ll think we make a ton of money.” Yet, these same owners are pushing, prodding and begging their employees to “bring in more money.” When those owners drive up in a new shiny car, of course the employees think their hard work paid for it. KEY: There’s nothing to fear about sharing basic revenue numbers, operating costs and profit with employees. Heck, they played a role in making those numbers happen. Why not show and teach them the financial reality of business? When an owner is closed and secretive about company finances, employees make exaggerated assumptions on how well “the owners” are doing. That exaggeration carries directly over to their pay expectations and feeds resentment.

• Pay conversations: Yes, pay conversations can be difficult and emotional, especially when the employee’s pay expectations are out of whack. The more out of whack the pay expectations, the more emotional and difficult the pay conversation will be. This is why Broadbands are so essential in Team-Based Pay. Broadbands define expectations for overall performance and behavior from entry level to top senior employees. If you’re still on commission, you should still have clearly defined performance and behavior expectations as employees move up the pay ladder. The problem with commission is that the employee gets a percentage of whatever service sales he/she generates whether other performance and behavior expectations are met or not. KEY: It is the company’s responsibility to clarify compensation associated with the various levels of performance and behavior. The higher the pay, the higher and more detailed the expectations.

• Fairness, productivity rate and finances: There are only 100 pennies in a dollar. If you’re projecting a 10% profit, there are only 90 pennies left for payroll and expenses. For most salons and spas, service payroll should account for 30 to 35 of those pennies. Ten pennies are for guest services/administrative payroll. Rent will take approximately 4 to 8 pennies. Spend more than 100 pennies and you’re in trouble. KEY: Owners must balance fiscal responsibility and pay fairness. That is why maintaining optimum productivity rates in the 80% to 85% zone is so crucial to the efficient operation of a salon/spa. On Team-Based Pay, low productivity means payroll dollars are wasted. On commission, it means some employees are making money while others are hanging around making little. If you want to pay your people well, your company has to be productive and fiscally responsible.

Here’s my challenge to you: There are pay conversations waiting to happen in your salon/spa. Avoiding them feeds contamination in your culture. The only way to manage pay expectations is to be open, accessible, willing to listen and have the ability to clarify performance and behavior expectations across all pay levels.

There will be employees that no degree of openness and clarification can overcome their unrealistic pay expectations. When an employee wants to be compensated at a level beyond what your company can deliver, the employee or the company must make a decision.