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by Douglas Preston
 I received a call one afternoon from the personnel director of a resort spa that had recently changed ownership following an extensive tour of chapter 11. While new management was busily planning a successful turnaround for the financially failed spa the detail of employee compensation was being handled as a casual afterthought. That director’s questions and my answers went as follows:
“We’re trying to learn what we should we pay our estheticians in compensation?”
“Sure. Pay them what you can afford to pay and still make a profit.”
“But what do you pay your estheticians?”
“It doesn’t matter what I pay mine because that has nothing to do with your financial situation. To find out what you can afford to pay you first need to know what your costs will be relative to the services your employees perform. Next, you need to have some idea of how much profit you want to make from those services. With this information you can then intelligently price your services and establish your compensation rate. Do you have those numbers available to you?”
“Well, no. (Now she’s quite annoyed with me) I just thought I would call around to the various spas and salons in the area and se what the average commission was. We would base our pay accordingly.”
“Is this how the company plans to lift itself from bankruptcy?”
“Thank you for your time Mr. Preston.”
 I know I didn’t give the answer she was looking for but I did give her the correct one. Formulas for fair and affordable pay are never simple, and they are positively hazardous for spa and salon operators who check it off their list like an order of cotton pads. It’s one of the prime reasons why so many employers are disappointed with the return they get from their businesses. For this article, rather than embark on a long (and debate provoking) comparison of compensation programs I’ll focus on my favorite pay model—the commission structure—and how employers and employees can make the most of it.
First of all we’ll assume that your company’s commission rate is an affordable one. How do you know? One very strong gauge is that after you pay your employees and overhead you still have money left for you that’s worth all the time and trouble invested in running a business and managing people. If that picture isn’t currently pleasing then it’s probably an ideal time for a business analysis.
But let’s say that you are happy with your financial returns and your employees have been, up until now, satisfied with the commission rate. All has been smooth sailing until suddenly you bump up against the rock of plunging morale in the esthetics department. You’re aware of grumbling below deck and fear that a mutiny is afoot. Finally you’re handed a demand from a representative of the crew: more money or else!
An employee’s desire for higher pay and an employer’s need to control operating costs create a classic struggle in the world of business. Pay too much and you’ll go bust, pay too little and there will be no one around to do the work. How does the spa or salon owner strike a balance between these two competing realities?
The reason I like the commission payment model (performance-based pay) is because it can permit the greatest possible earnings opportunity for the esthetician without creating a corresponding reduction in a company’s profit margin. It also places the responsibility for earnings increases on the employees themselves rather through the steady erosion of the employer’s critical percentage of the sales receipts (You want a raise? You can give yourself one today!) Ambitious estheticians have substantial power over their income potential, which is why I so much loved working as a commissioned employee during my early years of esthetics practice. I looked at every scheduled appointment day as a chance to produce the maximum possible income for myself, and every appointment as a step toward my daily goal. And I made terrific money through a combination of up-selling services, thorough retail promotion, and increasing the frequency of client visits—all without creating a reputation for hard selling. It can be done by anyone—including your own employees.
If you’ve ever felt like you were backed into a pay raise corner as an employer, ask yourself these basic questions about your estheticians before carving off a larger piece of the revenue pie:
• Do my estheticians generate all the service sales they possibly can with their clients?
• Do some of them frequently complain of having too little time to perform work others easily complete in the allotted time?
• Do my estheticians take advantage of their retail opportunity as a means of making more money at work?
• Would some of my employees prefer to shorten their work shift and go home rather than contact past clients when their schedules are spotty?
• Is my raise-demanding employee also one who frequently misses work due to illness, personal emergencies, or lateness?
 The point I’m raising here is that if you have employees who are “leaving money on the table” while at work, then you have no obligation to pay more money for less than satisfactory job performance. Every esthetician who eventually became an employer knows very well how they achieved business growth—through hard work, dedication to career, and netting top service and retail sales with clients. We have very high standards for ourselves as professionals so why is it then that we would accept anything less from those who work for and represent our businesses? Would we allow some of our customers to be treated with less care and attention than others? Of course not, but on closer inspection of your operation you may very well find that this is exactly what’s happening. Anything less than the professional standard provided by you, the business owner, must not be permitted in your employees. And you must certainly not pay more for that discounted professional effort.
Here’s my plan for you to get out of the escalating pay raise trap and improve the quality of your spa or salon at the same time:
1. Begin by accepting responsibility for the situation yourself. Let’s face it, either you were too busy with your own clients to manage your employees properly, felt too guilty to ask them to work as hard as you do, or simply didn’t know what to do with them. In any case the problem stems from a lack of appropriate action of your part and now you’re ready to clean the slate and make a fresh start, right? Right!
2. Now, as a result of reading this article, you realize that coddling your personal clientele while ignoring the needs of employees has been (and increasingly threatens to be) very expensive for your business. The newly enlightened you now plans to trim back your own service schedule in order to dedicate time and training to employees. They need your experience and skill to boosting their career performance and earn more money. Feels good, doesn’t it?
3. So you work out a training plan for everyone on your team, even for your veteran estheticians that aren’t living up to their production potential. Some of them won’t like it, even threaten to resign, but you know that whether they decide to stay or go it’s the best thing for all parties involved. You want to work only with those who still have the passion for career growth and development because your business hires only the best in your field, isn’t that correct?
 4. Your training plan reflects your own professional standards that you know are reasonable and attainable. This includes promoting and performing higher priced esthetic treatments in efficient appointment blocks. Forget the express facials that waste time and earn little. Get away from those back breaking and messy leg waxes that slow retail sales. Your business and esthetics department is all about glycolic treatments, microdermabrasion programs, and special anti-aging services. And makeup! The most profitable department in your business has been woefully overlooked and underutilized. Time for everyone on your team to brush up on basic application techniques so you can offer better service to your customers and capture incredible untapped retail sales! This is fun, isn’t it?
5. And now you’ll set some standards for employee sales performance to keep them focused on the income targets they convinced you they so badly needed. You already know that any esthetician with the slightest interest in their work can easily achieve at least 25% of their total daily sales in retailing personal care products, and you want to make sure that your employees have at least a slight interest in their work. What? Some of them are slipping behind? This can only mean that they are in need of more retail and product training, which you, the caring manager, are ready and willing to provide. Don’t you wonder how you could have ever run your business differently than this?
The point here is to put the money earning responsibilities of an esthetics career where they belong. For the employer it is in offering a fair and affordable rate of pay coupled with the training, marketing, and means to create a great career opportunity. For the employee, it is to make the most of this well-prepared opportunity. If either of you has not been fulfilling your responsibilities as well as you should, now is an ideal time to begin.
Best of luck to you! |
