Money Matters

Awards and Incentives Produce Top Employees

Keeping staff happy, satisfied, and fulfilled can be the biggest challenge salon owners face. Yet, somehow, many salon owners and managers retain employees long-term and manage to keep them happy. What innovative programs are salon owners implementing? What do employees really want?

Keeping staff happy, satisfied, and fulfilled can be the biggest challenge salon owners face. Yet, somehow, many salon owners and managers retain employees long-term and manage to keep them happy. What innovative programs are salon owners implementing? What do employees really want?

Salon owners can use the same creativity that makes them great nail technicians and hairdressers to make their businesses successful. The following is a roundup of various methods that have proven track records.

Value Your Staff

“What helps get and keep staff is paying value to them,” says Gayla Rodgers, owner of Class Act salon in Iowa City, Iowa. “That means offering cash incentives and other prizes for reaching goals, boosting their egos, and giving them credibility when they do something fantastic. People don’t usually leave a job because they lack money. They leave for lack of appreciation.”

Kenneth Anders, owner or Kenneth’s DesignGroup salons in Columbus, Ohio, and founder and president of Club Kenneth, a business-building program for salons, concurs. “Studies show that the number one thing employees want is appreciation for a job well done,” says Anders, who’s also artistic director for Kenra, a hair product line. “Next, they want help with their personal problems. Third, they want to be involved in decision-making. Fourth on the list of what makes them happy is money.”

 We Are Family

The Kenneth’s DesignGroup staff is one happy family with more than 100 people – right down to Anders’ son Tony, who’s a hairdresser.

“We focus on appreciation and provide an encouraging atmosphere,” says Anders. “Everyone is part of our family and with that there are obligations. For example, you have to be a team player and you have to earn the respect of the other family members.”

The elder Anders lives up to his obligations as head of the salon family. “No one here have ever missed a car payment because they had personal problems,” he says.

Being a team player starts with helping others and appreciating the help with helping others and appreciating the help when you are the recipient. “We call it building up IOU’s” says Anders. “It’s simple: The more you help, the more anxious people are to help you. If you leave early, you have to ask everyone if they need help first. If no one does, then you can leave.”

Even Anders, who no longer officially works behind the chair, is known to shampoo or blow a client’s hair on occasion. The strong support structure is a primary benefit of the family atmosphere. Such supportiveness limits competition among employees and encourages them to work together.

“When someone is going for a goal, we put out a notice and everyone participates in the celebrations,” says Anders. “For example, if a stylist has the potential to reach her best week ever, by Saturday everyone is offering to wrap perms or shampoo to help her reach it.”

Rodger of Class Act also gets involved with her employees’ individual growth. “Helping the staff get focused personally is important to me,” says Rodgers. “For example, if they want to buy a car, I show them how to go to the bank for a loan, how to balance their checkbook, and how to establish good credit.

“I want my staff to make great money and be some of the highest paid people in Iowa City. And I want them to care about each other,” she adds.

The Prize Is Right

Because of Class Act’s incentive-based compensation program, stylists can work 40-hour weeks, make a great living, and give themselves a raise at any time. The work structure, which includes an assistant program, ensures that they can never max out.

Says Rodgers, “Not only is this continuously motivating, but it means their raise comes from them and not from the salon.”

Rodgers also helps staff members set goals and rewards them when they’re reached. Technicians strive to reach “best weak” goals set at $100 increments. “Everyone tries to beat their own best week,” Rodgers explains. “Each time they reach it, they get a $25 cash bonus. Most staff members reach it five or six times a year for an extra $150 bonus. Once they reach a $1,000 week, the cash bonus goes up to $50.”

At Class Act, incentives are ongoing. Redgers, who’s also a platform artist for Kenra, says that retail contests are the staff’s favorite. For example, for every liter of shampoo an employee sells, she gets to pull one marker off the “pull board.” The employee wins the newly revealed prize, ranging from a case of beer to a VCR. During a referral promotion, employees may win a cruise or $500 cash. “They like the money and prizes, but they really love the recognition and credibility they receive,” says Rodgers.

Staff member can also purchase items from the salon’s boutique at cost. “They love it because it helps them buy their clothes at a discount, and we only stock unique items that aren’t really available in Iowa City,” says Rodgers.

Education and Involvement

At Eric Fisher Salon in Wichita, Kan., owner Eric Fisher focuses on offering the best working environment possible. His plan starts with education. Fisher spends upward on $3,000 per month to bring in top educators. He also takes his staff on trips to London and New York, and he recently sent his colorist to Paris.

The staff recently participated in one of Fisher’s many photo shoots. Employees enjoy the freedom to express ideas and implement change in their daily routine. “We just wrote a new salon philosophy and everyone read it and participated in the decision-making,” says Fisher. “They love making a contribution.”

Other benefits Fisher cites: a music system, magazines, and fashion videos. The magazines and videos are changed and updated continuously.

“We change the visual environment all during the day, which is really creatively stimulating to the staff,” says Fisher. “Both the staff and clients like feeling they’re part of something special that no one else is doing.”

Planning Ahead

The most important benefit to Anders is the pension/profit sharing plan. “Long term, this is the best benefit we offer. Many of the younger stylists don’t realize what they have,” says Anders. “Younger, artistic types often prefer our more fun incentives, such as the cruises we offer as prizes in contests for selling services and retail.”

To learn more about setting up a profit sharing program, Anders suggests consulting an attorney or a financial planner at your bank. “If you do it wrong, the consequences can be astronomical,” Anders warns.

Anders also offers paid vacation and sick leave or personal days for the salaried staff, and he pays 25% of the health insurance premium. His main advice: You can’t offer a good benefits package if you’re paying your technicians a 65% commission. He offers two levels: 42.5% and 44.5%.

“You have to get your staff focused on how much they’ll make monthly and annually, as opposed to their percentage,” says Anders. “For example, many stylists say they’ll work for 65%, but 65% of nothing is nothing. Instead, get them to think in terms of earning $30,000 per year, no matter what percentage that represents.”

Salaried Security

Richard Calcasola, owner of Maximus Total Beauty Day Spa Deluxe in Merrick, N.Y., partly attributes his high staff retention to his salary structure, which has been in effect for the 21 years he’s been in business.

“Our pay structure is a real benefit to the staff because they know what they will earn each week and budget their lives accordingly,” says Calcasola.

“People who excel make more, and productivity is a big factor in their performance review – but it’s not the only consideration,” Calcasola says. “Responsibility, accountability, professionalism, client retention, loyalty, team cooperation, and effort and participation in extra activities, such as fashion shows, are all taken into account.

“When the staff is paid by salary, it puts the responsibility for building the salon’s clientele, marketing, and public relations in my lap,” Calcasola adds.

Since there’s no commission paid on retail at Maximus, you might assume there’s little sales effort. But retail accounts for 18% of the salon’s gross receipts.

“The staff works just as hard and earns just as much, if not more, than a staff paid based on commission,” says Calcasola. For example, the average nail technician earns about $500 per week or around $25,000 per year.

In addition, staff members can earn incentives or contest prizes such as dinner for two, a shopping spree at a local grocery store, or free dry cleaning for a month. The staff put together the list of prizes.

Staff retention is high, which Calcasola says validates his salary theory. At Maximus’ recent 20th anniversary, Calcaso gave gold watches to those who worked at Maximus at least 10 years. Out of 43 staff members, 15 – more than one third – received a watch.

“If you stay here two years, you stay forever,” says Calcasola. “We don’t hire people for their followings; rather, they’re hired to accommodate our business. We have the business before they get here, then they lift into our system.

You’ve Got to Believe

For Class Act’s staff, the highlight of 1990 was the presentation of three “believe necklaces.”

“When a staff member hits a $2,000 week, he or she gets a 14 karat gold necklace or bracelet that says ‘believe’,” explains Rodgers. “When they reach $3,000 they got a diamond to dot the ‘i,’

“We presented them early in the morning when the salon was filled with clients and announced it on the intercom. It really meant a lot to everyone.” The one staff member who received a diamond was Rachel Mathes, salon manager and head of the nail department.

Great incentives are much more than yearly merit raises or higher commissions. As these salons demonstrate, they are programs that fulfill an employee’s total needs – for self-esteem, a support structure, involvement, education, security, and, of course, money.

Jayne Morehouse, former editor of American Salon, is now president and creative director of Morehouse Communications, a company specializing in the beauty industry, based in Cleveland, Ohio.

Choosing Your Pay

At Class Act, Rodgers gives each staff member a choice of compensation packages. While the 50% structure offers more cash up front, the 45% package provides future security. The following is a breakdown of the options:

45% Commission:

10% retail commission

2 weeks paid vacation

Ongoing vacation

Educational trips to shows

Recognition, credibility, and input

Health insurance: $250 deductible, salon pays full premium

For $2.10 per month, receive dental coverage plus $10,000 life insurance

Matching savings program: salon matches up to $35 per week, based on average weekly earnings over four weeks. For earnings of $600, the salon will match $10. Other levels follow: $800/$15, $1000/$20, and $1500/$35

50% Commission:

10% retail commission

1 week paid vacation after 1 year; 2 weeks after 5 years

Ongoing education

Educational trips to shows

Recognition, credibility, and input

Can buy health insurance at the group rate

Full-Service Cosmetologists Avoid Falling Into a Rut

At Finishing Touch in Boulder, Colo., the staff never falls into a routine. Why? All are full-service cosmetologists, meaning each does hair, skin, and nails.

“The flexibility makes every day different and interesting,” says co-owner Ada Menzies. “They love to be able to do hair, then switch to the close hand-holding contact they can get with their clients only at the nail table.”

Other benefits abound. Top on the list: Full-service battles burn-out by allowing staff members to challenge themselves. Besides challenging them intellectually, it’s less physically tiring.

“We don’t suffer back problems from standing in one position shampooing or have shoulder problems from manicuring continuously all day,” says Menzies. “After doing a perm, a cosmetologist can get a good stretch giving a pedicure, retreat to the peace and tranquility of the facial room, or really get her blood moving during a waxing service.”

Full service has advantages for both the client and salon, too. “Since each staff member actually performs all services, she feels empowered to offer a broad range of add-on services to every client,” says Menzies. “And she can actually perform those extra services, which adds a comfort level for the newer clients who might not have met the entire staff yet. Or, it can give the client an opportunity to try out other staff members. We all work together.”

According to Menzies, the staff loves the creative freedom this policy afford them. “One stylist told me she was bored to death doing one older client’s hair who hasn’t changed it in years, but since she has the opportunity to get creative with her nails – this client just loves nail art – it lets her keep their relationship fresh and exciting.”

Since partners Menzies and Sally Thompson pay the staff salary, there’s no financial worry about switching from wrapping a perm to applying nail polish.

“It never occurred to me to work any other way,” says Menzies. “We come out of school trained in all services. At Finishing Touch, our continuous full-service training ensures that we don’t lose touch in any area.

“Our goal everyday is to make sure that everyone is fully booked. We all take responsibility to check the book every day and upsell clients for anyone who’s not booked solid.

“The policy also makes sure that there’s no seasonal fluctuation either. We all move from busy cutting seasons to back-to-school facials for moms to winter pampering packages with ease,” says Menzies. “In fact, the salon does within $1,000 every month plus growth.”

The salon setup physically supports her system. “Nobody has stations,” says Menzies. “We have eight chairs, sic manicure areas, five pedicure areas, two facial rooms, an auxiliary room for waxing, and a full wig department, all for 16 cosmetologists. Every station is set up the same, and stylists use whichever one is open. The two makeup setups are portable and can be used at any station.”

Staff members that like one particular service can focus their time if they want to. For example, Menzies says one of her staff members loves doing acrylics and has a strong clientele in that area, while another really loves doing facials. “But, if another stylist left and she needed to give a perm, she could,” says Menzies.

The bottom line: The full-service system makes the salon client-oriented and focused on teamwork, yet it allows each staff member to reach her full potential.

“Potential is the key to ‘90s management theory,” says Menzies.

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