Compensation Challenges

Compensation Challenges

 

I am fortunate to be asked to speak at many industry trade shows, and no matter what my subject is, one thing I can be sure of is that the Q&A will turn to issues surrounding technician compensation.  This issue continues to come up as it is one of the most impactful on business profitability. Spas and salons that cut every possible expense during the recession, and survived, have already made most of the potential improvements. However, many owners and managers still are faced with income statements showing little to no profit to show for their efforts.  For many businesses, there is only one place left for pruning; the often massive chunk that goes to the technical staff.

Now, before you declare that changing technician compensation will never work in YOUR neighborhood, let’s review a few facts. 

  • If your direct technician labor costs exceed 40%, and you add in your contribution to taxes, plus the salaries of management and support staff, your payroll costs probably exceed 60% of your total revenue.
  • Most spas carry overhead expenses of about 40% of revenue; even if they are 35%, that’s a pretty slim margin for profits.
  • There are few industries out there where a person would apply for, and accept, a position with a company that could give them no idea what their annual earnings would be, and would offer little to nothing in the way of a benefits package.
  • In many parts of the U.S., spa and salon technicians are making an excellent living, in busy facilities, with income equal to commission ranges of 25%-35%. 
  • Software programs today enable many different options for technician pay than were available in the past.

As a former technician myself, for over 15 years, I am well aware of the rigors and stresses of those positions.  But the face of our workforce is changing; more folks are coming into the beauty industry from other fields, where compensation packages including health insurance contributions, paid vacation and other perks are common.  They are always a bit surprised by the lack of those options that many spas or salons can provide, but the reasoning is quite simple; spas and salons paying high commissions can’t afford to give any perks or benefits.  Which makes working in the beauty industry feel more like a job, and less like a career.

If we want to develop a career-orientation for our employees, we need to step back and take a look at the big picture. Is our current compensation promoting the behaviors that will grow the business? Does it have an upside for technicians as well as the business itself? We have to look at the options offered in other industries, and see how we can adapt our programs to have a long-term focus.

management, owner, article, Lisa Starr, spa,  salon,  standard,  training,  education,  business,  manager,  therapist

 

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