I’ve seen the good, the bad and the ugly in pay structures. Use performance based pay in your spa to improve both employee experience and revenue.
By Sal Capizzi
Digital Content Lead at Spa Executive
Attracting and retaining top talent in the hospitality industry for the new year is the topic on everyone’s mind. Rightfully so. With almost every media outlet talking about ‘The Great Resignation’ and figuring out how to keep your team safe as we exit a pandemic, there is no question that team leaders at every level are trying to navigate the best practices for retaining a strong team.
The number one answer to this issue in almost every poll and questionnaire out there is, simply, money. If we pay people more, they will probably be more willing to work. But, given that spa is generally a low-profit industry, this can be difficult. And for practitioners in the spa and wellness industry there are other related factors to consider.
For example: while we should pay people more if we are able, that doesn’t mean you should pay someone that just graduated from school the same as someone who has been practicing for 10+ years and has taken every continuing education course under the sun. One of the longest standing solutions to this is ‘performance-based pay.’
As a former Spa Director, I have been blessed to see the good, the bad and the ugly in many pay structures. One of the best pay structures I’ve worked with in the past was a tiered commission structure. Most spas use a commission-based pay structure. This is simply taking that common practice to the next level. It works by creating performance-based tiers, starting at Tier 1 and ending at Tier 4 + a bi-weekly bonus upon performing over 30 services in a two week pay period.
This structure is a winning strategy for everyone, as it helps grow revenue while incentivizing team members to contribute to the success of the business. And it helps solve the staffing problem by increasing earning potential while alleviating some of your costs.
Performance-based pay increases employee engagement
When I employed this structure, my practitioners were always highly engaged and willing to go above and beyond to get promoted to the next tier level. I was constantly being asked “What can I do to get to Tier 3 or 4?” And we would come up with an achievable action plan with goals and milestones from there.
Here is an example of how it could work for one of your practitioners:
Say you hired Eric straight out of school, post boards, as a Tier 1 therapist. He has met and maintained thresholds that put him at Tier 2 payout level. But he is now in your office asking how he can get to being a Tier 3 therapist. Maybe this requires him to get certified in Hot Stone Massage so he can start performing that service in addition to keeping his return request rate above 40% for all of his bookings. (Using Book4Time really makes this data super easy to pull up on our ‘Technician report card’ report. I used it myself to measure a ton of metrics during so many performance reviews and one-on-ones.)
Now Eric knows what he has to do to get promoted to a Tier 3 therapist, and you can continue checking in with him, see how classes are going, or even going the extra mile and seeing if he needs any resources to help find a class. (It’s pretty standard at this point that continuing education should be reimbursable by the company for the growth of your team’s skillset.)
A tiered payout structure model like this not only allows you to pay your practitioners that are at, or on their way to, a mastery skill level a respectable wage but also allows you to incentivize newer practitioners to continue building their skillset and their pre-booked client list to get to a higher payout or bonus per service.
There were many weeks in which my top performers could be making DOUBLE what I was making as a Spa Director, which, as a former service provider, sometimes made me feel like I should roll up my sleeves and start practicing again as well. But at the end of the day those practitioners were a true testament that it really pays off when you always bring your A-game and when your dedication to the team and unique skill set is unmatched.
Practitioners spend many years perfecting their craft, learning new things, and providing lots of hands-on work in addition to being your biggest customer service marquee.
As leaders, now more than ever, we have the power to build some of our strongest teams to carry-on into the future.
Hi! Check out this list of the spa & wellness trends we’ll be watching next year. Click here to download the Handbook: Seven wellness trends for 2022