The Psychology Behind Your Salon Pay Structure
The link between what we hear and how we feel
Hair & Beauty Businesses are Unique!
Unique in the way that employees must have a mix of great people skills and high technical ability.
That is if they want to consistently meet client expectations and earn a good income.
What your pay system says about your salon business
Beauty and hair salon pay is often a mix of basic pay and some sort of commission. Commission relates to the sales generated by the individual operator. Is this right for your business and what does this say about your business.
To be clear, with the right language and positioning, commission structures can work well and enable some team members to earn a good living. But there are gaps and inequalities that need addressing. Essentially the amount workers can earn is primarily impacted by these five elements:
- Clients – the volume and type of clients served.
- Efficiency – the time spent delivering each service.
- Technical ability – the employee’s skill level and range of services offered.
- Sales income – a mix of prices charged, and time sold.
- The salon pay structure used – commission rates or bonuses paid.
For the business, salaries take up a high proportion of sales income, varying largely based on the type of salon pay structure used.
In my experience of both living and working in various parts of the world as a hairdresser and salon manager – then again working specifically on salon commission structures. I can say that the average salon pay structure does not represent the business fairly. Often pay structures do not reward the right behaviours, neither do they consider phycological impact on the employee.
Psychologically - The way it makes you feel!
By psychological impact I mean how the employee feels about their pay structure and the emotional impact it has on them and the contribution to the business. Why, because hair and beauty professionals are largely creative, emotionally charged individuals with a general dislike for anything relating to numbers – except their salary of course, which is understandable!
I appreciate I am generalising - there are of course financially astute operators across the hair and beauty industry! None more so than Aesthetics therapists. This is not a criticism in anyway, it is to highlight a point that different job roles bring different mindsets. Mindset is down to training and conditioning (as in employers and workers are trained or conditioned to think a certain way about specific job roles).
The Psychology behind a pay structure is subtle. For example, the way you present the salary package to your worker will impact how they feel about their employer and how valued they feel. But this is just one part of the puzzle. The other parts include their job role, how they feel about it in relation to the other job roles. The expectations you set of the employee and the elements you reward (also known as targets or drivers), these targets have dual roles:
- One-part acts as a focus for the employee to work towards – the right targets will ignite the endorphins and motivate the employee to achieve their goals.
- And secondly, the elements you reward should relate directly to the health of your business, covering a range of criteria (beyond sales income) for example a mix of salon targets and individual employee targets:
- Employee performance
- Staff retention
- Client retention
- Client reviews, and of course;
- Financial success for both the employee and business.
Familiarity or comfort zone!
When I demonstrate the different salon pay structures available within Loop HR, typically, salon owners and HR managers are drawn to the structures they are familiar with – often basic plus commission. Pause for a moment, lets compare pay structures to clothes shopping! When shopping for clothes most people will gravitate to a similar style because they feel safe with it, they like the familiarity and are excited by finding something they “like”. They do this instinctively without any real thought.
On the other hand, if you had a clothes stylist to pick an outfit for you (or a good sales assistant) and you see yourself in different style of clothes, or different colours, you may be challenged, but equally you could have a newfound level of confidence. A new way of dressing can empower you – and conversely, if you wear the wrong outfit at a special event, you might feel out of place and just want to leave!
Likewise with salon pay structures – there is more to salon commission than “take three times your wage and get 33% commission!”
The first consideration is how the pay model supports your business culture – then, once the system supports the culture you are trying to build or maintain – consider how the salon commission calculator will impact the employee.
Consider the drivers (what motivates your employee)? What will help them feel more confident or empowered to strive? And equally as important “what you want your pay structure to do?”
- Drive sales
- Drive retention
- Motivate staff
- Retain staff?
The answer is often all those things - but does your beauty or hair salon commission structure genuinely achieve these goals?
Clarity over Vanity – get your message right!
To help you build a solid foundation for you pay structure, once you know what you want your pay structure to do, and you have identified the triggers to reward – consider the psychological elements, or the emotional triggers! That would be true no matter the role. For example the salon manager pay structure would, first and foremost, relate to your expectations and needs for the business. Secondly to the managers’ experience and ability to deliver whatever is expected of them.
Be very clear about the type of manager do you want, is it one that counts shampoo bottles, or one that leads the team and drive sales? These roles are very different and the second would demand higher pay but have a more defined criteria to benchmark.
Also, the character of the individual you can work with. Do you want a technocrat (objective and rational decision-makers who focus on data, evidence, and efficiency) or creative thinker who operates on sentiment and leverages their personal charm more than process! To be clear, a mix of both is ideal, but for the example I’m showing extremes.
Before you even advertise the position, set a clear job description, attach clear objectives and set expectations (that way neither you, nor the employee, would be surprised by what is expected of them). If you use Loop HR, go to Teams & Jobs, click on the Templates tab and the Job title to reveal a template Job Descriptions.
Your salon KPIs (or targets and goals) will reflect the expectations – and the rewards would relate to the key behaviours and achievements that are good for the business. Meaning you are happy to reward your manager generously once the criteria has been met.
What’s the best salon management system?
If you have ever wondered how do salon owners pay their employees go to our Loop HR YouTube channel and watch the video on salon pay structures, including Beauty Salon commission structure, salon retail commission and our Salon Management Software.
Loop HR legitimises salon business, elevating not only the business structures but the people who work within the business.
If you would like to discuss your salon pay structure or know more about how Loop HR could help you streamline your salon management tasks, set goals and reward employees - book a discovery call with our Founder, Ian Egerton.