In todays episode Julie shares a sneak peek into a SpaHive VIP Mastermind call. This is an edited quick look into the kind of conversations we have in the SpaHive VIP with two of our board members that are true experts in the industry.
In this Power Hour turned Power 90 we took a deep dive into compensation. Our VIP's discuss why the right compensation model is critical, the other pieces of the puzzle to creating engaged teams and how to make changes when necessary.
The SpaHive VIP, is THE ONLY elite private online community for spa, hospitality and wellness professionals. Members have 24/7 access to share ideas, solve challenges and connect with leaders and colleagues in the spa industry in a secure and private group. Julie Pankey and her team monitor conversations to address members’ questions and topics regarding operations, online marketing, social media, website development, management, hiring, retail and wellness programs. Through SpaHive, members connect with spa professionals from around the world to discuss business challenges, successes and even make friendships with individuals they would otherwise never meet.
BETTY LOIACONO
Betty Loiacono began her career in the hospitality industry in 1978 as an assistant hotel manager at the MGM Grand Hotel & Casino in Reno, Nev., which was then the largest hotel/casino in the world. She worked in training and development and as guest relations supervisor at Radio City Music Hall in New York and as director of VIP services at the 1982 World’s Fair in Knoxville, Tenn. After three years at Shearson Lehman Brothers/American Express in New York, she re-entered the hospitality industry in 1987 as hotel assistant manager at the Trump’s Castle Hotel & Casino, where she says she learned “grace under fire” by working under the direction of Mrs. Ivana Trump. In 1989 she became Resident Manager / Director of Operations for The Spa at Norwich Inn and eventually segued into the role of Spa Director. Betty was selected to move from the Norwich property to coordinate the re-branding of the Foxwood’s Casino spa as The Norwich Spa at Foxwoods. In August of 2008 she transitioned to the pre-eminent Four Diamond Saybrook Point Inn Spa & Marina in Old Saybrook, CT, where she is The SANNO Spa Director. Betty organized a New England Roundtable of the International Spa Association and served on ISPA’s Marketing Committee. She is a member of the Professional Advisory Committee of the Cortiva Institute formerly known as The Connecticut Center for Massage Therapy. She is a current member of the Board of Directors of SPA HIVE.
JENNIFER BOISCLAIR
Jennifer Boisclair is a management extraordinaire. Having 10 years experience in salons and spas in the Boston and Connecticut regions, Jennifer is a seasoned manager capable of handling any and all complications. Her executive prowess is demonstrated in her ability to consistently budget effectively, oversee operations and exercise intuition to handle team and client alike. Jennifer’s direct approach allows her team to feel that they can always trust and communicate honestly with her. Her degree in Business Administration and Management is reflected in her confidence to lead. Jennifer, although a literal mom of 4, has gained many children throughout her career by her positive attitude, willingness to teach, and simply being an inspiration to all. She is community and customer driven, results oriented and has a passion for systems and structure. Unrivaled are Jennifer’s competence, care and gift for her role in the spa and fashion industries.
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Julie: [00:00:00] I feel like been talking to a lot of business owners going into. 2021 and one thing on their mind. Although I feel like it's always on our minds, but really on their minds specifically this year, as they're evaluating. Last year business going into the first quarter of this year now into the second quarter, really trying to be sure that they're managing expenses and.
[00:00:36] You know what I'm making the changes necessary, moving forward into 2021 and beyond. And so I've had numerous conversations about compensation and, we've worked on changing compensation models that some spas, tweaking things at others. And then. Of course there's new businesses that are looking to open either during COVID, we have businesses that open during this whole last year, as well as at the end of this year or next year.
[00:01:11] And so a huge piece of that. Is the compensation piece. So I thought today was a nice time to start that conversation really go deep into it. But you know, Betty, let's do an intro of you for those that don't know you. And let's talk about, some of the compensation models that use and what you found most effective.
[00:01:41] So we had the great pause business closed. We reopened now's the time to make a change. What might be something that you would do to make a change, consider a change in compensation, potentially. And why?
[00:01:57] Betty: [00:01:57] Okay, so Julie and I've known each other for decades, that kind of gives you an idea and Ellie as well.
[00:02:04]And I just don't want to miss the opportunity to say that retail is a form of compensation while Ellie's here, but you have to literally find the products that every member of your staff can sell. And if you had a product line like spray ology or something that can be cross sold, understood right now supports immunity.
[00:02:25] And right now is so trending, you are able, and your team should be able to recommend one or two of those items. And it could be a spray ology, whatever you find. You've got to give them something worth selling and commission them on sales, but set an expectation level. Whether it's an aesthetician, a front desk person, a massage therapist, and nail tech.
[00:02:46] They should have a goal for meeting retail as part of their performance. And I don't think you should shy away from it. I think you should be bold about it. You're literally taking up square footage, it's dollars. If you don't sell what's on your shelf, all you're doing is dusting it, and you're doing that work and literally putting things away after they're expiration.
[00:03:07]I just wanted to preface this too by saying Worth isn't just money worth is an appreciation. Are currencies that fly deep in the face of everything. And right now you're going to have a gun shy team returning to the workforce. So appreciation and tying in while you may want to hide in your back office.
[00:03:25] And there's tons to do there. You've got to walk your floor huddle at the start of the day, Julie. And I know that I've done in terms of compensation, you've got to be there. You're a form of payment for your team member. And I did one-on-one every month for my team and we sat down, it was scheduled in their schedule.
[00:03:48] They got their float rate while they were meeting with me. We literally had a list of questions that we brought to the table, or follow-up from the months before that we met. It is the prelude to their performance review, which is yet anotherreward for compensation. Now I have been all over the place, compensating from Norwich spa to where I am now at Saybrook point resort.
[00:04:11] And literally in October, as we were doing re-entry we went back to a pretty set formula. So for those of us in Connecticut, we've had a steady rise in the minimum wage. And we made a decision. Good morning, Christie. We made a decision that instead of paying the minimum wage beneath every treatment percentage, we eliminated it.
[00:04:37] So if you are doing your treatment, you're getting 25, 26 or 27%. Of the rate of the treatment as your compensation. Number one, we can see what that is. Number two, you share in if it's a discounted treatment and we're doing all your advertising, your marketing, your appointment book, insuring buying all the products.
[00:05:02] This works very well for us in this resort setting. Because literally you're coming to work, looking at the appointment book and going about your business. So float time or minimum wage is only paid when you're not in the treatment room and you are punched in period. And that is now without apology. I think we're at what are we at?
[00:05:21] Jenn 1213,
[00:05:22] Jenn: [00:05:22] 12,
[00:05:24] Betty: [00:05:24] we're going to 15. Right. It's like incredible underlayment. Yeah. And it's like prescribed and that'll get larger. And it's something that you have to look at because that's your basic payroll burden right at the get-go.
[00:05:39]Julie: [00:05:39] Well, Betty, can I just recap this? So you're paying a hourly rate when they're not performing services.
[00:05:49] Betty: [00:05:49] Correct.
[00:05:50]Julie: [00:05:50] And then. So, so
[00:05:52] let's just say, and I'm just saying it for, some of the, newer people, on the call to the model. So I'm a massage therapist. I come in , I work a six hour shift. I have four appointments, so I , would get paid my commission on the four appointments.
[00:06:13] Betty: [00:06:13] Yes.
[00:06:14] Julie: [00:06:14] And then on the two appointments that I'm not working, I would get paid whatever the hourly wage is.
[00:06:21] Betty: [00:06:21] That is correct. This is a departure from us because we always paid the minimum wage or more, depending on the people who had been there a long time and literally had grown to get that we had paid that even while they were in their treatment.
[00:06:37] However, what we did do is, an analysis,of the treatments. Every single treatment the last five years to see what people were getting terms of the percentage of the treatment. And I inherited it and some of them were all the way off the board. So the first question you ask is what's your margin?
[00:06:55] What's your payroll burden. What do you want to make as an owner or as the manager or director? What does your business require you to bring to the table at the end of the year? And you cannot pay out more than that because the payroll burden insurance workers' comp social security, all of those things are excrutiatingly expensive and literally tip.
[00:07:20] The scale for your success or not. So you can stay in business and have no direction and fail, or you can start having marginal return and then you could start having incremental return. And then you can start having return that actually meets your budget. You can't waiver. I really feel it's been the hardest lesson because we are nice people and we let a lot slip and slide.
[00:07:46]And that just goes to what was said about, I can only work nine to three Monday through Friday, but if everybody in the world that wants you wants to come on Friday, Saturday, or Sunday, Saturday, Sunday holidays, you have to hire with flexibility and you also have to hire with clarity, your person, if they just want a job.
[00:08:08] It'll say that right at the interview. If you have a person that has passion and wants to partake, and you can create that culture in your environment, then you're going to have somebody who will subscribe to your mission, vision, and values, which I speak about all the time. And at the end of the day, you should be in the back of your head going, I love this person.
[00:08:27] They're going to bring 22% to my bottom line, and be faithful.
[00:08:31] Julie: [00:08:31] Right, right.
[00:08:32]Betty: [00:08:32] You've got to think in that way.
[00:08:34]Julie: [00:08:34] Talk about that a little bit Betty. So I know you've worked on changing this compensation for a long time. A lot of research, a lot of time went into it. And so you made the compensation change in October, so right in the post COVID world, .
[00:08:52] When your employees are like, Oh great. And now they're sticking it to me.
[00:08:56]Betty: [00:08:56] Right
[00:08:56]Julie: [00:08:56] let me ask you, how did you position it, when you rolled it out to the team and now so October, November, December, January, and February, what are we in March, April. So , six months later, let's say, have you started to see incremental.
[00:09:16] Reward to the bottom line.
[00:09:19] Betty: [00:09:19] Okay. So we started slow end with COVID in our resort environment, we had to hire back the teams, those that were willing to come back, they knew if they were willing to come back. The compensation piece didn't roll out day one, but we did tell them there was going to be a change.
[00:09:37] Number two, some people haven't chosen to come back yet and they're hybrid. Teaching at school, they're opening everything up. May 19th. If things go well here in Connecticut, like wide open. So, I don't know how the spa today is going to handle the reception area, the locker rooms dressing out of the treatment rooms and all of that.
[00:09:58] I'm pretty sure it's just going to open wide unless we have a pandemic increase and that's yet to be seen to, or the departments of health in all Saybrook may mandate otherwise. How did we see it? People are grateful for work right now. Unemployment will put a stop, a line in the sand at some point. I don't think my, they may have been a hiccup because any change, no matter how great your employee is, they're not looking at it from, Oh, I'm so glad the employer's doing this.
[00:10:26] They're like, now you're sticking it to us. But at the end of the day, can I just say that the team has added on hours? We've had limited hours. We've had longer and their hourly rate by the way, includes cleanup time. I mean the compensation. Let me just rephrase that. The 25% 26 or 27% includes take intake and the cleanup time, which we've all know now is a lot longer.
[00:10:51] And then if they don't have a treatment after that, whether it's we could do 30 minute, 50 minute, 80 minute treatments, depending on, like you said, so they could be full of 80 minute treatments in that day and have no float whatsoever, almost. The world's compensation is changing and it's a huge reality check what COVID brought.
[00:11:09]And for us, it was timely because we were probably at a status quo earnings wise going forward in it and change had to be somewhat drastic. So we stabilize the commission. We. Brought in the fact that if you're going to have a discounted package treatment, you have to be part of that. Otherwise you'd have nothing and you'd be floating at your flow rate.
[00:11:30]It's literally increased the bookings. Repeat guests are coming back. Our team seems happy and grateful. I would say to be working in this gorgeous resort, I think there'll be a whole lot happier after all of the Restrictions are lifted. Hopefully that'll be the case in my lifetime. We've all experimented from giving them 60, 55, 45% of the commission.
[00:11:56] And at the end of the day, you go into your general manager's office and you're preparing for the budget and you don't get your raise because you cannot perform like realistically to bring things to the bottom line. Supply chain is a huge thing. Changed. In this particular pandemic. Huge. So it's taking everything longer to get to you and it's taking far more.
[00:12:18] So you have to be very cognizant of all the pieces that fall to your bottom line. That's all I can say. It's a lesson you will trip on yourself. You will gag. You'll throw up. You'll be warranted. I mean, and , here's one thing that spa directors don't do. And I'm hoping they do now. They don't share the financials or train their team.
[00:12:38] They always say, well, massage therapists don't even care about this. Well, guess what? You're caring might tell them in their monthly meeting, here's your goal? Here's your percentage of sales to services? How can we get that higher? What do you need from me? What training do you need? So I try to find products literally.
[00:12:55] I mean, if you're an esthetician and you don't love to sell your product, you're in the wrong place. You won't last. If you're a massage therapist and you can't be prescriptive and recommend home care, you won't last. And if you can't love the products and walk somebody out and say, Hey, you know what? You talk to me about your allergies today , reach for the spray ology bottle.
[00:13:14] Just try this. I think this will really help you. I use it myself and you have the endorsement. You have to train your team to speak in that language. Retail has been a curse and it's your biggest blessing at the end of the day. So do you have to fold that into your culture? And that's what I have to say.
[00:13:33]Let the team think out of the box and appreciate them. I know that I've seen and I, I have often thought, I have to hold my mouth shut when I have my one-on-one. So that person's idea is validated. We don't all say what we actually mean when we're trying to get a thought out in front of your spa director of all people.
[00:13:51] So if they say, I think this protocol could use this change, or if we can change this in the treatment room, it would be operationally easier. Or, you know what? We could save money on products. If we did this, and this. You have to listen, write them down in front of people so that they feel like you're listening.
[00:14:09] And I just think that you're the biggest asset in terms of a reward for your staff. You have to be, you have to be their greatest reward and then everything else will follow.
[00:14:21]Jenn: [00:14:21] Well, I agree with Betty that there are so many moving pieces to it and really communication and giving that support to your team is where it all starts. So when I changed the compensation first of all, I'm the spa director at. The Norwich and that fax was for all of you who don't know. And when I initially came in. And. I want to say it was May 1st and I right away started meeting with all of the employees. One-on-one getting their feedback on what they loved about their environment, what they thought were challenges, what they thought , could be improved and really started there.
[00:15:09]Very quickly after that. We had a lot of what you guys are talking about as far as the booking. So the booking went exactly as you got juice data, Julie, where it went by seniority. And the first person in line would be booked solid, and then the next person would not get anything until that person was booked out and so on.
[00:15:34] So if you're the fourth person in line, why do we even want to work here? Why do we go on to show up? So that was one of the big pieces, that also then tries back into the compensation. I changed a lot of things. The feedback from the staff was that they really didn't have a lot of motivation.
[00:15:54]They didn't really feel like anybody had their back and. also part of that was, in my mind, I had intended on changing the compensation structure, just because. I felt comfortable with the other model. And I had seen it be successful in the past when I started these conversations with them and got their buy-in so that they knew I wasn't doing this just for the company.
[00:16:25] I wasn't doing this just for the bottom line. I was also doing it for them. So that they had some control over what they were earning. They felt like their opinions mattered and that they were part of the process. So I certainly didn't change it and say, Oh, Hey guys, guess what? This is what we're doing now.
[00:16:47] And hope you like it. And, move on from there. So what they had initially, when I first came in was kind of all over the place. It was an hourly. But everybody had a different hourly rate. It depends on seniority. So imagine doing payroll also, that was fun. And I mean, it was all over the place, so it would also be dependent.
[00:17:08]If you're getting an hourly rate and it's, you're doing a 15 minute Swedish, what's your incentive to do a deep tissue? Nothing. Why are you going to work harder? You're not so. I changed to commission only. They do not get paid anything in downtime. The only time ever that minimum wage would come into play, which it never has, would be if their commission fell below minimum wage.
[00:17:42] So if they're commissioned for the week, ended up being less than what they would have earned. If they were making minimum wage, then that would kick in, but it's never happened. So we changed that. Also increased, we have a pass through gratuity, so that's automatically added to the bill that they received.
[00:18:00] That was 15%. We increased that to 18%. And they also do get paid commission for retail sales. So what I saw, I put in this request for the compensations change in July, it did not get approved until I want to say November 1st immediately people started picking up shifts. We did add on competitions, the ad-ons were through the roof.
[00:18:33] You've not believe the amount of add-ons that they would do re we would do retail incentives that November, every single employee came into my office and thanked me. And we're so grateful. And. In return. I had people applying for positions. I had people, referring their friends for positions.
[00:18:58] They had a lot of flexibility with their schedules and again, they never, ever previously would add on people would not add on shifts. They would actually call out a lot. All of that changed significantly. So my retention rate went up significantly. Their income went up, our bottom line increased. So really it was a win-win for everyone.
[00:19:28]As far as the retail component would go, we would have some that would always struggle. They still always struggle. So. With that we would choose an item or two for the month. And that would be the focus. So if they weren't sure which item they wanted to sell, or they didn't know enough about it, we would pick out one item, give them the background on it and have them focus on that.
[00:19:54] And that, helps for the people who there's always those people who just aren't good at retail, no matter what you do. Know, other than the estheticians and we know they'll sell everything, but the nail tech struggle, sometimes the massage therapist struggle. But if we would pick that out for them specifically and say, this is what your goal should be.
[00:20:14] And again, I also agree with, cutting down and saying guys, if this is what your goal is, this is exactly what you have to do, because although they know that their paychecks have increased, they don't really look at the detail of it. They don't look and see, okay. So this much came from my retail sales and this much came from my ad-ons.
[00:20:35] So we would report. Print out the reports from the actual system so that they would see it broken down and not just on their paycheck, because they really don't pay attention to anything on their paycheck, 99% of them. And I do think again, that gives them a sense of control over their earnings. they're much more grateful.
[00:20:53] They're much more productive. It's a much nicer, more pleasant environment for me to work in because everybody's, much happier.
[00:21:02]Julie: [00:21:02] And Jen, quick question. How much do you pay for retail commission? Is it like the straight 10% or
[00:21:09] Jenn: [00:21:09] 10%? Yes.
[00:21:11] Julie: [00:21:11] Yeah. And do you pay them when you're doing training?
[00:21:16]Jenn: [00:21:16] No. Well, if they came off hours and we had like an entire team training, then they clock in. So our place is a little bit different where if they clock in, they get coded for benefit time. So no, we're not, we still don't pay them, but they get to,
[00:21:35] Julie: [00:21:35] it adds towards what they're required to work, to earn.
[00:21:39] But they don't earn like a minimum wage or something there for a training.
[00:21:45] Jenn: [00:21:45] Right. They just get to clock in and it builds towards theirs, their vacation time or their sick time or whatever.
[00:21:51] Julie: [00:21:51] Got it.
[00:21:52] Jenn: [00:21:52] Honestly, surprisingly, I hadn't had any negative response to that or to the fact that they don't get paid during their down time.
[00:22:04] And I think really that's just because they're. Their incomes, increased significantly by changing it to commission. So they're just following up.
[00:22:14] Julie: [00:22:14] Okay. Oh, and what do you mind sharing your commission?
[00:22:19]Jenn: [00:22:19] 30% for massage therapists and 40% for nail techs and estes. And everybody gets 10% for. Retail.
[00:22:29] And then again , they make a lot of money. They also get the 18% pass through gratuity. They like Betty. We only pay on the work they do. So if we have a discounted service, sometimes we'll do a Travelzoo or what have you, and the services, $99 instead of the original price, they get paid off of the price.
[00:22:52] So we don't ever pay them on money that we're not receiving.
[00:22:56] Julie: [00:22:56] Right.
[00:22:57]Betty: [00:22:57] And one of the things I wanted to say in term of compensation, Jen, I'm not sure if you do this in training the front desk team, there are coming in at a minimum or above wage, which is ridiculous for what they have to do, but we give them a 1% of completed bookings for them.
[00:23:13]The difference between a booking on a deep tissue or a sports massage is greater than a Swedish. So part of what your training is, find out why they're coming to you. Why is this person coming? Well, I got a Swedish gift card. Okay. It's very hard for somebody to upgrade something because this is really a free treatment, all included.
[00:23:33] But a lot of times just that conversation is like, I'm so stressed. The kids have been home. I need to relax so you can change them to a different treatment being a Chizler. And I want to say that you have to be very. Credible and authentic when you're listening, but really listening to why somebody's coming a that's the beginning of retention of this person, because somebody is listening and two your team has to get that knowledgeable.
[00:23:58] And to the end of that and Jen, I don't know if you do this, we give our therapists the opportunity eight to have one complimentary treatment a month. And that apply. Now, if they're having a facial that may have to pay like a $12 or a $9 for product but. And we insent them 25% off of retail.
[00:24:18] So they love a product. They're going to buy it and talk about it. That's what becomes their bestseller. Literally, I use this because people on an aesthetic stable say, what do you use? And they want to know. So those are little things that might help if it's a real busy season and you can't do it.
[00:24:35]The team understands if they're beat. But they could come in before work. They are not paid to get a free treatment. So it's time off the clock for the giver and the receiver. So literally, I may go in and say, Julie, can I have a massage? I see you're open at six o'clock and you'll go, sure.
[00:24:52] Both of you are off the clock because it's a vis-a-vis reward for every person. That's a treatment therapist.
[00:24:59]Julie: [00:24:59] But I think we made it to our power 90. Thanks for sticking with us today. Everybody. I think we have to continue this conversation again in the future. Definitely empower topic and Let's look forward to talking to everyone.
[00:25:16] Thanks, Jen and Betty for sharing some of some of the challenges and what you faced with changing compensation models and how you've done it successfully. And we definitely we'll continue this conversation and as always thank you for being, candid and honest so that we can all, help each other grow.