Every time I speak on this topic, it ruffles some feathers…
Because hiring employees and offering commission-based pay is the “norm” in our industry – and it really SHOULDN’T BE (in my opinion).
So I will continue to shout from the rooftops that commission-based pay is bad for beauty businesses AND their team members because the way MOST businesses in our industry structure their pay doesn’t provide consistency and stability for the team member NOR the business trying to build that team member a clientele. And I mean ANY commission based business model – not just the 50% commission model which, by this point, I hope you’ve seen the light of how unprofitable that pay rate is!
I want to release the BS (belief system) that just because everybody else is paying commission – that you should too! Because it’s a broken pay system in our industry in MOST (not all) businesses.
Commission sounds great for your team members when they are FULLY BOOKED. But if you’ve ever hired somebody, you know they’re not fully booked right off the bat. It could be months or years before they’re fully booked (depending on how good your marketing and client retention is).
More often than not,commission based pay leads to:
Inconsistent Pay = Unhappy Employees who can’t consistently pay their bills because of fluctuating paychecks = Employees Leave.
Employees who ONLY care about the money = They are always looking to see who pays more because there will always be 50% commission salons out there and all your team member thinks is “more money” because they don’t understand the reality of what it would be like to work in a salon that pays 50% of sales to their labor and how much cutting corners and what shitty culture that breeds = Employees leave for more money or to work for themselves.
Employees think the owner is pocketing the rest of the pay so if they’re paid 30% commission – the employee mindset is that the OWNER is making 70% on “her” sales = This breeds resentment and leaves employees feeling entitled to make more percentage of sales and the owner becomes the “gatekeeper” of all the money = Employees go start their own business so they don’t have to “share” the sales with you.
No Money left over after paying labor/business operating costs = Biz Owner can’t offer perks and benefits like bonuses, raises, medical insurance, holiday parties, donuts on Mondays = Employee Unhappy and doesn’t feel connected to the culture, vision or values of the business and so employee leaves.
Episode Highlights:
- Why commission-based pay isn’t a great employee retention strategy.
- How do you incentivize your team members?
- Why commission-based pay makes your team members think you’re greedy.
If you want the benefits and growth and joy that can come from building out a team and you are confused as to how you can do that legally AND profitably so YOU can stop trading YOUR time for money…
We are opening up applications for SEASON 3 of our MOMENTUM MASTERMIND program on November 28, 2022. Momentum Mastermind is a high level of support, coaching and community of like minded beauty business owners who are building out their dream teams. If you want to learn more about Momentum Mastermind and how you can apply DM me #hire over on Instagram and we can chat more about your team building goals (and challenges)!
