About 25 years ago, Dennis Ratner, CEO and founder of Ratner Companies, attended a week-long seminar at the business school of the University of Virginia and he left embracing a new philosophy that has led the company ever since. “While there I studied cases histories of businesses that have adapted and adopted a people-first principle,” he says. “That week was tremendous, and as a result we converted to a people-first management style with a new motto, mission, visions and values.”
Today, Ratner Companies operates nearly 1,000 salons in 16 states, employs more than 12,000 stylists and includes a number of salon brands, including Hair Cuttery, Bubbles, Salon Cielo, Salon Plaza and Cibu for Hair. When it comes to retaining employees, that people-first mentality has paid off. Within the Hair Cuttery ranks, it isn’t unusual to find career employees who’ve been with the company for 20-30 years—a rarity among large-scale chains that cater to value-focused clients.
In recent years, the company started working with Peter Mahoney, salon owner, consultant and one of the founders of Summit Salon Business Center, on a multi-level pricing structure that would create a focused career path for stylists. Eight months ago, Ratner brought in Phil Horvath, a 25-year industry veteran as president and chief operating office. Having spent his past 17 years at Ulta, Horvath had pioneered a similar compensation structure there in his past few years.
“Prior to the Path to Prosperity program, Hair Cuttery had two levels—designer and master designer,” Horvath says. “The new program will include eight levels with small incremental price increases and clear metrics they’ll need to achieve to reach the next level.”
Metrics include a stylist’s ability to rebook, the number of chemical/color services, the retail to service ratio, the average ticket, and number of customers. Each level will include goals on each metric and when stylists meet those metrics on average for 13 weeks, they are eligible for promotion.
In addition, the company is designing multiple levels of support to help stylists reach their goals. Salon leaders and coaches are being trained on the new system and how to help stylists grow. An already strong education system is being reinforced with collections that can be marketed to clients and increased technical training, as well as training in soft skills and life skills. “For example, they’ll be offered classes that help with consultations and talking about products to life skills, like how to manage their finances,” Ratner says.
Perhaps the most innovative aspect of the program though is the new HC App, which more than 9,000 of the stylists have loaded onto their phones. “Not only will the app show them where they are on their own metrics on a daily basis, but it has a program that reflects the new career path program and will show them potential annualized income if they reach different levels,” Horvath says. “It even includes a tip factor, so they can see all the variables.”
The app will serve as an additional educational outreach, as Hair Cuttery plans to load it full of success stories and strategies from the company’s stylists. “One of the pillars in launching this technology is addressing humanology as well—it is as important for our professionals to connect with one another as it is for them to connect with their guests,” Horvath says.
While Horvath speculates it’ll will take about 18 months to roll out the new compensation and education programs and the app across all the company’s locations, they’ve launched the coaching conversations and tested those along with the app in a few regions. “So far, the response has been phenomenal,” Horvath says. “You’re talking to stylists who already are committed to the brand, but this opens them up to a whole new view of their own worth and you can see the groundswell of pride.”
As stylists earn their price increases, Hair Cuttery plans on making the increase transparent to the stylist customers bringing them into the celebration. “Part of the wow experience for the guest will be seeing our commitment to the passion of hairdressing, as well as our stylist,” Horvath says.
“As one of the largest family-owned salon businesses in the industry today, we want our salon professionals to feel respected, our door is always open to people who want to learn continuously, and their compensation will always reflect their hard work,” Ratner says.