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Management Practices

10 Salon Team Bonus Strategies

Lauren Salapatek | September 24, 2014 | 1:09 PM

Strategies, a leading national business management training and coaching company for salons, spas and medspas, had its first annual Team-Based Pay Conference, which took place September 21-22, 2014 at the Westin Chicago Northwest in Itasca, IL, just outside of Chicago.

10 Salon Team Bonus Strategies

The conference was split into various breakout sessions, each covering a different topic in salon business. SALON TODAY attended a session presented by Certified Strategies Coaches Brett Pierce (owner of The Masters Salon in Huntsville, Alabama) and John Villamil (owner of La Jolie Salon and Spa in Princeton, New Jersey) on Team Bonus Strategies. Here, we provide Pierce and Villamil’s steps for salon bonus success:

#1 REWARD THE RIGHT BEHAVIORS: Team bonus promotes learning opportunities, a healthy and positive team culture, and rewards and recognizes overall team efforts. It’s a company’s tool and guide to celebrate wins.

#2 WHY HAVE TEAM BONUS PROGRAMS? Team bonus programs promote “Team-Thinking” vs. “Me-Thinking.” It encourages a team to focus on unsold hours, promotes cross-selling and up-selling. It helps make everyone responsible for customer satisfaction, productivity and client retention.

#3 WHAT’S YOUR CRITICAL NUMBER? Every business has critical numbers that when achieved have a profound impact on business outcomes. Driving a critical number shapes team performance and behavior in a lasting way. Tying bonus to critical numbers makes the business game more interesting and it will help to maintain a sense of urgency in your company.

#4 DESIGN YOUR BONUS PROGRAM: Incorporate profit sharing. Get the team involved in the process. It focuses everyone’s attention on the critical elements of business performance in order to build a stronger more profitable company.

#5 THE DON’TS OF TEAM BONUS: Bonus is not an entitlement. Here’s an example: A Christmas bonus that is not connected to some performance standard is an entitlement. Never pay out team bonus if the goal is missed…even by a few dollars. It sets the wrong expectations and removes the “learning” opportunity.  

#6 DESIGNING YOUR TEAM BONUS PROGRAM: Set the goal high enough to cover costs and promote profits. Easy to reach targets will not create momentum. Pick your target numbers carefully. How high is reasonable? Targets that are too high will create frustration and possibly mistrust amongst your team.

-Create the bonus pool

-Include everyone

-Set up Disqualifiers

-Decide how much each person gets

#7 FUNDING YOUR BONUS PROGRAM: You must understand the current and near future financial realities of the company when you establish your bonus. What is your current level of core competency with your financials? Who is at a beginner, intermediate and seasoned level? The bonus program has to be self-funding. Achieving the goal must create net profit – cash to the bottom line. Set minimum net profit standards that must be met before bonus is awarded.

#8 TRACK IT: Communication is key to a successful bonus program. Make sure you are doing daily huddles with your team, weekly, bi-monthly or monthly leadership and team meetings.

#9 WHEN DO I PAYOUT BONUS? When you hit 70% pre-book; 75% new client retention. When you reduce backbar costs to a certain number…etc.

#10 DISTRIBUTING BONUSES: Make sure you instate bonus disqualifiers. Be careful. If you are going to kick someone out of the bonus pool due to disqualifiers – you need to do an emergency performace review. If you disqualify someone five days into the month, now you have to have someone who is disengaged for the rest of the month. You also need to set up a system for that person to get back in if they are disqualified.

Keep distributing bonuses simple. Full-time folks might get a full-time share and part-time folks get a part-time share.

Share your team bonus strategies on SALON TODAY's Facebook!

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