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The medical and spa industries have become very competitive marketplaces. Many professionals from the traditional medical industry are jumping into the cosmetic procedures game and face a learning curve when it comes to pricing and compensation for services rendered. Having the right compensation structure for a medical spa, spa or salon is critical. The spa industry has some of the highest payroll expenses of any type of business, so when it comes to compensation, there is very little room for mistakes. Many owners are paying compensation that is not profitable for their business, nor does it hold accountability for their team in meeting performance goals. It is important to have a pay structure that is fair and equitable for you as a business owner, as well as for your team.
Compensation is a combination of what you pay your employees plus the benefits you provide. The right benefits program is important because it helps you distinguish yourself from the competition. It can also be used as a tool in staff retention when you factor in vacations, paid education, retail commissions, health insurance, and special employee pricing on products and services. The days of paying a straight 50% commission to spa service providers are coming to an end as business owners are realizing there is not a profit to be made under this structure. There are many types of pay structures out in the market today, and no matter which one you choose, the numbers have to add up to the right percentage in order to maintain profitability. Medical professionals such as RNs and physician's assistants most likely will be used to salaried positions, so they will need to be trained on and transitioned into performing services based on dollar incentives or commissions. Spa professionals, such as estheticians, stylists and massage therapists may be used to commissions, and it is important for you to take into consideration that you are bringing two different types of professionals together, and accountability goals may be new to both of them.
This type of compensation structure has become more popular during the last few years. Many business owners who have the desire to have a more professional environment and offer more stability in their workplace have been turning to paying their technicians a salary for their work performance. In this scenario, an owner of a business could look at the performance of a technician during a period of three to six months, and look at their productivity and sales to come up with a weekly or bi-weekly salary structure that would be an average of their sales during that period. For example, if a technician during a period of 12 weeks brought in an average of $2,000 per week an owner may look to offer the employee a guaranteed weekly base of $800 plus some type of benefit options. This salary option would allow for profitability in the business when combined with benefits, and still be attractive to the team member. The technician’s salary could be adjusted anywhere from two to four times a year with this model.
With salaried positions, it is not uncommon to see compensation also tied into what the department or the entire team does in performance. This means if the group or the entire teams meets their performance goals, there would be an additional bonus in pay for collaboratively working together.
This type of pay structure is a standard for many businesses in the spa industry. This involves the technician being paid a percentage of their gross sales for the work they performed during a certain period of time. The example of a 50/50 split has been a common offering for many years. You may find in some cases it is higher or lower. Many owners are under the impression that they only have to pay their technician for the services performed, and if they are not working, they do not get paid. The federal government requires all employees be guaranteed at least minimum wage when employed. This hourly rate can vary depending on the state the business is operated in. In this scenario, it also common not to see any benefits offered.