Changing Changing CommissionCommissionStructure toStructure to
Hourly Rates Hourly Rates (with potentially Pay-(with potentially Pay-
for-Performance)for-Performance)
Success, Teamwork, and Success, Teamwork, and Compensation are Interwoven!Compensation are Interwoven!
Spa and/or salons are struggling to Spa and/or salons are struggling to control payroll costs – the major cost control payroll costs – the major cost within our businesses!within our businesses!
Competitive environment is accelerating Competitive environment is accelerating even faster than before even faster than before
True “Teamwork” is often lacking. Many True “Teamwork” is often lacking. Many owners feel like “they are hostage” to owners feel like “they are hostage” to Service ProvidersService Providers..
Present Situation
Analyze and implement needed changes Analyze and implement needed changes within your present compensation within your present compensation structure to:structure to: Free up cash for reinvestmentFree up cash for reinvestment Reduce Payroll CostsReduce Payroll Costs Align staff to execute SUPERIOR Client ServiceAlign staff to execute SUPERIOR Client Service Motivate and Attract Staff Motivate and Attract Staff Implement Pay-for-Performance via three Implement Pay-for-Performance via three
different performance levels:different performance levels:o Individual Individual o DepartmentDepartmento Business (enterprise)Business (enterprise)
Present Needs
Compensation System Foundation
A. Assumptions
By nature, people are good and want: Structure, Consistency, and Predictability Motivation Feedback (Rewards, Evaluations)
People want these things in their workplaces (by importance):#1 Security#2 Sense of making a difference (Both self-worth and contribution)#3 Equitable Compensation#4 Opportunity for Advancement
Compensation System Foundation
B. Business Premises
Reward and compensation systems must be: Factual Integrated Progressive Logical
•A desire is to have the system simple-as-possible, easy to execute, with minimal maintenance.
•Management results are only successful when using the
practice “Managing what you are measuring”.
Compensation System Foundation
C. Business Needs
Alter/assure that Compensation System is
optimizing costs and rewards for all stakeholders: Clients Providers Support Staff Management Owners
Maximize data system(s) to quickly and objectively gather, analyze, and communicate critical-to-business results
Spearhead advanced team management practices and perpetuate an open, honest business environment
Owner’s AdvantagesOwner’s Advantages Decreased overall payroll costsDecreased overall payroll costs
Ability to motivate employees with Ability to motivate employees with
Individual, Departmental, & Enterprise Individual, Departmental, & Enterprise
SuccessSuccess
Ability to increase prices without sharing Ability to increase prices without sharing
increase with service providersincrease with service providers
Better budgeting and business plan Better budgeting and business plan
projections Better projections of cash flowprojections Better projections of cash flow
Possible Financial Savings
Sales $1,000,000
Direct Labor @ 49% $490,000
Indirect Labor @ 10% $100,000
Total Labor $590,000
If save 1% $5,900
Company’s AdvantagesCompany’s Advantages
Providers’ AdvantagesProviders’ Advantages
StabilityStability “ “Guaranteed” hourly wagesGuaranteed” hourly wages Defined and achievable, progressive Defined and achievable, progressive
wage increases wage increases Career path defined Career path defined Sense of appreciation and contributionSense of appreciation and contribution Sense of building business on an Sense of building business on an
individual, departmental, and enterprise individual, departmental, and enterprise perspectiveperspective
Pay for PerformancePay for Performance
Where do you start? Where do you start?
Debbie's Performance - 2006$1
9.26
$15.
59
$17.
80
$18.
89
$16.
91
$16.
96
$16.
00
$18.
90
$12.00
$13.00
$14.00
$15.00
$16.00
$17.00
$18.00
$19.00
$20.00
$21.00
$22.00
J F M A M JN JL A S O N D
Month
Com
m. $
/Hou
rTrend Chart – 2006 Trend Chart – 2006 (sample)(sample)
Using straightforward, Using straightforward, key business data as key business data as well as marketplace well as marketplace information, the information, the system compiles system compiles benchmarks for benchmarks for performance* such as:performance* such as:
•• Hourly Pay Structure Hourly Pay Structure•• Performance Factors Performance Factors in 7 Different areas in 7 Different areas that are correlated to that are correlated to business success business success
Pre-Control Chart – 2006 Pre-Control Chart – 2006 (sample)(sample)
Debbie's Performance - 2006$1
9.26
$15.
59
$17.
80
$18.
89
$16.
91
$16.
96
$16.
00
$12.00
$13.00
$14.00
$15.00
$16.00
$17.00
$18.00
$19.00
$20.00
$21.00
$22.00
J F M A M JN JL A S O N D
Month
Com
m. $
/Hou
r
Debbie's Average Rateis this blue line: $17.34 per Hour
With the critical data With the critical data compiled, analyzed, and compiled, analyzed, and validated, compensation validated, compensation and performance factors and performance factors are transformed into are transformed into easy-to-use charts and easy-to-use charts and recommendations. recommendations.
* * The theories and practices The theories and practices are based on world-class Six are based on world-class Six Sigma theory and proven Sigma theory and proven management practices. For management practices. For instance: instance: • • Correlation AnalysisCorrelation Analysis • • Multiple Variable AnalysisMultiple Variable Analysis • • Regression Analysis Regression Analysis • • Process Capability Process Capability
Success, Teamwork, and Success, Teamwork, and Compensation are Interwoven!Compensation are Interwoven!
Run “present” compensation plan and the Run “present” compensation plan and the recommended plan at the same time for a recommended plan at the same time for a designated time frame. Compare results.designated time frame. Compare results.
Communicate with staff. Hold 1-on- Communicate with staff. Hold 1-on- meetings. Compare results of each meetings. Compare results of each “system” Discuss superior benefits of “system” Discuss superior benefits of “hourly system” versus “commission”. “hourly system” versus “commission”.
Implementation Plan (Sample)
Implement per management discretion. Track Implement per management discretion. Track results. Modify if necessary. results. Modify if necessary.
Changing Commission Structure to HourlyChanging Commission Structure to Hourly
Tremblay ConsultingTremblay Consulting Cincinnati, OH 45249
Office: (513) 530-0122Cell: (513) 708-3977
Please start getting results today by contacting us. We will prompting get back to you in order to help
you on this important, logical journey.
www.Tremblay-Consulting.com
Thank you for your time and consideration.
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