Nikki Lee is a 30 year industry veteran.

She's been in the industry for many roles, everything from salon owner to stylist.

Now she's an HR consultant who focuses on compensation, benefits planning and the employee experience.

Today we're going to learn what are the parts of a healthy compensation ecosystem and how do we create an amazing employee experience.

Welcome back to the Hairdresser Strong show.

My name is Robert Hughes and I am your host and today I'm here with Nikki Lee.

How you doing today, Nikki?

Hi, Robert.

How are you?

So happy to be here.

I'm so good.

I'm excited for this.

So I'm thankful and grateful for you to take the time and come and talk to us today.

Well, I'm so happy to be here and it's really, really important to me because, you know, I feel like there's been some shifts and some trends that are changing in our industry.

And so really sharing that message in a very simplistic way is very important.

And it's a passion of mine for sure to help.

You know, one of my biggest purposes in life in this industry as a coach and educator and consultant is to help bridge the relationship between the business owner and the employee, to heal that relationship and make sure that relationship is as strong as it possibly can.

You know, it takes two parts to really make a very successful business.

It just takes much more than just a really savvy, smart, great salon owner.

It also takes a really, really smart, savvy team.

So.

So, you know, when you work together and collaborate, magic can happen.

Well, I love that because.

And that's so close to our hearts over here at Hairdresser Strong because we are all about this employee employer, you call it gap that you, I think you used word at that.

It's a great word.

So let's get started.

What do you mean by because?

I mean, I love the way that it sounds, but I want to understand what you mean when you say a healthy compensation benefits.

Hold on, sorry.

Compensation ecosystem.

A healthy compensation ecosystem.

Tell us what you mean by that.

Yeah, so I will explain that right now, actually.

So let's just dive right into the slide so you can actually see it on screen.

Right.

So if you look at this, this is just something that I've really done in depth.

You know, as somebody who has helped a lot of business owners develop pay structures and benefits packages and PTO programs and policies and procedures and all the things that go into what I call an employee experience, it's pretty important to really understand, I think, the core system.

So to Me, a compensation system is the core system inside of a company.

Meaning.

And I'll reverse this a little bit.

Why does anyone go to work?

Right.

People don't go to work so that they can just do work and not get paid.

Maybe some people do, but not the majority of us.

Everyone goes to learn how to be a hairdresser so that they can not only be a great artist and do great work and be famous or, you know, do great hair, all of the reasons that people have.

But I would say at the core of it, it's to get paid.

Right, I would agree with that.

Right.

And some people would say to me, no, compensation isn't the most important system.

But I would argue that all day.

Because if it was reverse and we gave all of the amazing employee experience part without the compensation part, then nobody would work.

No, yeah, totally.

It's like, I gotta get paid, but it's not at the top of my list.

It's like, well, I don't know.

Like, if we remove it, then it might all of a sudden realize it should be at the top of the list.

Right.

And I think in our industry, compensation is broken because it's.

It's the decision makers that have set the precedent, that have set the trends in our comp.

In our industry, the beauty industry, in regards to compensation, have not really understood the evolution from an HR perspective in our industry.

And that evolution was happening way before the pandemic, by the way, and it was happening with a concept in the United States called compensation reform.

The last time we saw compensation reform was in the 1920s, when the President really fought hard for a minimum wage for unscrupulous business owners to pay their people at least a minimum, instead of expecting people to work for pennies and live in extreme poverty.

So I think that there's a natural distrust built into the American workforce against business owners just from that, the PTSD of that.

So I think that now, currently, after how many years, 100 years later, we are still in stages of that.

I think there's a natural mistrust, and so owners can be very frustrated by that overall.

But I think that it perpetuates that type of distrust.

Because in the.

Why I say it's broken in our industry is because there is zero lack of clarity around compensation.

Most people, I would say, and tell me if you agree with me, Robert, but when you go get a job or you do an interview at a.

At a salon, most employees would say, I'm afraid to ask about pay.

And owners would say, if somebody asked me about pay in the first interview.

I'm not hiring them.

That's rude and inappropriate.

Yes.

I don't understand that.

I completely disagree.

It's because they don't understand how to explain compensation.

It's because they don't know what their compensation system looks like.

It's because they don't know what the parts and the pieces are.

And at the end of the day, I would say your compensation ecosystem has all of the parts that add up to make a very strong pay structure so that you are able to offer competitive pay in an incredibly competitive workforce.

And so part of compensation reform has impacted our industry.

And the way to understand it is that we are facing, you know, our industry is impoverished.

If, you know, I don't know how many people know that.

This is why I think most senior level people could say, back in the day, my parents, when I told them I was going to be a hairdresser, they cried and said, no way, you're not going to make any money.

They think hairdressers don't make any money.

But then you have these salons that are incredible businesses that have people making 100, 150, $200,000 a year behind the chair.

And this secret sauce is always the same.

You know, the secret sauce is always the same.

It might be in a different salon, it might be with a different person, but the pieces of that are always the same.

And I would say now more than ever, we have a surge in self employment.

Do you agree with me on that, Robert, that there's a surge of self employment, especially since the pandemic?

Yeah, I would.

Well, I mean, the last numbers I saw were about 60% of the whole industry is now independent.

Yeah.

And the Department of Labor is suggesting that it will only continue to increase at a rapid rate.

And some states like New Jersey and Florida have implemented laws and statutes now that actually house laws and licensing around booth rental and self employment.

So states are even responding to that.

Oh wait, what does that mean?

So in New Jersey, there was a new law that was passed that basically states the statute.

Let me see if I have it.

I'll pull it up for you guys.

It's called statute 1503.

It's right here.

So statute 1503 is from the state of New Jersey.

It was issued.

Florida also has a similar one and some other states are starting to look as well.

The essence of this is basically stating that if you are a booth renter in New Jersey, they are now allowing it.

They're not, they're not forbidding it.

Basically and they're saying that there are some licensing requirements and some inspections that are required to be able to do it.

But the licensing has to happen from the owner side and the employee side.

Was it not legal before?

No, it was not.

It was considered.

Now you will have some people that argue that say it's, it's, it's, it's legal in every state.

Let me explain why that is what they mean when they say that is there are three categories of workforces in our industry.

Right.

Or in the United States, we'll say so in the United States, three categories of workforce are employer, employee and self employed.

Those are the three categories.

On Facebook posts or sometimes you'll hear people say things like, oh, the commission based salon is going away.

It's going to be, it's a dinosaur.

It's going to disappear.

Everyone's going to be self employed in the future.

That's not true.

Because how will the United States, how will the beauty industry remove all employee based, employer based businesses?

It's not going to happen.

Now will the numbers adjust back and forth and you know, trends sway and things like that?

Yeah, of course.

But right now the trend is trending upward in the workforce to have more self employed individuals.

Whereas pre pandemic it was around 30 ish percent.

Now it's almost doubled.

Really?

And so there's a reason that that's happened and everyone thinks it's the pandemic.

The pandemic isn't the only reason that that's happening.

There's lots of reasons why that's happened.

I mean I can just to name a few.

One would be that compensation reform is calling for minimum wage and hourly rates to be increased dramatically.

Right.

So in Virginia alone it's jumped from 725 to $13.

In California it's now you have to pay commission licensed individuals double minimum hourly wage, which is $32 an hour.

Oh, double.

Interesting.

So these are laws that are passing statewide driven by the federal movement of compensation reform.

So this is on the agenda.

And so they're suggesting by 2030 that minimum wage is going to sit above $20 an hour and the minimum expectation of annual income is going to be somewhere close to 70,000 a year.

Now minimum annual income of most jobs, people are pushing for a 70,000 generous wage.

Now does that mean it's like 35.

An hour full time?

Correct.

So does that mean that's going to happen?

Maybe, maybe not.

No one knows.

But this is the trend that people are talking about in hr.

Okay, so what we need to do as a business owner is we need to understand the pieces.

If we're going to be an employer, we need to understand how to develop what I call the employee experience.

And the employee experience, the piece de resistance of that is the compensation ecosystem.

Meaning how competitively, competitively you pay in a competitive workforce will be the name of the game to how you can succeed and strive and continue to be somebody that is considered by employees.

What that means when I say that self employment has grown, it just means that our workforce from employee basis has shrunk.

Right.

And it's shrunken in a way that basically it means that our choices of workforce is like junior level assistants.

Which is why what you're doing is so important.

Because what you're trying to do is you're trying to teach salon owners how to train and how to build and mentor new people, right?

Yeah.

Kind of at the core of what you want to do.

Yeah.

And so part of that mentorship process and part of that growing process is skill training.

But that there's all these holes and gaps in there.

Like, would you agree with me that both most business owners kind of stay away from training because they're like, oh, there's going to take my skills and leave me or they're going to get.

I think I would also say that a lot of salon owners say that they offer training and when the student asks three months in why they're not getting any training, they're like, oh, you're not watching.

Right, Right.

So training isn't fine tuned, it's not efficient, it's not considered and equated to an amount.

So there's no established value around the training either.

And by the way, I think everyone, every salon owner would agree that most salon owners provide more advanced training than a cosmetology school every day, all day long.

So why are salon owners having to pay people an hourly rate to train them whereas a school gets to be paid for it?

It's because state board and compensation is broken, that's why.

And so we have to look and see what we can do a little differently to navigate through that system.

And so we have to have a very strong junior level pay plan because I.

And I'll get into pay plans in a minute.

But, but I believe very much that you need to create unique pay plans for different levels of career so that you can actually market and recruit and retain at every level.

So because our workforce has shrunken, it makes it competitive because the minimum wage has increased so much, it makes it competitive because self Employment options are so readily available for anyone to take.

Students can go get a suite right now.

20 years ago that was unheard of.

20 years ago no student would have been like, I'm going to go get a suite.

There was no such thing.

And so now all of a sudden people are starting to think about other options.

And then there's another fourth caveat to that, which is now we have social media and phones and that we didn't have that so much 20 years ago.

You know, it wasn't as popular.

Right.

It was a little bit happening, but it wasn't happening.

Like now everybody can hear anything they want at any time, search anything.

So, and would you agree with me that the voice of the self employment in our industry is louder than the voice of the employer?

Yeah, I don't.

Yeah, yeah.

Nobody hears employers like getting on an Instagram reel and being like, yo, we have great compensation plans, blah, blah, blah.

You know, you hear even less is you don't hear stylists who are W2 employees.

Do you know any W2 influencers?

I don't know one.

Right, exactly, exactly.

So how the heck is anyone supposed to be excited about working for somebody?

Exactly.

Because.

And that is again pointing directly with a big ass red arrow to the point that I'm saying, which is compensation is broken inside of our industry.

So if we want to stay on top of the compensation reform and if we want to address all the challenges that are happening and if we want to make our system so strong, the compensation ecosystem is where to focus, in my opinion.

And by the way, compensation ecosystem has a lot more to do than just your commission rate.

Okay.

Commission rate is 1% of this entire system.

So let me.

It's on the screen.

Let me show you a little bit about what this looks like.

So the first level or first thing about a healthy composition.

So there's compensation ecosystems, but there's a difference between that and a healthy one.

A healthy means it's profitable for the business owner, that it's scalable for the provider, and that it's diverse enough to address every career level or career level.

That's a healthy one.

Right.

And so the first part I'm going to zoom in here is what I call a career ladder formation.

So think of the military.

So like the army, let's say.

Right.

And inside the army they do a beautiful job with this, by the way.

They're all about ranks.

Right.

So they have private, private, first class, sergeant, corporal.

I don't know all the ranges.

General, General, Four star, how many levels of career do they have in the military, like 25 or something like that?

So why do salons not have a career ladder formation?

We need to have one.

An example of that would be junior level new hire, new talent, launching new talent, junior level stylist.

You don't have to use those names.

You can use whatever name you want.

You can come up with creative fun names too.

Another one would be mid level.

Right.

So this could be like a tier.

So we have started to do that a little bit with tiered pricing.

But I would say your tiered pricing is not the same thing as a career ladder formation.

Some people use tiered pricing as career ladder steps.

It's in my opinion you can do that, but it's not the most advantageous thing to do.

Because tying everything to pricing, you need to have very strong and structured KPIs that go along with that.

And it intrinsically goes against what is functional inside a salon.

Because if you need to give somebody a price increase based on their volume of sales, why then, but then, but then they're still a junior.

It's like, so for example, somebody who's been doing here 25 years could be producing $1,000 a week because they don't have the skills or the ability to grow clientele.

But somebody who has graduated from school three years could be able to produce do balayage for $400 an hour and be able to produce $3,000 a week.

Do you see what I'm saying?

So just for the nature of our business and how variable it can be, it's not a good idea to attach pricing because pricing at its core is a controlling mechanism to control the equilibrium between supply and demand.

It has to do with supply and demand.

It doesn't have really to do with career ladder.

So that's why I don't like top tier pricing to be attached for a career ladder level.

So can I help me understand this.

So are you saying, Correct me if I'm wrong, I feel like I am.

Are you saying that?

Hold on, let me think about this.

So, so if tiered pricing and career ladder are not the same thing, can you give us an understanding of like a time when you wouldn't raise a person's prices but you raise their compensation?

Yes.

So if somebody has been with you for five years and hasn't received a raise or hasn't received more compensation, they will leave when they feel stagnant when it comes to pay structure, or they will leave when they feel like they have not increased and promoted, been promoted inside of their career.

And then would you promote if someone's not ringing the numbers?

I, I just, I like my first thought is like I'll give you an example.

So giving someone a price increase requires a heavy level of demand.

How do you measure demand?

So you measure demand by request, rate, call, volume, retention, the ability to take new client counts, whatever, staying booked, highly productive.

Right.

These are things that measure demand.

So these are KPIs.

So if you have very low numbers, then you can't raise your prices because then why.

But you're still going to give that person a raise even though they're not bringing in more money, essentially, because it.

Might be time to do it.

Because it might be time to move them up the ranks.

Right.

So for whatever reason, because maybe the job description, they no longer are an assistant, maybe they are now a launching stylist, Maybe now they're not a launching styles anymore, they've been behind the chair three years, maybe they need to be a mid level stylist, whatever it is.

So again, attached to career ladder formation are career levels, job descriptions, departments that they're a part of, salaries that are aligning to the levels of what you should be expecting for somebody to be in a career of whatever that is, for how many every years and any benefits that are attached and what are the next steps to be promoted?

Right.

So again here's.

So I'm going to make a statement that I feel very strongly about.

Compensation is the spine in your leadership.

Okay.

So your, your team or your culture might be the heart in your business, but your compensation is the spine.

It is single handedly the most important piece of your leadership because it builds in the method to reward, to recognize, to compensate fairly, and to consider the contribution of somebody on your team in order to pay them fairly.

This is why this industry suffers from retention.

And I know you mentioned retention to me earlier, why this is such a problem.

Well, because we don't understand at the core what employee retention requires.

It requires not just more money, but it also requires more responsibility and moving up a ladder.

It does.

And so we want to make sure that we're building that out inside of our teams.

So building this out creates this and develops all kinds of attachment to this framework.

And inside this framework you have descriptions, names, titles and all the things that they should expect to be on.

Why?

Because people lack imagination.

At the core of why we feel or why a career formation is important is because it gives somebody the framework of what to expect as they continue to grow.

Would you agree with me that people need to feel like, what is the next step?

People lack imagination because it's like walking in a model home.

Have you ever walked into a model home?

Yeah.

So when you walk in, you're like, oh my God, I want this.

Why?

Because it's all decked out.

Because it's built out for you.

Because you can see exactly what you're going to get.

We're very visual people, right?

And so when you can see what you have and it's tangible, it's easy to work towards the goal.

It's not as easy when it's intangible and you're not even clarifying for the employee what is, what is the next step?

One of the biggest questions I get asked all the time is from employees, from Sweethearts is I left because there was nowhere else for me to go.

I left because I had tapped out.

I left because they were holding me back.

I left because there was no other place for me to increase my level.

People want this, they need this.

And so if you build this out inside of here, it's the structure where you will place all things.

I have a question.

So what do you say to the owner who says, so I could end up with a bunch of low product, low product, lowly productive people and all the productive people, you know, maybe I never even made room for them because I'm keeping all these like low productive or whatever.

The reason, like I'm just.

I can imagine because I know you haven't explained the whole system yet, but off the break, it's like if we're not rewarding people for their productivity, we're rewarding them for whatever we're rewarding them for.

I hear my bottom line getting cut into raising, giving people raises that are not producing more and more.

And I know that's the old school, like commission structure, sliding scale.

The more you make, the more we pay you.

That's how you can climb in your income.

But I also see like, no matter what, they're going to hit a ceiling at some point.

Unless you're giving away profits.

No, you never, never have a ceiling.

Never have a ceiling.

That would be my advice.

Never have a ceiling.

You can always continue to grow somebody.

There's always methods.

I've done it 100 times.

So.

Meaning, Meaning you're never going to tap out.

Because if you tap out, the next step then should be self employment, which, which makes would mean that you should consider hybrid.

So you can keep them there, you can keep their revenue at this high volume and let them be taken care of in this way instead and let them be self employed.

That's the next step.

Then it's either continue to grow someone's career or let them be self employed.

That's the movement in our industry.

I don't particularly agree with that because.

Would you, would you also agree with me that most stylists who are top performers, these top talents, they think the next step to being promoted is to open their own salon.

You know why?

Because there's nowhere else for them to go.

Because salon haven't built out tier systems that go big enough.

They haven't built out career ladders that go big enough.

They haven't built out pay structures that continue to scale.

They build one pay plan and they shoehorn everybody into it, no matter what level they're at.

That's wrong.

And I say that's wrong because it's not fair for somebody who's producing 10,000 a week to be paid in the same fashion that somebody who's producing 1,000 a week.

It's not fair.

And they feel that that's why your top channel is leaving.

So I think the top, the top ringers, I think that's probably an easier conversation to have.

What about the, like, the newer people tell us about, like, give us kind of like a little bit of insight.

I don't, I know we're probably jumping around here a little bit, but I'm.

Just, I think it leads directly into KPIs.

You're going to ask me about KPIs and standards?

Sure.

Yeah.

That's kind of like, I'm wondering, like, you know, I got, we, we hire a young person, they're not producing, they're not going out, they're not building their book.

But say they have a good, they have a good attitude and we want to keep them and we want, we don't want them to feel like they're not growing, even though it's their fault, because they're not like doing whatever or whatever.

We can grow you at two, two to four clients a week, whatever, 10 clients, whatever it is.

This is the volume that we can, we can like give you.

But like you're, we're only half of the story, you know, the other half is like, you gotta grow your own book, you know, and ideally you grow your book from within your chair.

So, you know, like we're how I, I get the concept of motivating people, especially new people, especially younger people, knowing that there's a career path.

And so I guess walk us through understanding that.

I got it.

So let's talk about KPIs.

That's the second part of a compensation ecosystem.

Okay, so let me zoom in to what are KPIs like.

Let's give a definition.

Okay.

KPIs.

I'm going to ask you a question.

Do you think, just let me know.

Do you think that people, salon owners truly understand KPIs?

No.

Performance indicators.

Do you think most salon read reports on the regular where they are actually defining in a range scale.

So a scale means that it goes low to high in a range.

Do you think they do that?

No, I think they probably look at whatever numbers that are important.

Unless they've had coaching or you know, business consulting, like assuming that they haven't, they don't have like some sort of business background.

I would, I would agree with you.

Yeah.

I would tell you in my experience with working and coaching clients is KPIs are always the most frustrating portion of the work.

They are so frustrated by it because I think at the core of it they don't understand what a KPI is.

So this is my definition of.

I'm going to read to you.

Key performance indicators or KPIs are metrics, right?

So these are metrics, these are reports in your software most of the time.

And some of them are not reports, some of them are reports and some of them are not reports.

These are like cheat codes basically, or I don't like the word cheat, but they're like codes, right?

To unlocking the, the, the numerical measurability of a performance or a behavior or a business practice.

Right.

So these numbers have to have what I call a data source.

Right.

It measures the results of how you deliver, of how you work, of how you produce and how customers respond to all of that behind the scenes.

KPIs are powered by algorithms, basically inside of software.

That's how software is built out.

KPI's before they run a report, they're internally codes are inside of the software algorithms.

But they're gathering data and they're processing the data from various sources.

So sales numbers, client feedback, service times.

There's a million data sources.

Most salon don't have accurate, they have skewed data sources.

I know this might be hard to understand.

I'll give you an example.

Real life example client codes like a new client coded nc.

An existing client or repeat client that is coded rr.

A new client that isn't a new client of the salon but then goes to a new stylist.

So they're a new client for that stylist.

But not for that salon.

Right.

So all of these client types need to have codes.

This is so that the reports can read accurate data about your client traffic.

That's at the end of the day what it means.

So we have to make sure the data sourcing is right.

But you know how many salons that I work with that have no client codes, they're not using any client codes.

So there's no tracking of any of the data.

So the KPI is a mute point.

You can't even read that KPI because it's not even being sourced properly.

That's what I'm talking about.

Productivity.

It has like, most softwares can read productivity from like five angles, five facets.

So you have productivity based on volume of sales.

You have productivity based on percentage of being booked.

You have productivity based on unproductive hours versus productive hours.

You have a lot like many processing times versus actual dollars doing the application time.

So there's a lot of ways to read this one KPI, you have to understand that KPI and you have to understand how you're doing it.

So if for example, you're booking somebody straight through, so you book a new junior full foil one hour application or for four hours straight through because they're slow, right?

So four hours.

But how much process time is inside of there?

Maybe an hour.

Right.

So that hour can't be called a productive hour.

That hour has to be called an unproductive hour.

So then you can properly read how many hours are being productive.

So the percentage is correct.

That's an example of what I mean from data sourcing can be skewed.

So you need to work with a coach or your software company in order to understand how to make sure that you have airtight methods to data source properly so that your KPIs are very effective.

So if you're going to try to price somebody a certain way, your KPIs have to be accurate.

Otherwise it's random BS, right?

Otherwise it's you kind of guessing.

You're like kind of think you're good, kind of think you're busy.

I kind of think you're booked now.

You're living in the land of emotionality, which is going to piss people off.

You have to have real accurate numbers.

Numbers do not lie.

They give you accurate data.

As long as you're data sourcing that KPI correctly.

Right?

And so by understanding this, you get a really clear picture.

So you can tweak it, you can edit because it's constantly tweaking and editing.

So you say to me, how do you grow someone junior?

It's to really watch them, it's to really understand, it's to really track the measurable data.

It's to make sure that they understand and then to teach them the right behavior and practice behind to drive the metric.

So pre booking is a clear is a really good example of this.

Everyone says pre booking has to be high, but then why is in the industry it's like national average is 30 something percent or 40% or something like that.

You know, it's super low.

Retention is a whole nother animal.

We won't get into that.

But pre booking, the behavior that you teach someone that's junior is to have strong consultations that include designing customized and personalized maintenance programs.

That's the behavior.

The behavior isn't at the end going, hey, you want a pre book?

That's not the behavior, right?

And so you have to teach the right behavior, you have to teach the right business practice in order to drive the metric.

If you're teaching them the wrong thing, it won't drive the metric.

You're just going to be.

It's like telling your kid get straight A's and then beating them when they don't get them help, get them a tutor, find out what they're really failing at to figure out what's going on, why they can't achieve whatever they're trying to achieve instead of just going, I'm sick and tired of this person.

She never can grow, she never gets booked, she never retains clients, she never pre books, blah blah blah.

You can't fire people for these kinds of things.

You have to actually work with them and you have to have great data sourcing in order to do it.

And so this is an example of a list of KPIs that you could choose.

There's more than this.

There's like 25, 30 KPIs that a slant can use in most softwares.

But these are sort of like the core ones, right?

Customer service scores.

This comes from, not from a report, by the way.

So this is where you have to build a procedure now.

So the procedure here would be surveys that you would give the client after each service to ask them five questions like do you feel like you, what you paid for the service was, was equal to the value of what you got.

That would be a great question to ask at the end of the service so that you know what the price is if the client feels like, you know what, she knocked out the ballpark, he was free.

Like you know, so now you get feedback.

Was it timely?

Did you get the results you wanted?

I mean, there's just certain things.

And then you come up with this thing called an NPS score or customer service score, and you create this beautiful survey.

You issue a new survey every quarter or two.

And now you're going to start to collect customer service data so that you can help your team deliver better customer service.

Instead of just being like, be nice, give them a drink.

Those aren't that.

That's a part of customer service.

That's the only thing.

Right.

I love it.

You know, we, We.

I like, give.

How do I say this?

I wanted to start collecting data, and that was a new behavior in the salon.

So I raised my price as $10 and then told everybody they get $10 off if they scan the QR code next to my name at the front desk and leave me feedback.

Right.

So you created a procedure in which data to take that data to then re edit and.

Or edit and change the things you're doing to make it more enhanced and improved.

That's fantastic.

Yeah, that's exactly how you use a KPI.

So that's called an NPS score.

And if you have that for your junior teams, you can get really valuable data back.

By the way, the data can't come from you because most owners are busy behind the chair.

You're not even knowing what they're doing totally.

And then you're.

Then you're asking the team members like, hey, do you think she's doing okay?

And they're gonna be like.

They're being.

They're gonna be like.

Only if they like them or dislike them.

Yeah.

Create a good procedure around the KPI.

So these are some of the core ones.

Attendance.

Attendance is a whole conversation.

You and I can have a whole separate video about that service.

Sales volume, number one data most.

Number one metric most of the time because this drives revenue productivity.

Percentage is important.

Request rate.

So important because you got to see how many people are requesting this person.

On an average, a standard should be like 8 to 10 clients requesting you per month.

That's a solid, healthy metric.

Right?

It could be less, it could be more, but that's healthy.

Service upgrades, new client retention, repeat client retention, and all the other things that can go into.

But these are some of the core ones that are very important.

And what about.

Would you ever recommend somebody look at like Google Reviews or is that too.

Is that was.

Is there not an easy enough procedure?

Fantastic.

Google Reviews are the same thing as basically surveys.

Treat your reviews very seriously and include your Reviews in all of your performance evaluations.

Every review this person gets, encourage them to do it.

Every survey report you get back, bring it to the performance evaluation.

Let your stylist know what the clients are saying about that.

They need to see that well.

And then on the survey thing, you can also like make it when they finish it can like have a link that'll take them to your business map, Google Maps and to leave a review.

That's right.

It's amazing.

Start to digitalize your process.

That's a great point.

So the other thing about KPIs that I want to mention here when it comes to compensation is you have to be realistic about the career level.

This is again one of those concepts where owners create one standard and shove everyone into it.

That's not the right way.

How do you grow a junior?

You create a whole separate pay structure.

You create a whole separate standard set of standards or ranges for their production.

It is unfair to expect a junior level to hit 85% productivity in anything.

It's unfair because they can't.

They're not at that place where they can do that.

You can't compare somebody junior to somebody who's been doing hair 10 years.

That's, you know, fully booked for six weeks.

It's not the same thing.

So create a separate set of ranges per level.

So again, this is why it's important to have the career ladder.

The third is to decide what kind of compensation types you're going to maximize inside of your company.

I'll share that with you in just a minute.

Hourly scale build outs.

Most people don't have an hourly scale.

They have an hourly rate.

So most people are like, you're like, what do you pay hourly?

10 bucks, 15 bucks?

It's.

That's it.

That's all they got.

There is a whole method behind hourly scale build outs.

So meaning from an hourly standpoint, your client or your employee has to know it's part of the employee experience, the clarity around how they will be improved and given raises.

If they're paid hourly.

You can't expect somebody to start at $12 an hour and then 10 years into it be paid 1250.

It's not fair and it's not going to work and you will lose them.

This is part of the retention problem.

Sequential commission configurations.

This is a whole.

We can do an entire video on this.

But this is a very big topic and it's something I believe in very, very much benefits planning this day and age.

Sorry, what is.

Can you give me like a one liner on what is sequential commission configurations?

I can't give you one liner, but I'll give you a very brief overview.

Okay.

So would you agree with me that somebody who is a private is not getting paid the same as a general four star?

Yes.

Okay.

Is that fair for you?

Do you feel like it's fair?

Yeah.

And if you were the general for, I mean if you were the private, would you expect to be paid with the general four star is making?

No.

And if you were the general four star, would you expect to be making with the sergeant first class?

Was definitely not.

That's why you have sequential commission configurations.

Because inside a beauty industry most people.

Again, would you agree with me?

Have one pay plan?

Yeah, they plan can be flat rate 50%.

That can be a pay plan, commission pay plan.

It's not the whole pay plan, it's just one part, the commission paper.

Would they have.

Sometimes they have like a, you know, based on pricing tier.

Sometimes they have the commission trigger attached to production.

Sometimes they have it attached to all different kinds of things.

Sometimes I've worked with a company that had their commission trigger.

Commission trigger means something that triggers the commission to go higher.

So some people have it attached to a client count.

I've seen that which is not always good.

But attaching it to production is probably the best way to do it.

And when I talk about sequential commission configurations, what I mean is to develop a layered, multi tiered, layered effect of pay plans that align to career level movement.

So every career level jump, you get a promotion.

This is what puts the spine in your leadership.

One of the things that I think disempowers a business owner is when you remove the ability to give a raise, meaning you don't have any carrot dangling.

So they think they're self employed.

So for example, if an employee comes to you and they say I want to raise and you say, most lawyers tell me what you think they're going to say.

They're going to say, well, work more, we'll raise your prices.

But to get your prices you have to perform better and do bigger KPIs or whatever random bullshit they have.

And then the other thing that they have that they would say is work faster.

Right.

So those are kind of the three core answers.

There's more, but those are the three core answers.

Would you agree that's kind of the roughly the question conversation that people have.

Okay, yeah, yeah.

So what do you think those answers tell the employee?

It tells the employee you're in charge of your own raise.

Yeah, that disempowers the owner, the owner has to hold the power to give a promotion.

If you don't have that ability to do that, they're just going to go be self employed because they can do it themselves.

That's a really, really, really interesting point that I never thought about it that way.

That's so good.

Oh my gosh.

So, so my point here about this is you need to build out different pay structures.

And if we really look at different pay structures, this is what it looks like.

So this is an example of multiple pay plans.

This is an example.

This is an slightly incremental calculation method.

But again, we can talk about that in another call.

And then I would be able to promote someone from pay plan 2 to pay plan 3, play plan 3 to 4, 4 to 5, 5 to 6 for Rockstar pay plan.

And then if somebody's part time, I'm a huge fan of part time pay plans, by the way, because in our industry this is happening a lot.

So now this business could have seven pay plans that they could grow somebody's career in up to the point where they're producing $17,000 per pay period.

So this could address somebody that's making 32,000amonth, $34,000 a month.

So why wouldn't you give, Would you give somebody at $17,000 every pay period $34,000 a month more commission than you give somebody that was producing five.

Will we give them how much more?

More?

Just more.

More?

Yes.

When you give them more.

Yeah, yeah.

I thought you were asking me a math question for a second there.

Yes, I would, I would definitely give them more.

Yes.

And I know that there's this like old school thinking of like, you can't give anybody over 40%, something like that.

I agree to some degree on that.

However, somebody producing 30,000amonth for you, or 25,000amonth if your per employee cost.

So like for you to be my employee, for me to cover all my monthly expenses would take, let's say $5,000 to cover all of it, let's say.

Right.

So if you are making 30,000, you've more than enough cover the 5,000.

Couldn't I be more generous on the pay structure if you've made more?

This is my technology with sequential commission configurations.

I had a guest on the show who said something that I thought was really interesting on this topic.

They said that if you want to like and like, he was talking, he's a salon owner talking to salon owners saying like.

And I'm not quoting him because if someone knows who I'M talking about.

I don't want them to think I'm quoting him, but something along the lines of, I don't know what, you know, like, I don't know, you know, like, get over the fact that some the.

Your high ringers want to make money.

Like, sometimes you got to pay them more.

And even if you don't really make that much money off of them, it's important to have aspirational people in your business because the young people want to work hard and like, want to want to be like them.

So you need big ringers in the salon, even if you don't really make money off of them.

I thought that was a really interesting perspective.

But I would argue that you do make money off of them.

Because here's the thing.

If somebody's producing $25,000 a month for you, multiply that times that's 250, that's what, 300,000 a year in total production.

Right.

And then your expenses per month on each employee is, let's say, $5,000.

So that's.

What is that, 5,000 times was that 5,000, 50,000, 60,000 a year.

So they're producing $300,000 a year for you, and it costs you $60,000 to maintain their color and their benefits and their whatever.

Now, maybe it's more than 60,000.

Maybe it's more in payroll or whatever.

Right.

I would argue that it could be more.

But wouldn't you say that they more than cover their expenses?

You.

They more than pitch into their part to cover the expenses.

So you are making money on them, even if you give them more?

Because.

Let's analyze the alternative.

The alternative is the $30,000 or three or $25,000 producer a month times 300,000 a year is going to leave.

Yeah.

Which means that your business takes a $300,000 hit.

Maybe not 300, maybe only 200, because maybe 100,000 stays, but it's still a giant hit.

Agreed.

Yeah.

So wouldn't you rather just keep your top producers to be aspirational, to give them more, to be more fair, to pay them higher to all of the things so that they're producing more?

Here's a story for you.

I met somebody that built a salon, an amazing salon.

They were so busy, they were booked out, like six to eight weeks out.

He just had this way.

I don't know how he did it.

He just knew how to do it.

He worked for a giant salon in our area, and he kept asking them for more.

He says, I want more.

I want More responsibility.

I want more pay.

I want more benefits.

I want more.

He was producing over $300,000 a year in production.

They said, no, this is it all you're going to get.

And I think it was like 48% or something like that.

I don't remember exactly, but it was slightly under 50.

He wanted 50 and they wouldn't do it.

And I get it.

Stand your ground.

That's what's not going to work for you.

But they lost a $300,000 producer a year or more.

But I would argue that that's not even the most important thing that they lost.

The most important thing that they lost is he built within two years another salon down the street.

Not down the street, maybe like 20 minutes away down the street that was producing a million and a half within two years.

That means that this man had skills that they could have leveraged inside of their business to build a leadership team that was so strong and to build, Develop people instead of for himself inside of this company.

Of course I would have paid him for that.

I would have all day paid him for that.

Is it compensation is a.

You.

I just had an idea, like, if you have somebody that's ringing all this money and you are able to identify that they have some sort of leadership or training qualities and they are.

They are ripe for disrupting your business in a way of pulling out a large amount of revenue and then going not far away to compete with you in the same market, would it.

I mean, I love this idea.

I'd have never seen it happen and I've never seen it played out.

And I mean, I don't know what the complexities are, but what if you had a salon within a salon, like.

Like almost like you were investing in this person as like a startup and they start building a team.

I mean, I guess it depends on the size of the salon and if you can.

But they can start building a team and having people and they get to be there.

Like, those are my employees.

And it's like, well, you know, I'm the owner.

You are.

You run this business within a business.

You manage those people.

You get the tear.

But I get.

But I get like 20% of your take or 30% of your take from those people.

Like, have you ever seen anything like that?

What do you think about that?

Yes, I've seen it happen many, many times.

There's a million ways to skin a cat.

The first way I would do, the first thing I would say is when that happens, you need to have a very in depth, connected Empathetic and forward thinking conversation with the individual.

That's the first thing I would say you need to have your communication skills better be on point and you gotta maybe even pull in a coach to have that kind of conversation so that you can really have somebody else talk to this person to extrapolate all of what they want out as much as they possibly can.

And when you do, this is where one of the biggest HR trends in our industry is happening which is to personalize and customize career paths for people when necessary.

And so to build out a customized, in any format you choose, all of that and more is absolutely viable.

And you pull an expert to do it.

And trust me, it's not as hard as it sounds.

So, so here's one of the things that I would say.

First, see if you can leverage them within your business as a bigger piece of the pie for their own pay.

Secondly, develop structured leadership compensation methods which is a part of your ecosystem, to grow individual, personalized individual people.

When we're talking the big hitters.

Right.

And so you can leverage your pay structures.

For example, one of the pay structures that you can use is what we call a commission override.

So if somebody is training and leading and growing a team, so they're in charge of a team.

Right.

So as a leader, I have six onboarding new stylists.

I'm going to train them, I'm going to grow them, I'm going to groom them.

Just like I would do as my own salon.

I would give that person a very small commission override on all of those six people for a portion of time for like a year while they're launching that person can get us 1, 2, 3% commission override on all of their produce, all of their production on top of it as a bonus.

So that is a method that you could do in order to handcuff this really in a very beautiful soft way.

But to handcuff them to your business so that they are leveraging their, their knowledge in order to stay with your company and they're feeling fairly compensated for their contribution.

That's, that's the magic.

Yeah.

To really think about what that looks like.

And you need a specialist to do that to really help you plan that kind of stuff out.

That's just one leadership compensation method.

And that's also like, that's also the people that got the big money and.

But I feel like the, I feel like any, the salon owners that are watching or listening to this are probably, that's probably not what they're worried about.

They're probably more concerned about keeping the younger people that they're bringing on for more for long enough to get a return on the training that they it.

Frustration is the number one people, one number one reason why people leave.

They're frustrated.

They're frustrated that their owner's not listening.

They're frustrated that there's nowhere else to go.

There's frustrated that there's no more to be paid.

There's, they're frustrated there's no benefits.

There's.

They're frustrated that they can't get clients.

They're frustrated and frustrated and frustrated.

And I know the salon are frustrated too.

I'm a salon, I'm on your side, man.

But, but the point is, is that you got to pull your, you know, your head out of the sand and start to build out this employee experience so that it's unbeatable.

Because if it's unbeatable in the marketplace, and by the way, salons are local businesses, they're in communities, they're not nationally driven, which means that In a very small 2, 3 zip code range, you just have to be unbeatable, which is not hard.

So you just have to think about what those are and be willing to do it and do the work to set it up and then administer it properly.

So that's where benefits planning really comes in.

This is, these are amenities that you're going to offer in your employee experience that are amazing.

And I know our call today was supposed to be about paid time off and flex schedule, but your paid time off in your flex schedule today, currently in this marketplace it is single handedly two of the most desired benefits in any workforce today.

Because of the pandemic, most likely.

Well, we are, we have a paid time off in flex scheduling IG Live.

So let me just pull that date up for anybody that is interested in expanding on that because I don't want anyone to feel like we're not going to talk about it.

November 18th at 5:30pm Eastern time for everybody.

That is when Nikki and I are going to be doing an IG Live with a focus on PTO and flex scheduling.

Yep, two of my favorite things in the world.

So.

And in this beauty industry, people are not admining that properly.

You know, they have barriers and resistance to it and they're just, they don't understand the functionality around it.

But if you really master the pieces of it, it is one of the most powerful leadership tools you can use and two of the biggest pieces of your benefits package that you can imagine.

So it's really, really important to develop those things out.

Moving into the future.

If you don't have those and you're an employer, you're not going to be competitive.

So it's, it's just, you know, it's just one of the things to be competitive, you have to be different.

Right?

So that's, you know, one of those things.

And benefits planning, I talk about this concept called a benefits wallet.

And a benefits wallet is more of a.

I coach people to this concept where we talk about how to admin your benefits, admin your benefits.

So development benefits is one thing.

Admin them is an entirely different story.

So, meaning how do you keep track?

How do you measure?

How do you, how do you cash it out?

How do they, you know, how do they tell you when they want to cash it out?

Like what?

You know, there's like a million things that go along in benefits.

Not to make it complex, it's actually simpler than you think.

But there are a lot of tax implications in there.

So working with your CPA and a really strong benefits planning coach or an HR consultant or an HR company that understands benefits planning is going to be really important there.

You don't do that yourself.

And then benefits, there's going to be two categories, really.

There's many categories, but two core categories for slaughter.

There's internal benefits and there's external benefits.

So internal benefits are in house, like paid lunches and internal education and stuff that you provide for them.

You know, hair product allowances and things like that.

Whereas an external is like pulling in a medical group plan or an HRA or something like that, where it's being admin by another company.

And we'll talk a little bit about HRAs on the PTO as well, if you want, but we can do a whole call about that.

HRAs are, in my opinion, HRAs are health reimbursement arrangements or agreements and they are, in my opinion, the best benefit to offer.

If you want to get into the world of health benefits and you can't afford a group plan, HRAs are the way to go.

But we can.

I have a whole webinar on that that you can watch about, by the way.

Perfect.

And I'll share the link with you so that you can share it with.

And we'll put in the, in the description below will be the link if you're on YouTube or podcast.

And then there's another layer called performance based pay.

So I want to zoom into something for a minute.

So here are some facets of your compensation system.

So There are always, I like to break things down into three layers.

So your first layer of pay, when we consider anything like hourly scale commission configurations, commissions are technically considered variable pay, but in the salon industry it's base pay.

So base pay is guaranteed.

It's what I'm paying you to work.

So it's how I'm calculating what I'm going to pay you to be here for whatever time, doing whatever volume or your hourly or salary.

Right.

So variable pay is the next layer of benefits.

This typically is not guaranteed.

That's why in other industries they consider commissions variable pay.

But technically in the beauty industry, you can't really say that because commissions are always part of base pay structure in the salons, specifically because of service providers.

But variable pay is like your benefits package, your medical insurance, your PTO program, your blah, blah, blah, right?

So those are the things that are added amenities that sweeten the deal.

And then you have performance pay, which is a unique animal in itself.

And if you read any blogs about performance based pay, people kind of have this argument back and forth of going, performance pay is bad.

No, performance pay is good.

Like it's just all over the place.

It's bad because the reason it's bad is not because it's performance paid.

The reason it's bad is because most owners don't attach a KPI to it or don't attach an objective to it.

So if you don't attach a goal or a quota or a standard to it, you're just giving away stuff for no reason.

It's the whole purpose of performance based pay is to further incentivize higher performance and higher level contribution.

So there's some analysis that needs to be done there of what you want to provide an example of.

This would be an annual bonus.

So if you give an annual bonus.

A lot of salon owners give annual bonuses for no reason.

They're just like, yep, I just give it to them at Christmas because I'm nice and that's nice.

But you're just giving away money for no contribution and no return.

Like, it's not like you can't do that.

That's not smart.

Oh, but I just want to be nice.

Okay, well if you just want to give away money because you're nice, then I'll stay out of it.

But I would say it would be as simple as attaching a KPI to a bonus example which would be, I'm going to give you retail commission for selling retail, but at the end of the year I'm going to give you 2% of your total retail sales as your bonus.

That's how I'm going to calculate your bonus.

That'd be an example.

Right.

Certainly that's not the only KPI.

Why I chose retail is because it's the most profitable revenue source in your business.

So sorry, performance based pay wouldn't be the commission like you.

No.

So the base pay, even if you have an hourly base pay plus the variable, the performance, I guess it just.

Anyway, so the healthiest compensation EcoSystem will have three layers, highly robust and active.

Okay.

And, and a lot of structure put along.

Each one of that's a very healthy structure out pay structure.

And then you have employee loyalty, which is where rewards and recognitions live.

So rewards and recognitions are another form of compensation.

It's just not the normal way.

Right.

But I think you could definitely agree with me that employee loyalty is something to reward.

Right.

And so, and also there are bigger contributors in your team than not.

Right.

So you have some people on your team, you're like, they, if they leave, I'll die.

Because they are such big contributors, not even from the money standpoint, but just because culturally they are just so powerful in the, and you know, in your team.

So, so this is where you want to reward great performance.

I'll give you an example.

Attendance is a very big deal for me.

Attendance means that people and I'll talk a lot about attendance in our conversation about PTO and flex schedule.

In my opinion, terrible attendance is number one reason why people don't make money.

If you have in its attendance the attendance metric that you read.

And by attendance I mean having them clock in and out, knowing what their committed hours are.

So if you tell me, Robert, that you're going to work 36 hours, 34 hours a week times 50 weeks, that's like what, 1800 hours a year or something like that, right?

Maybe I'm wrong, maybe I'm right about it.

Let's just say it's 1800 hours.

And you, when I look at your actual clock in and out report and you've only clocked in 1400 hours, that means you've missed 400 hours of your schedule fulfillment, which means that you have terrible reliability and terrible attendance.

Agree?

Yeah.

And so you come to me and you're like, I want a raise.

We can't give you a raise.

You, your attendance is terrible.

Meaning you're not.

Because if your average hourly rate, what is your average hourly like, what is that metric for you?

Like $100, 250.

These top end producers, they're producing 100 to 150 an hour on average.

Multiply $100 times 400 hours.

That's $40,000 a year.

Just because you miss your work hours.

Right.

See why attendance is so important to me?

Yeah.

Numbers get powerful quick, right?

So don't give me a conversation that you want to raise until you get your attendance.

Right?

So let's work on your attendance.

Let's make sure you're fulfilling that.

And if you want more time off, then we have to redo your schedule.

So if we redo your schedule, then we'll talk about it.

Then we can, you know, figure out what works for you.

I'm not saying don't do that, but I'm saying if you've committed to me this many hours and you've only clocked in this many hours, there's a reason.

And we need to know what those reasons are before we start just giving raises to people you know.

Okay, so that is an example of something that you could reward as additional tokens.

So you would use like a.

So there's a software called Connecteam that I really love.

You can create it in house, like, internally without having to do a software.

But I love the software for this reason.

It's called Connecteam, and it has an employee loyalty build out on it.

So your employees can actually see and track at any given time how many tokens they have on it.

So think of Chuck E.

Cheese.

So you know when you're at Chuck E.

Cheese and you're like, tickets, tickets, tickets, tickets, tickets.

And then at the end, you take your tickets and you're like, I want to redeem it for all of these cool toys.

That's exactly what an employee loyalty program is.

So you have to figure out a way for them to earn tickets or earn tokens.

You can earn tokens by every time you have perfect attendance.

Every month you get, bam, 100 points, 100 tokens.

Every time you add up to 1,000 tokens, you can convert it for five hours of PTO.

So this is now where you're going to convert behaviors and core values in things that aren't just KPIs to reward.

And those rewards could be free tools, flat irons, classes, additional pto.

It could be, I mean, a number of things.

It could be a number of things, but just those are some examples.

Love it.

I think employee loyalty programs, when you have one and the team is fully engaged in it, it's so fun.

It's so much fun.

And the team loves it.

And they feel this Is again another retention tool.

Because can you imagine somebody getting, you know, all of these points and they're going to be like, wait, if I leave, I don't get all these extra goodies?

Why wouldn't you pay for goodies?

When people are representing to your culture in the way that they want, the way that you want.

And then of course, HR administration, which is all of the boring admin part of it, to manage and manifest all of it.

And really quickly before we wrap.

I don't know if we're gonna wrap yet, but, you know, just for now, let me just.

Yeah, I think that's.

I think.

Yeah, let's tell us what you got and before we wrap it up.

I think that's a good idea.

Okay, so base pto.

I'm sorry, not base pto.

So these are the different paid methods, base pay methods.

So you can have hourly pay salary, but salary is only reserved for certain people.

Salary isn't reserved, isn't given to everybody.

Salary has very specific nuances to it that you don't want to give to everybody.

But in certain states, salary makes more sense.

So again, it just depends on your state, your business, your role, the job description, the position, all the things that you would use a salary method because salary just makes.

Just means that the person is.

You don't have to pay overtime to them is really what it means.

And that you're just paying what the minimum state required salary is at minimum, which is, I think in California, Virginia, I think right now is 42,000 or something like that.

I don't know.

It's somewhere around that range.

So again, these are for very specific roles, people who aren't measuring the clock.

Some people, you know how they are, they're like, it's 5:00, I gotta go.

And if you have that kind of person, salary is not a good method for that.

Flat rate, those are the nuances that I'm talking about.

Flat rate commission is one method.

Not my, not my favorite, but certainly the favorite of most people because it's simplistic to understand, but it's not profitable and it's not scalable.

And so it's very limiting in a lot of ways.

And then there's flat rate tiered, which is like, if I produce 0 to 1500, I'll get 40%.

1500 to 2500, I'll get 42%.

It'll scale up based on production.

Again, it doesn't have to be attached to production.

It can be attached to client counting, attached to any KPI, sliding Tiered incremental, which is my particular favorite.

I love this method because when you use this method, it creates fluidity in the commission traveling.

So the more you produce, the more it goes up.

The less you produce, the more it goes down.

Just it fluids like this.

So I love it for that reason.

And you can pay higher scales, higher commissions overall when you do this method.

Team based pay structure.

This is where somebody is going to pay you an hourly.

A business owner just gives you an hour, like so you produce $100,000 a year.

I break that down per hour, by the way.

You work Your hourly rate $62 or whatever it is, and then that's what you're going to get.

You're locked in and then there won't be any commission until the team hits a quota.

So the quota could be, we want to hit 50,000amonth, 100,000amonth, whatever it is.

And then if we hit this quota, then everyone's going to get a percentage of the commission.

If we don't, then too bad, so sad you're only getting your hour.

So that's kind of team based.

Some of the negatives of team based that I've seen other people say is that top, top, top producers are frustrated with the hourly rates.

Yeah, I would never work in that environment with my revenue.

Some people don't and so, but it works well for others and it's very profitable.

First law.

So it has a lot of merits.

It's just you have to think about the team that you have.

And you know, and I'm sure coaches that do team based pay have a lot of great answers to how to navigate that.

But there are some things that you have to take into consideration for that.

Well, I also think there's a psychology too because in theory you could make sure that my salary was equal to what my commission would be in theory.

Right.

And then so I think it would be more of my personality type being like thinking, I had a big week, I was so busy, I was squeezing people in.

Or I would stop squeezing people in, I would stop coming in early, I would stop coming late.

So there is psychology around it.

There is, yeah.

Yeah.

So, so then again, we'll, we'll start wrapping here, but we're going to focus on PTO and flex schedule.

So flex schedule is a type of leave.

So in pto, I'll wrap with this statement to warm you guys up for the, for the Instagram live.

So in pto, PTO means paid time off.

Okay.

So it's a program.

So think of it as a housing unit, right?

So underneath your PTO housing unit you have different leave types.

So you have safe leave, flex leave, vacation leave, family leave, you know, sick leave.

You have all the different types of leads, right?

There's so many different types of leads.

So once you decide the types of leaves that you're going to have, you as the salon owner or the business owner can re can award certain amounts of leave for each one if you decide to do that.

I don't particularly love that method.

I just think you should just have one PTO program.

They can choose what kind of leave it is.

So you're categorizing the leave type, but then they have a certain number.

So if you were in a state that requires you to give this as a benefit, which about 17 states are doing that now, if you were in a state that's requiring it legally, what they're telling you is you have to give them what we call a base pto.

So remember that base variable performance, same thing applies to pto.

So you have base pto, you have rewards or what they call advanced pto.

And then you have performance PTO which is for super high level performance.

You would reward that as like an additional prize or option.

So that's how you structure your pto.

Most people in the salon industry pay vacation based on weeks using a calculator that is completely outdated and honestly completely ineffective for salon owners, to be really honest with you.

So it's just not positive to do it that way.

So what I would.

So when we get into our live, I'll break down how to take it from weekly to hourly, which is much more effective.

And then to have a calculator that rewards people for tenure or loyalty or long term staying with you for higher levels of production, for higher levels of retail, for higher levels of performance and all of the things.

And then your flex schedule is a type of leave that you would create a category of that where not everyone's eligible for it.

Right.

It becomes an eligibility thing.

And then you have to then decide what those factors are and I'll, I'll go through what each one of those are on our Instagram live for you.

So I hope you enjoyed today and kind of what the compensation ecosystem is and why I feel really strong about building it out.

This is so good.

So like, you know, I was thinking when I there's like this, there's a whole psychology and theory around stickiness and loyalty when it comes to things like having your own lingo.

You know, like when I'm building Out a cutting course.

I make sure to, I make sure to like kind of nail in to the head every sing at the beginning of every class.

This is the language I'm using.

This is language I'm using.

You're getting buy in for to your brand as an educator.

Well, the same thing happens in like it's just like a, I guess it's like a marketing branding 101 kind of thing and but I don't feel like we talk about it.

It's talked about enough.

So like having, having it.

It seems complex at first but the more you talk about it the more you realize you're just, you're.

What you're doing is you're getting people into your night the ecosystem.

You're getting people into this ecosystem and you're kind of gamifying it which has got to improve stickiness like and, and, and loyalty and retention of your employees in of itself.

I would think so.

And then on top because like people like to like know where they can go and what they can do.

And especially the young, younger folks that I talk to, they love the, they love climbing and you know, if you want to see, if you want to see Gen Z work hard, give them a path like that and you'll see it.

And if you don't have a path like that, you might not see it and that might, that might track with everything that we're seeing and talking about in this conversation.

Young, talented artists flounder when there is a lack of path.

When you don't have the path of purpose and passion and structure and reward and recognition for them.

They will flunk.

I love that.

That was, that's a great sign off right there.

That was.

Thank you so much for your time.

This was so good and I feel like you and I could probably talk for a very long time especially if I could ask more and more and more questions, you know.

So I look forward to our live.

And just a reminder, everybody on the call are on the on YouTube and on podcast.

That is our IG Live is at 5:30pm Eastern Time and that is November 18th.

Bring your questions.

Absolutely.

Yes.

Bring your questions.

Yes.

Well until then, Nikki, thank you so much for your time.

It was a pleasure.

It's an absolute pleasure.

I love it so much.

I love having conversations like this and please reach out to me and we'll share links of how you can do that or you know, just ask Robert how you can do that.

I'm happy to help.

Yes.

Everything will be in the description below.

So just look down there and you'll see everything that you need to know to get in touch with Nikki to check out what she's doing and to learn more.

Thank you.

All right, see ya.