Team work makes the dream work: Salon structure and stylist compensation

One of the things that I have been thinking about lately is salon structure—specifically stylist compensation. For decades the predominant method has been commission, a percentage of service sales and retail sales. Percentages have changed over the years, ranging from 50% to 45%, but as business costs increase and change we are now paying 30-35% commission. In the barbering world, the norm has been 75% but this too is changing as costs change. Recently I have been speaking with barbershop owners who are lowering commissions as the costs increase to be more competitive in the marketplace. Point of sale machines, online booking services, increased rents, marketing and other related business costs have all been contributors to the decline of commissions.

Hands raised Photo by Adam Winger on Unsplash

At La Luma, we did away with the commission pay structure in favour of a team approach. We saw first hand that people working together for a common goal can achieve whatever they choose to. That being said, I have come to realize that different pay structures can be designed for a specific outcome. We at La Luma have a pay structure in place to specifically create growth in the salon team. We have a collective bonus in place that is stretching the limits in a way that is achievable but allows the senior staff to be rewarded for developing new talent, while new talent strives to reach the overall goal to gain a bonus and grow their book of business. I won't get into detail in this blog, and other pay structures can be created to maintain your senior team members as well, like salary or hourly wages based on service and retail sales.

My suggestion to salon owners would be to take a look at your business and see what age and stage it is in. Sit down with an accountant and plan out the best possible pay structure for your salon and your employees. The next hurdle would be to get a buy-in or alignment from your salon team. In my experience, most of us just want the same thing: a great place to do what we love, fair compensation, respect, and a place to be heard and to know what is possible. That being said, asking a stylist what they want and need is a good place to start.