If you are growing your spa do not forget about staffing and employee retention. Entrepreneurs riding out the economic ups and downs may not have spent much time wondering whether to add new employees. As the economic recovery begins to take shape, however, they may want to start thinking about it. But it raises a question: How can a small-business owner know when it is time to add staff?
You Need to Add Workers if . . .
Ultimately, of course, spending your hard-won capital on a new hire requires a leap of faith. Still, you can improve the odds that the leap will end in a happy landing by following a few rules. Some are quantitative; others involve less exact methods of forecasting.
Four Signs That it is Time to Increase Payroll
- The amount of overtime you pay is increasing.
- Your backlog of sales is (or may soon be) growing. Sufficient gift certificate sales in hand mean you will have the wherewithal to pay a new worker while also indicating a surge in demand for your goods or services. That in turn will require extra help.
- Your business' billing multiplier has risen above the norm. The billing multiplier is computed by dividing net revenue by direct labor costs. The higher it goes, the more money you are making per unit of labor. A too-high multiplier is a sign that the work force may be overloaded.
- Your debt is at a level that allows you to assume additional risk. You look at your debt service and see how much of a risk you can afford. It is crucial for an entrepreneur to know when the gamble has not paid off and a new hire needs to go. Too many small-business owners are reluctant to make that kind of tough decision.
Full Time Versus Temporary
Once the decision to hire is made, the question is whether to hire a full-time employee or a part-time worker. If the work is part of the core service of the company, it makes sense to hire a full timer, but if it is more of a secondary thing, or not as important to the customer, it is better to subcontract because you reduce expenses. So for instance if your spa is known for great massages you may need to hire a full-time massage therapist. If you are experiencing a slight rise in waxing services and aesthetic treatments you may need to hire a part-time aesthetician.
Getting the right information from potential employees is important for two reasons. One, you want to have the right people working for you, and a good interview is one way to ensure that happens.
In addition, employee turnover is so expensive. It typically costs one-and-one-half to two times the annual salary of a position to replace an employee in that position. So mistakes made when hiring have an impact on company finances.
Six Steps Recommended for Effectively Talking With Potential Hires
- Have an Interview Plan – It is not enough to say, for example, that you need a great salesperson. You should list the qualities of what makes a great salesperson for you – ability to work with others, a good personality, timeliness, et cetera – so you can develop the questions and ways of determining whether a person has the attributes or competencies you want.
- Do Identical Interviews – Taking the time to prepare your questions in advance will help pose similar questions to different candidates. If you ask completely different questions, you could wind up confusing yourself and not being fair to the candidates.
- Conduct Behavioral Interviews – In addition to the conventional methods of reviewing an applicant's job history and skills, you should ask questions that give the candidate a chance to explain how they react to specific job situations. Here are some examples of behavioral questions:
The biggest problem with behavioral interviewing is that people can prepare in advance for these questions. Colleges and websites have materials available on typical questions and how to give the ideal answers. The solution is to probe a little deeper, so you know you are getting honest answers and real-life stories rather than canned responses.
- Give me an example of when you had to address an unhappy customer.
- Have you ever had to do too many things at once? What did you do?
- We need someone who can work with people from many different backgrounds. Have you had an instance you remember when you had to deal with people quite different from yourself? What did
- Give me an example of when you had to conform to a policy you did not agree with.
- Can you tell me about a time you made a mistake at work? What did you do?
For example, if you are asking how someone handled an unhappy customer, follow up by asking questions about which store or business the applicant was working at, how many people were in the store at the time, how the person felt during the event, how their supervisor reacted. If someone is not totally telling the truth, it is going to be very hard for him or her to hang on through three or four additional questions.
- Ask Open-Ended Follow-Up Questions – You cannot ask questions that do not apply to the ability of someone to perform a job, such as age, marital status and so on. But there are questions you can ask that can help tell you a lot about the person. Questions that are open-ended, instead of allowing for a simple one-word answer, give applicants the chance to communicate useful information about themselves. Among the open-ended questions preferred:
- What have you liked most about your last job?
- What have you least enjoyed?
- Why should we hire you?
- What do you feel are your major strengths?
- What would your boss say are your two or three weaknesses?
- Ask "Performance" Questions – With performance questions, instead of simply looking at a resume that lists a candidate's areas of experience, you can ask exactly how they would do something that is part of the job. Performance questions can be like mini-tryouts. The whole process of effective communication in an interview comes down to remembering your goal. It is easy to make the mistake of interviewing the resume — just checking off that what is on the resume is what the candidate has done. A good interviewer will communicate with the candidate and use the interviewing process to learn about that person.
- Experience Their Skill – Although it is time consuming, it is absolutely imperative to experience the technician in the performance of their trade. Include a massage, facial, makeup application, et cetera, as well as trying them out in a retail and service sales setting – during the interview process. This will allow you to get a feel for how they will perform in the position they have applied for.
Once you have found the right staff it is very important to train them and this is an expensive proposition. Retaining this staff is crucial to the client's experience and the bottom line of your business.
- Offer Retirement Plans – From a 401K to a Simple or SEP plan it is imperative that you offer a reason for your best staff to stay with your organization. Let new hires know of these programs but do not make them available until six months to one year of comprehensive employment.
- Offer Mentoring Incentives – Your employees control their income within your spa because much of their pay should be based on sales, productivity and retention of clients. For senior staff this pay incentive should also be built into their ability to build on other members of the team. Accordingly, when a new staff member is trained by a senior staff member their income should in some small way be given to the senior staff mentor. For instance, if the new team member exceeds their retail sales goals, perhaps three percent of that income should be bonused to the mentoring staff member.
- Incentives that matter – Giving health insurance to a team member that does not need health insurance is not going to go far. However, offering child care allowance to a new mom will hold a lot of weight. If possible consider a cafeteria styled menu of benefits to each new hire. Implement them once the new hire is settled in and then monitor how the benefits are working for the employee. Incentives do not work if they do not fit the employee.
Your staff is the crucial link from your spa to the client. Without a great staff you will not have a great spa. Finding excellent people, training them, and then keeping them on board is key to creating an enduring organization of success.