Paying Your Spa Staff: A Rundown of Fixed Pay Structures for Aesthetic Employees

Fixed Pay Structure is a pay structure that does not fluctuate with revenue. What that means is that no matter how much or little revenue your spa brings in, your employees under a fixed pay structure, will be paid the same amount. Just about every employee will have a base line fixed pay level, but employees who are totally fixed pay only receive payment based on that agreement.

There are three types of fixed pay arrangements:

Hourly

This is by far the most popular in the spa industry. Essentially, this type of arrangement is an agreement between the spa and the employee that the spa will pay a certain hourly wage and will guarantee either full-time or part-time hours per week. Part-time includes any hours per week up to 40 hours per week. Full-time comprises 40 hours per week or more. Also included in a fixed pay structure is overtime. Overtime consists of paying an extra amount on a fixed scale for any hours that go over 40 hours a week. Overtime structures depend on the owner/manager, but generally, overtime hours are by law time plus one half.

The overtime equation is the following:

Base Rate of Pay through 40 Hours per week + Half of that Base Rate

So if you pay your front desk personnel $10 an hour, you would pay them $15 per hour once they past the 40 hour per week threshold. Overtime allows employees to be compensated for their time commitment with additional pay as a reward for their dedication. Often, overtime is a key incentive that spa uses during peak customer traffic times.

The benefit of hourly wages is that you only pay for services that are provided. If an employee does not work, they do not get paid. The downside is if you have a lot of overtime to include every week.

Salary

A salary structure is an arrangement when the spa agrees to pay the employee a set amount based on 40 hours or more per week regardless of overtime put in by the employee. Salaried employees are guaranteed the same amount of money regardless of whether they work the time or not. At the same time, they do not get overtime and are expected to put in as much time as necessary to fulfill their job duties.Most salary jobs are given to management positions or jobs where that are not dependant on customer production. By customer production we mean any job that relies on customers buying a service or product. Salaried employees also usually have more responsibilities in a global sense than hourly employees.The downside to salaries are mostly employee morale. Since salaried employees usually work more hours per week, they also tend to make more as a base amount. It is important to put into your pay structure some sort of bonus system for salaried employees as it acts like a year round incentive.

Flat Fees for Services

These types of arrangements are typically paid to personnel needed for the delivery of specific services, such as the company that does your payroll or your computer consultant. Usually, flat fee structures are based on a monthly retainer and then hourly charges are tacked on for any service levels that exceed your service agreements. These types of arrangements work very well for certain functions that need to be farmed out, such as your janitorial services or trash pickup, but are not good for employees that are used on a daily basis.The benefit of flat fee arrangements is that you pay according to need. Any hourly charges are usually charges that are extra from your usual service agreement. The detriment of these types of arrangements are the same as the benefit – you are expected to pay it per your service agreement, whether you use it or not.

So when should you opt for using a flat pay structure?

That depends on what your goals are in terms of remuneration, employee development and the types of jobs you have to hire staff. Typically, the more baseline the employee role, the more likely they will have a flat hourly wage (with or without incentives).

The overall benefits of a fixed pay structure are the following:

The pay structure does not fluctuate according to revenue volume
It is easier to plan for in terms of weekly expenses
Promotion ladders are easy to define
It gives you control over hours and employees
It is widely accepted for certain levels of jobs
It is easily tracked and verified
Accounting and taxes, even with overtime are easy to document
You can adjust an employees hours to meet revenue intake
Overtime is an incentive instead of a burden

There can be disadvantages to fixed pay structures. These include:

You are required to pay for hours worked, regardless of revenue
Overtime can add up quickly
During times when revenue is down, cutting hours can affect morale
Generally, hourly wage earners are less educated than salaried wage earners
Bonuses tend to be drawn directly out of company coffers and are not based on increased sales
Workers tend to work as hard as they are paid
Salaried overtime can lead to resentment if pay does not keep up with time investments