A Fixed Pay structure generally does not fluctuate with revenue. For example, a Spa Director's salary will not change (except in extenuating circumstances) whether the spa revenue increases or decreases. In the case of hourly wages, also considered fixed, although an employee's actually hourly wage may not vary with spa revenue generated, the total payout to the employee will vary, based on total hours worked.
You might choose a fixed pay structure if:
- You desire a higher level of control over your Employees;
It is the most widely accepted form of pay for that position, in your area;
- You can afford the financial commitment and know that the long-term results will prove this to be the most desirable choice.
A Variable Pay structure fluctuates directly according to spa revenues being generated, and/or individual staff productivity levels, as in the case of Commission, Fee for Service and Incentive pay structures.
You might choose a variable pay structure if:
- You have Independent Contractors versus Employees;
- You prefer a more cost-effective balance between revenue and expenses;
- You are not ready to commit to payroll dollars when revenues are low;
- It is the most widely accepted form of pay for that position, in your area.
Incentive Pay Structures play a primary role in your overall Compensation Package and can be deemed a fixed or variable pay structure depending on how you choose to set them up. Incentives may include: commission on retail; bonuses; profit sharing; staff service and product allotments; staff service and product discounts; service gratuities; training and education; paid time off, etc.
You might choose incentives if:
- You need to stay ahead of the competition;
- You need to attract more potential candidates;
- You need to motivate existing employees;
- You wish to train and/or educate your employees;
- You must stimulate business.
A Combination Fixed and Variable pay structure is very common in the Spa industry, as you may see an hourly wage or annual salary supplemented with a Fee for Service, Service Commission and/or Employee Incentives.
You may use a combination pay structure if:
- You wish to be competitive, or stay ahead of your competition in the marketplace;
- Your fixed pay is low and needs to be supplemented with variable incentives;
- You endorse both employee loyalty (fixed) and potential performance (variable);
Employee Benefits may include the core insurance benefits such as Health, Dental and Drug; Savings and Investment Plans; Worker's Compensation and Employment Insurance. Once established, these benefits may become fixed pay structures and will hold a high dollar value.
You may choose employee benefits if:
- You can afford it;
- You take interest in your staff's well-being and quality of life;
- You wish to have an edge over your competition in gaining and retaining staff;
- You promote tenure, loyalty and long-time/life-time employee relationships.
Non Monetary Rewards or "Opportunities of Employment" are a very important component in your Compensation Package. Examples of non-monetary rewards are: Caring Culture with life-friendly policies; Higher Level Leadership; Employee Retention programs such as Mentoring and Shadowing; Focused Staff Development; Stretch Opportunities and Experiences; and special privileges.
You may choose non-monetary rewards if:
- You are smart;
- You believe a pleasurable working environment gains and retains staff and clients;
- You wish to make your business and life more successful and more lucrative.
Your ability to effectively combine these pay options to best suit staff needs will dictate the overall success of the Package.
By Leslie Lyon, Spas2B www.spas2b.com