Are You Taking Advantage of Your Human Capital?

13 07 2007

There have been lots of stories both good and bad about the “typical” practices of hiring in the spa industry. As a trainer and consultant I see a lot of this from the back end. We we are typically trying to create is a level of profitability for the owner or main practitioner, while still honoring the need for therapists to make a living. Sometimes this is a conflict. Therapists who were practicing in a spa, who are now a spa owner or operator can go to the extreme of “nuturer” or “nazi”. What I mean by this is they tend to want to provide everything to the therapists they didn’t get when they were in that position, or they have decided it is payback time and they are going to finally reap the great rewards of being the owner in charge. Well, neither extreme will work. There is a fine balance between creating a good and rewarding place to work and making your busines viable. I’d like to touch base on a few key topics within the subject of hiring and profitability.

Hiring Best Practices and Resources

To use best practices in the industry, first we need to understand what it is we want out of our potential candidates and we have we assess the return on our “investment”. Let’s take a look at a few questions we should be asking ourselves.

  • How much is our human capital worth?
    • Well, a lot in our industry. If we don’t have well trained, motivated talent for our spa production then we certainly can’t expect to gain or retain clients. There is a continually lack of correct, great client relationship management (CRM) in our industry. With it being harder and harder to set ourselves, our practices and our spa facilities apart from the competition, over the top fabulous client services better be at the top of your list. I know everyone says they provide that, and many think they do. But how are you measuring that assessment? Are you tracking client satisfaction and responses? Are you addressing their needs? It is what your clients and your employees say about you that can gauge the wealth of human capital in your business. Bottom line is how does your organization behave and what are you going to do about it? Great employers utilize their human capital to the fullest advantage and create a high quality of work life. It is proven that if employees are happy the business is healthy, there have been studies on it, vast articles written about it and interviewing questions are based on it. In the end saving you dollars, and headaches. That is worth a lot in my book.
  • Where will investment in talent have the greatest impact?
    • This has to do with making some decisions as to what you should do in initial investment to gain and retain the best talent. This could be in thorough on the job training that enhances a career. Maybe it is in a consultant or employment firm to screen and interview potential talent. It could also be the decision of your compensation structure or ability to offer health plans or profit sharing. All of these are an investment on the employers part and affect your profit margin. You will need to weigh out where you are able to add some benefit and perceived “extras” while still being able to see a return. This will be specific to your needs, assets, cash flow, debt service and sales forecasts with regards to business planning. You can benefit in this area from a good consultant and trainer to help you get the most for your money.
  • What is the right amount of training?
    • This is the million dollar question. I’m not just talking about the level of training for front of the line employees but in larger businesses (spas, resorts, retreats, medical etc.) the executive staff as well. Let’s take a look at some management decisions and reactions that are common in our (and all) industries.
    • CAUSE FROM MANAGEMENT= EFFECT FOR EMPLOYEES
    • Rude, demanding =Low employee morale and productivity
    • Double standards =Employees resentful and abstinent
    • Plays favorites =Passive/aggressive behavior
    • Poor cash management =Fear, suspicion, low morale
    • Inconsistency =Disrespect/challenge rules
    • (Management layout credit Preston Inc.)
    • You can see with these cause and effect scenarios what can happen in an organization. This goes for management as well as service staff. If there is not strong leadership to begin with it will be more difficult to create sound decisions and have the confidence that you have the tools and information you need to steer your business to success.
  • What is the link between our people and financial results?
    • Direct link. If you’ve ever looked into organizational behavior (OB) you understand how the study of human behavior (our human capital) acts within an organization. Our industry just like any other business has processes it needs to follow to be successful. It is a culture in itself. If you can understand a little about the individual and collective “cultures” we are working in, you can implement more successful strategies within your own organization. Most organization’s today don’t operate within the traditional paradigm, with top down management or a division or order givers and order takers. It is more informal, and in some senses more functional because the new generation of a business organization utilizes ALL of it’s human talent pool and creates an interdependent internal system. This is especially true in the spa and beauty industry. We have the ability to be creative and drive trends, we love to help and heal people and we are dealing with a different set of individuals. So the link between what your human output is and the result of what you financial input is, has a lot to do with that interdependent relationship. Find out your feasibility levels for new and existing businesses with financial statements.

How Not to Hire

We’ve probably all had a nightmare interview or hiring story that we can share. Feel free to post them here for review and response. We are put through practicals, free services and then more interviewing. Ok, well it’s pretty standard in the industry to provide a practical before your hired, but should we expect them to do it for free? I know some companies that pay for their candidates time, after a thorough first interview to measure their personality and check credentials, background, references etc. In addition to this, should we expect that our therapists can survive on commission alone? This may be great for an owner who can claim little liability and have free talent on hand until a “walk in” or booking comes in, but what about the therapists who need to have some security? This is a hot debate, and in my own opinion there should be a compensation system that benefits both sides. This could be based on performance with motivated therapists able to earn higher commissions, and reward them for improvement and success, and possible profit sharing for long term employees once you reach a 10-14% profitability rate. But what about those dead hours? You hold the responsibility of keeping clients coming in the door to keep your therapists busy and your business healthy. Whatever you decide on this, get creative, look at your bottom line, and consult a professional with questions.

Don’t treat your therapists like employees but expect them to act as independent contractors. This is not only walking a fine line with the labor board, but is an unfair practice. Most people do it because they think it will save them money, when it actually causes dissent. If you cannot plan correctly in round one of your daily cash flow enough to run the company, pay employee payroll and operational costs, the harsh reality is you may have made a mistake in being in business. We’ve had some feedback on new therapists coming into this growing industry, but instead of the windfall of cash flow that schools and recruiters are promising they are being met with boot strapped companies and faulty commission based systems that don’t allow them to make a living or pay back the expense of school loans. Competition is fierce and it can be difficult. Going into business for yourself is one option that can allow you to be more profitable, whether it is a private practice or spa, but it can also be a mistake for some who can’t balance the lean times with growth. However as some practitioners have found that these lean times can come with employment too. See excerpt below:

“…….She tells me they’ve decided not to go forward with the second interview and she thanks me for my time and apologizes for the wait. This is the point where I become perplexed and pissed off. You mean to tell me because I wanted to speak to the owner first, I’m being penalized and denied an interview? I took two buses and a train over to sit in this establishment’s office for an hour and a half for them to tell me no thanks. …..”

This is one women’s experience of bad interview/hiring practices with no explanation or apology to boot.Check out the full article at Bella Online Thanks to Leah Patterson for the use of this article.

She has some good points here, and there are some faulty practices in our industry regarding compensation and the belief that profitability (sometimes wrongly so) comes easily with owning and operating a spa. Why do many individuals who own spas think that they don’t need to treat it in the same structure as any other business? To be fair to the side of management, the position itself is a a unique challenge that carries many performance responsibilities, including supporting the work efforts of others and making a profit. Let’s focus on being effective managers and owners, and providing a combination of task performance based rewards and job satisfaction as we watch this industry grow. To find our more about hiring practices, contact us here or check out some resources.(Some of these may not be spa specific, but many times pulling correct practices from other industries makes the best sense.)

Benefiting from your Human Capital

Job satisfaction = The positive feeling about ones’ work and work environment. This can be captured by providing benefits to your employees, whether it’s monetary or not. Reward them with a gift certificate to a competing spa, maybe it’s an opportunity for additional education, building morale with quarterly employee appreciation. You can save yourself a lot of time and bad feelings by accessing the already existing pool of talent to become your best ambassadors and idea generators.

The top four functions of management are planning, leadership, organizing and controlling or (PLOC) There is a lot that goes into this, rightfully so. If we expect our choice of candidates to have the skill set, motivation and training that we need, and we demand they meet performance goals, have well defined job descriptions and consistency in delivery, then we need to provide them with something in return. A fair delivery of opportunity, growth and support. We can do that with the PLOC system and providing a good compensation plan with a well fed net return. Individual differences and diversity can create a successful business environment if managed correctly, just as well as a more homogenous work culture. Take advantage of your human capital like other industries do. You’d be surprised how loyal and helpful employees can be if they feel appreciated. Most practitioners are well versed in their modality and want a little identity and autonomy. Let’s give it to them and create a rewarding system for both sides. Am I living in a fantasy land to believe this can be done? Possibly, but in my line of work with spa consulting, I know there are ways to make this work.

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