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advancing our industry membership MANAGEMENT WORKSHOP PBA Report: Salon/ Spa Industry Sees Modest Growth in Second Quarter A h After holding steady in the first quarter of 2013, P the Pr Professional Beauty Association's (PBA) Salon/S Salon/Spa Performance Index (SSPI) rose 0.2 percen percent in the second quarter of 2013. The SSPI is a quarterly composite index that tracks the health and outlook of the U.S. salon/spa industry. The SSPI is based on responses to PBA's "Salon/Spa Industry Tracking Survey," which is fielded quarterly among salon/spa owners nationwide on a variety of indicators. It is constructed to measure the health of the salon/spa industry in relation to a steadystate level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction. The Current Situation Index, which measures current trends in five industry indicators (service sales, retail sales, customer traffic, employees/hours and capital expenditures), stood at 101.1 percent, rising 0.7 percent from Monday | September 30, 2013 | 6pm EDT the first quarter. The Current Situation Index has Register at probeauty.org/eduonline remained above 100 for the third consecutive quarter, which marks expansion in the industry indicators. The Expectations Index, which measures salon/spa owners' six-month outlook on five industry indicators (service sales, retail sales, employees and hours, capital expenditures and business conditions) declined slightly by 0.2 percent to 104.2. The Expectations Index continues to remain above 100, which indicates that salon/spa owners are optimistic about growth in the coming months. they're protected from the effects of discounts and promotions, so in the end it feels fair to everyone." Another method, more common in spas attached to hotels, fitness clubs or wellness centers, is to pay the staff an hourly rate, augmented by an extra sum for each service that they perform. Such rates vary based on geography, but generally range from $7.50-$12 per hour. The additional treatment rates or percentages of treatments performed may be 5% to 20% of the service fee, again depending on a variety of factors. The hourly pay model attracts an employee who is interested in stability and a regular paycheck, and can be very cost-effective for spas, but its benefits are usually not realized until the spa reaches mature treatment utilization rates. As this may The hourly pay model attracts an employee who is interested in stability and a regular paycheck. not be until the spa has been open for at least several years, this method isn't always ideal for a new spa that doesn't have a constant source of operating capital. The full SSPI report and the "Salon & Spa Tracking Survey," along with other helpful research on the professional beauty industry, can be found at probeauty.org/research. probeauty.org/research The Professional Beauty Association (PBA) advances the professional beauty industry by providing our members with education, charitable outreach, government advocacy, events and more. PBA is the largest organization of salon professionals with members representing salons and spas, distributors, manufacturers and beauty professionals/NCA. Visit probeauty.org or call 800.468.2274 (480.281.0424) for more information. PBA Membership Advances Our probeauty.org | 800.468.2274 Industry. Join Today! 92 DAYSPA | DECEMBER 2013 vide such benefits to your full-time, loyal staff. In order to provide medical benefits at affordable rates, your spa will need to join an existing group of businesses in a plan, which can be found through insurance brokers or your local Chamber of Commerce. With our consulting clients we usually advise that the spa contributes up to half of the individual premium (current rates put that premium at an average of $5,000 per year), with family members eligible to join at their own cost. For a technician booking $1,500 per week in revenue, that amounts to a monthly contribution by the business of approximately $200, or 3% of the revenue generated by that technician. Paid-time-off (PTO) benefits of one week after one year of employment, and two weeks after three or more LOOKING BEYOND DOLLARS One consideration when evaluating your compensation plan is your ability to support your staff's overall career goals by providing them with benefits or perks in addition to direct compensation. A contribution to healthcare coverage and a paid-time-off benefit are typically the most popular "perks" among spa employees. Obviously, if you are trapped in a high percentage commission plan, you will likely not have the ability to offer benefits of any kind, but other types of plans will enable you to pro- years, are also quite affordable for a business. Using the above scenario of a technician booking $1,500 per week in revenue at a direct compensation rate of 35%, that benefit would cost the business well under 1% of revenue generated by that technician. Of course, now that today's workweek tends to be more fluid, make sure that your earned PTO policy reflects the regular working schedule. For instance, if the benefit is one week PTO per year, a technician working four days per week earns four days PTO, not five. This is one of the few benefits that can also be extended to part-time staff, if desired. A WINNING FORMULA As for support staff, including customer service and spa attendants, hourly pay is the norm, with rates ranging from $8 to $14, depending on your