3 times staff wages = income?

salonfrog

Active Member
#1
Hi everyone,

there is a very well known performance indicator (KPI) in the industry such that your stylists should be generating income for the salon of at least 3 times their wages.
But does anyone know where this KPI came from? Why 1/3rd? I've always understood it to be that income is then used for 1/3rd wages, 1/3rd overheads, and then 1/3rd profit before tax. Is this still a relevant KPI number?

Google doesn't seem to know :)

I'm researching it for an article I've been asked to write and so any info would be much appreciated. Happy to share the finished article with you as well.

Many thanks
Andrew
 

TheDuchess

Well-Known Member
#2
I'm not sure where it comes from but it's in common use. I went to a Phorest conference and all the salon owners agreed that they worked on between 3 and 4 times service income. Another KPI is room occupancy. A therapist who is booked 80% of her time should be credited with hitting target whatever her income.

Interestingly it's a common KPI in other service industries. I have a solicitor client who is also targeted to make 3x her annual salary. She says that each year she sets herself a target to hit her goal a week earlier than the previous year. Presumably she's working on her bonus after that.

In food service industries (pubs, cafe's etc) food is a max 1/3 of the total price of the meal.

it doesn't apply in sales jobs, only where the product being sold is the staff time - the product cost is the staff time if that makes sense.

Its a mistake to get too hung up on KPI's especially if you link pay to performance too directly. The most sensible thing for a staff member to do if she's paid a %age of the take is to drop all activities other than the ones that connect to pay - so don't worry about hygiene, or salon presentation or client experience just turn the salon or spa into a factory where clients are the product. In my salon the highest income generator has poor English and a bad back, the rest of us dance around her, answering the phone, turning her room around, writing intelligible notes and rebooking her clients. It wouldnt be fair or correct to value her more highly than the rest of us - it's a team effort.

KPI's are just that performance indicators, not metrics to "game" the pay reward system justifying underpaying and undervaluing staff.
 

#3
I'm not sure where it comes from but it's in common use. I went to a Phorest conference and all the salon owners agreed that they worked on between 3 and 4 times service income. Another KPI is room occupancy. A therapist who is booked 80% of her time should be credited with hitting target whatever her income.

Interestingly it's a common KPI in other service industries. I have a solicitor client who is also targeted to make 3x her annual salary. She says that each year she sets herself a target to hit her goal a week earlier than the previous year. Presumably she's working on her bonus after that.

In food service industries (pubs, cafe's etc) food is a max 1/3 of the total price of the meal.

it doesn't apply in sales jobs, only where the product being sold is the staff time - the product cost is the staff time if that makes sense.

Its a mistake to get too hung up on KPI's especially if you link pay to performance too directly. The most sensible thing for a staff member to do if she's paid a %age of the take is to drop all activities other than the ones that connect to pay - so don't worry about hygiene, or salon presentation or client experience just turn the salon or spa into a factory where clients are the product. In my salon the highest income generator has poor English and a bad back, the rest of us dance around her, answering the phone, turning her room around, writing intelligible notes and rebooking her clients. It wouldnt be fair or correct to value her more highly than the rest of us - it's a team effort.

KPI's are just that performance indicators, not metrics to "game" the pay reward system justifying underpaying and undervaluing staff.
Thankyou so much for your reply.

I totally agree - it’s not a kpi to hang yourself with, but rather It maybe one of a few that helps steer everyone in the right direction.

Again, thanks for your thoughts.
 
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