Manager commission structure - ideas?

riva

Member
#1
Hi all,

We have just had an offer accepted by a practice manager. A very generous base with a commission structure that matches what she got paid. We will soon be a 2 place practice but I mostly need her for one location (offerings differ at both locations- only 15 min walk apart). I've heard of fairly complex bonus structures and wanted to get a feel of what others are doing. I'll list what I know including what she was doing:
  1. based on revenue KPI
  2. based on profit KPI (not as keen on this unless we specify that it shouldn't be massive cost cutting, working people to death etc)
  3. new client acquisition
  4. old client retention
  5. rebooking rates
  6. staff absenteeism
  7. online reviews
  8. product sales
  9. sliding scale commission so that they can gain more commission even after hitting targets eg 120%, 140% etc
This is off the top of my head based on what I know. Any ideas/thoughts etc? Happy to share by direct messaging if its too private to talk about here.
 

riva

Member
#2
Bump.... anyone?
 

TheDuchess

Active Member
#3
Ive been thinking about this. I've had a manager for 2 years - my daughter. This has given me a chance to learn about targeting managers - I'm very experienced at managing managers in other industries but I haven't had to design my own targets before.

Essentially what you both need to know is "what does success look like". What are you doing at the moment? What would you expect to do without a manager? What do you want to acheive with a manager? How much extra revenue do you need to justify your manager and what are the realistic ways you can allocate this revenue to your various KPI's? What works for you and what do you want to experiment with? Be aware that a savvy manager will give you what you ask for - even if that's not in your best interests.

Go through your figures and look at the things that are important to you - look at trends over the last 3 years, what's growing, what's shrinking? What's acheiveable? My daughter was really good at selling, so I targeted her on product sales. We're an Environ salon and we're now a silver salon which means that we qualify for free training courses and extra marketing support. This builds our long term success strategy - we had a couple of quiet months last year when product sales saved our bacon.

Look at your revenue. Are you basically fully booked and comfortable with your capacity? If not, you need to grow. If you are fully established then you need to focus on profitability. You can do very complicated sums which basically mean "we're not fully booked but we"re not going bust". You can target this through gross profit targets - income less cost of sales and Labour. Your manager doesn't have much control of fixed overheads, but she can manage waste and efficient use of resources.

In terms of managing staff - What costs you time when you could be earning more money than your managers hourly rate? I need to know who is in late and who is reliable - but my time first thing is valuable. Getting my manager to monitor punctuality and ensure that no-one is paid for hours that they haven't worked, enabled me to concentrate on revenue generating activities.

What this comes down to is job description. What do you expect your manager to do? How will she know when she is doing well, how will she justify a pay rise? And what value are you expecting from her?
 

#4
Thanks @TheDuchess
Lots of food for thought there. She's starting soon and haven't pushed for final details on commission so I think the right thing to do it to ask her 'what does success look like?' - I like that analogy.... and see how it compares to my idea of the same.

At present, we are not full at all but have a wonderful offering- mostly my fault as I focussed on another area of the business- so that's an easy area for her to scale. I suppose we then have to revisit this every so often and have the targets change every so often; by mutual agreement.

Thanks for that. Need some thinking time now....
 
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