How will my employees respond after changing my pay scale?

Hello hello and welcome to Greedy Bitch, a podcast where groomers stop apologizing for charging their worth.  I’m your host River Lee, founder of the Savvy Groomer.

Today's episode is sponsored by the Pay Masterclass, a 6-module masterclass where we teach you all about paying your employees legally. 

Paying 50% is bull shit.  We here at the Savvy Groomer have cracked the code of paying employees a liveable wage they’re happy with and creating sustainable profit for pet grooming business owners.  Introducing the Pay Masterclass, a 6-module exploration on how to legally pay W2 employees, specifically designed for the pet grooming business.  Busting myths while teaching you the skills and winning formulas you need to create a pay structure that actually works. 

Let’s talk about today's topic:

How will my employees respond after changing my pay scale?

River: Changing the pay scale from commission to hourly can make employees react in different ways. Let’s look at some of the positive responses that pet grooming business owners can expect after switching an employee from commission to hourly.

Some employees may actually welcome the change from a commission-based structure to an hourly pay system. With guaranteed income, employees experience greater financial stability and predictability. They can plan their finances better and budget for their expenses. 

Jim: With an hourly pay, pet groomers typically receive a fixed wage for the hours they work. This provides a level of stability and predictability in terms of income. Regardless of the number of appointments or the grooming services provided, they can rely on a consistent paycheck.  Working on an hourly wage basis can mitigate the impact of fluctuating customer demand.

River: A pet groomer in an hourly job does not have to solely rely on attracting a steady stream of clients to earn a living. This is particularly beneficial during typical slow periods or when a business is building up a customer base… or when they’re training employees who need time to get faster. In a commission-based role, groomers heavily depend on the number of appointments and the willingness of customers to spend on additional services or products. If client demand is low, if there are lots of no calls / no shows their income may suffer.

Jim: Commission-based positions may encourage or require pet groomers to upsell additional services or products to clients in order to earn higher commissions. This can create added pressure and potentially compromise the groomer-client relationship. In contrast, hourly jobs typically focus on providing quality grooming services without the pressure to sell additional items.  

River: We here at Savvy Groomer do NOT encourage groomers to check in and out their own grooming clients.  If you do and your groomer is commission based, that means the groomer is going to pressure your support staff since their ability to add on an extra $10 teeth brushing or $5 shampoo directly adds or takes money out of their pocket.

Jim: The change to hourly also eliminates the pressure of trying to cram in as many dogs as possible and allows employees to focus more on providing quality services.
With employees caring more about work-life balance vs a bigger paycheck, hourly jobs encourage set work schedules and support predetermined hours.

River: This stability allows pet groomers to plan their personal finances more effectively. They can budget their expenses and manage their financial obligations with greater certainty since they know when they will be working and how much they will earn per hour.  It can foster a sense of fairness if some employees feel they are doing more work but receiving the same commission rate. 

Jim: As for groomers as an individual, hourly wage can simplify things like paid time off, adding benefits and in their personal life like buying a home or getting a loan.
Having an hourly wage allows banks to have proof of a consistent income (vs “50%”), easier calculation of debt-to-income ratio since their income fluctuates week to week, month to month, etc and proving a stable income in order to be approved for a mortgage. 

River: Too many groomers cannot get a mortgage because their income is too inconsistent and the bank knows they’re at the mercy of who shows up that day.  By switching them to hourly you immediately make it easier for them to buy a home.

So what about negative responses? Let’s look at some potential downsides.

Jim: Some employees may not welcome the change from commission to hourly pay. They may have become accustomed to the potential for higher earnings and may not be satisfied with a lower hourly rate. This can lead to dissatisfaction and lower morale, as employees may feel their hard work is not being adequately rewarded. It may take time for them to adjust to the new payment structure and accurately track their hours. If the hourly rate is not competitive, it could also increase the likelihood of employees seeking employment elsewhere.

River:  It’s important to consider the potential challenges and concerns that employees may have during this transition. There may also be mixed responses that you should be prepared for.

Jim: Some employees may appreciate the stability of an hourly wage while still missing the opportunity to earn a higher income through commissions. They may find comfort in having a baseline income but still be motivated to work harder to earn bonuses and incentives. It’s crucial for business owners to engage in open communication and address any concerns of feedback that may arise during this change in pay structure. This can lead to a better understanding and a more collaborative work environment.

River:  We at the Savvy Groomer suggest doing hourly based on a point system, aka a production spectrum, plus production bonuses and loyalty bonuses. One of my favorite bonuses is the 13th month bonus. We really talk about the Groomer Point System (GPS) which helps with the production based bonus system.

Jim: A way to help with this transition is to implement a production bonus system.

River: These bonuses incentivize employees and serve as a powerful motivator as well. They are a great way to recognize and reward exceptional employee performance. By linking bonuses to specific performance metrics or goals, businesses can create a system that motivates employees to strive for excellence. These bonuses can take various forms, such as monetary rewards, gift cards, additional paid time off, or even special recognition. We even teach points time off utilizing our Groomer Point System. The key is to design a bonus structure that aligns with the business’s objectives and encourages employees to go above and beyond their regular expectations.

Jim: Performance metrics can vary depending on the nature of the business and its goals. Metrics could include client satisfaction ratings, the number of repeat customers, or even the number of positive customer reviews. Other metrics could be based on productivity, such as the number of points completed within a specific time frame. The key is to establish clear and measurable criteria that align with the business’s objectives and reflect the employee’s impact on its success.

River: Performance bonuses offer several benefits for both employees and the business. For employees, it provides an additional sense of recognition and reward for their hard work. It motivates them to perform at their best, knowing that their efforts will be acknowledged and rewarded. Performance bonuses can also foster a sense of healthy competition among employees, driving productivity and innovation. From a business perspective, it helps to attract and retain top talent, as employees are more likely to be engaged and committed when they see opportunities for growth and rewards based on their performance.

Jim: When implementing a production bonus system, it’s important to establish clear and transparent criteria for earning bonuses. Employees should have a clear understanding of what is expected of them and how they can qualify for bonuses. Regular communication and feedback are crucial to keep employees informed of their progress. Second, the bonus structure should be fair and equitable. Ensure that the criteria are objective and applied consistently to avoid any perception of favoritism. Lastly, make sure the bonus system is financially feasible for the business. Evaluate the potential impact on the bottom line and ensure that the bonuses align with the overall budget and profitability goals.

River: It’s important to create a culture of continuous improvement and learning. Production bonuses should not be seen as a one-time event but rather as part of an ongoing process. Regularly evaluate and update the bonus criteria to reflect changing business needs and priorities. Additionally, celebrate the achievements of employees who earn bonuses and share their success stories with the rest of the team. This helps to reinforce the positive impact of the bonus system and further motivate employees to excel.

Jim: Communicating and addressing employee concerns are key to managing this transition effectively. 

River: Before implementing any changes, it’s crucial to thoroughly evaluate the impact of employees and the overall business. Ensure that the new pay scale is competitive. Ultimately, fostering a positive work environment and showing appreciation for your employees’ contributions can go a long way in managing this transition successfully.

If you guys are interested in learning more about the Pay Masterclass, be sure to visit me at savvygroomer.com/pgmc. This is a 6-module masterclass where we teach you how to pay your employees.

Thank you all so much for listening to this podcast, How will my employees respond after changing my pay scale?. Be sure to visit me at SavvyGroomer.com to see my current opportunities to work with me in growing your pet grooming business plus more free resources for you to learn. See you in our community on Facebook - Savvy Pet Professionals! As always, Happy Grooming