Minimize Stylist Turnover to Maximize Salon Profit
As any salon owner can attest, hiring never stops. Just when you think all the pieces are in place, your star stylist announces she’s pregnant and going to stay home after the baby is born. Or your favorite manager moves out of state. Or—worse-case scenario—you have a walkout.
Heath Smith, co-owner of Ruiz Salons in Austin, Texas, recognized this shift of employee behavior not just in the beauty industry, but in all small businesses, and he decided to do something about it.
“There’s a high cost associated with hiring people,” he says. “And some of it is intangible, like your lost training investment, loss of productivity, or increased re-dos when a junior employee takes over for a seasoned stylist.”
Sensitive to the tangible and intangible costs he was experiencing, Smith decided to do some research.
After polling salons from a variety of manufacturers representing hundreds of stylists who left their salons in the last two years, he found salons were the most susceptible to turnover in an employee’s first three years.
“This is consistent with Gallup’s 2015 poll, which found of all applicants to small businesses, 45 percent only plan to stay with their employer for two to three years,” Smith says.
“To many young stylists, two years is a really long time,” he adds.
Smith also researched the exact cost of losing employees, and found he could lose up to $200,000 per year if a senior level or master stylist left.
“You have to fill their chair with someone more junior, and it takes years to become a master stylist,” Smith says.
When Smith broke his research down even further, he realized 70 percent of stylists were leaving for lifestyle reasons and only 30 percent left to compete in the same market.
Some of the turnover was due to failed employment relations, but some was under the influence of the owner. So he asked himself an important question:
“What if we try to engage our current employees more to keep them interested and invested in the business?”
Understanding Your Stylists
Smith found the impact of turnover wasn’t just affecting him, but also his managers and trainers, with new and/or poorly trained employees placing a larger burden on the leadership team.
“It requires them to be more hands-on in the business instead of focusing on larger-picture initiatives,” he says.
So he began to learn more about the people he was hiring.
“When we first opened, interviewees would ask about stability and long-range careers,” he says. “Now they are asking how much time they will get off or what cool opportunities (like Fashion Week) we offer,” he says. “So the shift we’re seeing, is from long-term to short-term focus.
“If managers and owners are dealing with the drama of the day, they can’t be future focused. If they keep getting caught up in the turnover cycle of hiring and training, they can’t put their efforts into current employees.”
He adds, “Someone once told me as the owner of the business, if I am making decisions that affect the next three months, I’m doing the wrong job.”
“The role of the owner is to be way out in front of today, not working in today.”
Engage to Retain
To get prospective employees’ attention, Smith started by changing his recruiting material. His standard recruiting message was focused on benefits and other long-term perks, so he rewrote it to reflect short-term goals.
“Now my materials suit their wants. Our environment gives them a sense of autonomy and fulfillment. They have the perception of having a voice.”
Last year, Smith spent close to $115,000 investing in his stylists’ training. It costs the salon $13,000 to put a colorist on the floor and $10,000 to put a cutter on the floor, with an average cost of $1,150 per day in training.
“When someone leaves, that investment walks out the door,” Smith says. “So I’m transparent with my employees about the numbers. We don’t get 100 percent of our investment back until between year three and four. Up until then, every bit of profit a stylist makes is earmarked to pay for the training we invested.”
To keep them there three years and beyond, Smith uses five engagement activities to help retain stylists.
- Speed up hiring: Smith has gone from an average of having a resume in his inbox for 14 days to five. “If you can reach out the same day you receive a resume, do it,” he advises.
- Speed up promotions: This is more about perception, Smith says. “It’s all about how you present it. We used to reward stylists every 12-15 months, but they were starving for attention.” Now, stylists get a certificate of completion after eight weeks, then another, and another. Smith found rewarding along the way kept them engaged.
- Speed up training: “Nobody is going to sit around for a two-year internship,” Smith says. “We found key parts of training we can double up on in our classes each week.” The goal is to look for opportunities to shrink the timing (adding trainers, classes, etc.).
- Connect with “stay” interviews: At least once a year, Smith advises sitting down with each stylist and asking if the salon is meeting their expectations. “Ask what they would change if they could, what the next steps in their careers are, how they feel things are going—you will retain 20 percent more employees by doing just this.”
- Focus on the future: Find ways to keep your employees engaged during their journey. “Show them the career path at your salon and build in milestone moments,” Smith says.
At Ruiz, the five engagement activities have been in place for varying amounts of time. For example, they began the “stay” interviews last year, but have been focusing on the future and fine tuning their career path offerings for several years.
“When we took a look at our traditional career path, we found in many ways it was quite boring,” Smith says. “So we set out on a mission to intentionally create a more engaging work environment packed full of more frequent projects, goals and opportunities that increase focus on ‘why’ they do what they do.”
Previously, the focus had been on allowing stylists to spread their wings artistically and providing options like trainer or platform artist for career paths. But not every stylist wanted an artistic path.
“Providing alternative career paths that allow them to activate their strengths has been incredibly instrumental in retaining stylists,” Smith says.
His data shows possibly two thirds of stylist turnover is due to outside influences, and Smith says a high-engagement culture and work environment impacts the employee’s willingness to leave.
“We do still have some turnover, but our attention is not so much focused on who’s leaving, but more so on who’s staying—because that’s how we build our teams.”
“We only need a small portion of the workforce to do what we want to do, but I want that small portion to be the best team we can put together, and be happy doing it.”