Facing a Walkout

This August, a PBA salon/spa member wrote the listserve (aka the List) looking for advice on how to handle a walkout of four top performers. Active listserve participant Charles Riser Jr. responded, bringing his usual no-nonsense smarts to the topic. As walkouts remain an unfortunately common problem for our salon/spa owners, we asked Charles to summarize his feelings here. Take heart, says Charles. You're not done yet.

It seems that the two biggest conversation starters when PBA salon/spa members get together are: (1) tips and/or tip compliance and (2) staffing challenges... to whit, keeping staff and dealing with the dreaded "walkouts." I would like to focus on the walkout challenge. I have been through it (as have most), losing my entire staff just three years after opening our salon.

The situation that appeared on the List was pretty ubiquitous to the stories I tend to hear. Not only did the staff leave and go "right down the street," migrating to a salon owner who promised them 60% or higher commissions, but they took client records. The only thing that I do not usually hear is that in this case, they did not just write down addresses and phone numbers, but they actually TOOK the paper records. The salon owner, like many of us, wanted to hold the ex-staffers' paychecks until this was resolved. Here's what I told her:

It's hard to know where to start... but I'll begin with the obvious:
(1) There was a theft in the salon.
(2) You have to release the paychecks.
(3) The "new guy" will not be able to stay in business for very long at those pay rates.
(4) The grass is never greener.

So let's start with #2:
I hate to break it to everyone, but you simply cannot hold their paychecks. They didn't sign anything authorizing you to do that, so you really must give hand them over. Think of it as a "casting off." Seriously. Give them their checks so you can righteously do what you need to do next.

Moving to #1:

I don't really care what it takes, in circumstances like this, you must find the meanest, strongest, most bada** lawyer you can get your hands on and sue them for theft. If the chemical service records were there before they left, and gone AFTER they left, then they stole them. No cute responses on their part will change that... This falls under something called the "trade secrets act" and doesn't even require a contract to enforce. Even if they didn't actually take the PAPER, using any data collected while in your employ violates the act. The client data is NOT THEIRS to have. It was given by your guests, in confidence, to YOUR FIRM. You have a responsibility to keep that private. Seriously.

See if you can have the legal paperwork delivered directly to their new place of employment. That will definitely turn some heads.

So that leaves #3:

If you have ANY type of non-compete in place, you will need to send a copy of that to the new salon owner, along with a letter from your new-found attorney friend, explaining that the salon owner that is your ex-staff's new flavor of the week, is interfering in a contractual obligation between you and his (or her) new employee(s). This is something that THEY can be dragged into, but you need to reiterate to them that you would be willing to let all that go if they would just be so kind as to NOT employ them until this is all figured out.

In the end, these folks really aren't coming back. Even if the other salon crashed and burned, you have had folks steal from you. Allowing them back into your business becomes a moot point. So everything you are going to do now needs to be done with an eye to the future. If they didn't actually steal the hard records, they stole your time and energy.

Remember, it is really FUNDAMENTALLY IMPOSSIBLE to make a profit paying people 60% commission with no service or product charges. The salons that do this MAY be able to juggle money for a bit, but ultimately, unless they chose to pay other people and staff members substantially LESS, there is simply no way to make this work in the long run. And no matter how hard they try to hide it, eventually everyone will know that certain people are getting paid MORE. And that's never a good way to promote "happiness and joy" in the workforce.

Remember, these salons are NOT PAYING THEM MORE. They are just calculating their pay at a higher commission. Unless your old staffers keep 100% of their clientele, they will NOT make more money. 100% of nothing is still NOTHING. Commission rate is one of ten things that determine pay. And really the only one YOU, as the owner and controller of the purse strings, control 100%. The other nine can be altered, at least a bit, by the stylist. If you don't know what the other nine are, go chat with Michael Cole. Or just trust me that there are ten!

So if you don't have a computer system, NOW is the time to get one. You will need to start doing a BLITZ to every single one of your clients. You only lost four people. More than half your team is still there. Your remaining team should be looking at this as a BONANZA. They probably are only booked at about 75-80% efficiency, so they have ROOM FOR MORE. Every one of your existing team should be able to handle the clients that come back to your salon. And they will all DEFINITELY make more money. Sit down with them. Explain to them that simple fact. Show them how this will directly benefit THEM. Believe me, they will LIKE this.

Send out one large mailing. Offer the clients of your ex-staff HALF OFF (or even FREE if you want) to come in for a haircut and experience someone new. Then, eight weeks from now, DO IT AGAIN for everyone who didn't return. Then, eight weeks later DO IT AGAIN. AND AGAIN. AND AGAIN. For a full year. Believe me, no matter what size salon you have, your guests may go and try the new place, but after a year of getting notices from you, if they at all MISS YOU, they will be back. We have NEVER not kept at least 85% of our customers when a team member has left us. Even if you keep 50%, or 40%, or even 20%, you will still put a HUGE DENT in their income because they can't BUILD a clientele fast enough to compensate.

If ANY salon really is offering 60% (or more), then they aren't doing other things ... like shampoo help or desk help. If you have these things, then eventually your ex-employees will have to do these jobs in THAT salon because at 60% they simply cannot reliably keep support staff around. Hourly support staff eats up profits. Profits aren't there if you are paying 60%.

But on to your own team:

1. Contact your distributor. Explain what happened. Ask for any and all help they can give you.
2. Sit with your accountant. Figure out the BOTTOM LINE. Contact your bank. Ask for a sweep line that can help cover expenses until you get back on your feet (which honestly won't take long). What is the absolute LOWEST revenue you can have and keep the doors open? Remember that payroll is your single biggest expense, followed by your inventory. These two just essentially got cut IN HALF if half your team has left. Your expenses probably will get cut by about 40% as a result. Maybe higher.

Once you have the low number, STICK TO IT. Do NOT, under any circumstances, chase it over the horizon. It will simply deplete any savings you may have. Make the decision NOW, that if you go below your needed revenue, you will SHUT THE DOORS. Period.

And finally, buck up. I hate this part (the platitudes... the "you'll get over it" comments), really I do. But a few months ago, someone on the List mentioned a TRUTH that I hope anyone will find comforting in this situation:

NO ONE, and for me I can tell you again NO ONE, I have EVER talked to that has experienced a walkout (and in my case, we lost 100% of our staff) has gone out of business because of it.

NO ONE.
Is it a pain in the a**? You bet.
Does it break your heart? You bet yer sweet a** it does.
Will it harden you to certain things? Yeah, but you will thaw because this too will pass.

Let it go though. Do what you need to punish those who stole from you, but let it go. Put the systems in place to prevent it from happening in the future and use this as an opportunity to grow and prosper in directions you could never do before.

Call your friends. Get drunk with the girls. And find that bull dog attorney.

You've built this before and you can darn well do it again.

Charles R. Riser Jr.
NewYork NewYork Salon, Inc.
The Temple: A Paul Mitchell Partner School
Frederick, Maryland