Esthetician Podcast; Business tips for Beauty professionals

068: How to Shift Estheticians from Hourly to Commission Without Losing Your Team or Your Mind

• Kari Jo

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Ready to transform your spa's pay structure but afraid of the fallout? You're not alone. Many spa owners find themselves trapped between financial necessity and fear of employee backlash when considering the switch from hourly to commission-based compensation.

This episode tackles this challenge head-on with a powerful reframe: "Hourly is capped. Commission is scalable." When properly presented, commission isn't a punishment but an opportunity for growth—both for your business and your team members. The fear that employees will interpret this change as abandonment is addressed with practical communication strategies that position commission as a partnership rather than a penalty.

Kari Jo shares from personal experience, drawing parallels between her transition of employees from 1099 contractors to W-2 status and the hourly-to-commission shift. She candidly discusses the benefits that emerged during COVID when her properly classified employees could access unemployment benefits while independent contractors couldn't—a perfect example of how doing things correctly protects everyone involved.

Before making any changes to your compensation structure, heed this critical warning: commission regulations vary dramatically by state. 


Perhaps most importantly, this episode delivers the tough love many spa owners need to hear: "If you're scared to rock the boat with your team but your numbers are bleeding, you're not running a business—you're managing feelings." Leadership requires making difficult decisions, and protecting your vision sometimes means accepting that you might be the villain in someone else's story. 

Ready to lead with confidence? 

Book a free strategy call with Kari Jo here - https://stan.store/EstheLaunchAcademy/p/free-30-minute-consultation-

and transform your approach to compensation, leadership, and profitability.

To learn more about coaching please visit: https://www.karijopatterson.com

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Links You May Want to Check out:

Join the Client Building for Estheticians group to go deep in learning all the latest tips and strategies https://www.facebook.com/groups/clientbuildingforestheticians
Check out Kari Jo’s courses here https://esthelaunchacademy.com

Kari Jo:

Welcome to the Esthetician Podcast, where passion meets prosperity. Your host, Kari Jo Patterson, transformed from a solo esthetician into a successful business owner, achieving ultimate time and financial freedom by the age of 38. Kari is the author of Fearless Prosperity, empowering estheticians to build their empire and achieve financial freedom, and the creator of the Empire Growth System for Estheticheticians. Get ready for some empire building wisdom Now. Welcome your host, Kari Jo Patterson.

Kari Jo:

If you have ever thought I know I need to change my pay structure, but I don't want to come off looking like the bad guy to my employees Well, this episode is going to be for you, because today we are talking about one of the most misunderstood shifts that spa owners face. And that is when you are switching an employee from an hourly rate to a commission and making it not sound like a punishment. And, guys, I'm just going to say something really bold, I'm just going to put it out there. If you are scared to rock the boat with your team, but your numbers are bleeding, you are not running a business, you are managing fillings, okay. So listen, I never had to switch my employees from an hourly to a commission. I started on the commission, but where I did have to do a switch was I had to switch my employees from a 1099 to a W-2. And so I feel like the fears surrounding are very similar. So when I first made the mistake, I brought on my employee as a 1099. And then I learned that that was not the right setup. So I had to fix it and I had this conversation with her and my gut feeling was probably what you will feel if you're thinking of switching your hourly to commission is, what if she doesn't like it? What if she is upset with me? But ultimately, guys, like I believed in what I was doing and I believed in the process and I built trust with my employees, so she knew that she could trust me to, like, take care of her back. And so when I laid it out, it was really an easy thing and she understood it and hey, plus, guys, I'm going to go back here for a second.

Kari Jo:

Okay, when COVID happened and people were there were, okay, in my town, just so, you guys know, my business was in a small town. So when people, first and foremost, oh, we're going to, just so, you guys know my business was in a small town. So when people, first and foremost, oh, we're going to go there too, when people are like, but I have a small town and that probably doesn't work for me in my small town, guys, my town was 25,000 people. I mean, I don't know, maybe you're smaller, but my town was 25,000 people. That's what I built my company. It wasn't like I was in some big city, okay. So, first and foremost, in my town there were a bunch of people that had 1099s and they had booth rents. Nobody in my town had employees Like it just wasn't a thing. So when COVID happened, all of the people that were booth rents and 1099s, they all went home and they didn't get a paycheck because they weren't a W-2 employee. All of my girls, when COVID happened, they went and they filled out the form like everybody else anyone who was a W-2 employee and they filled out this form and so they were able to collect unemployment while they were at home, sitting at home from COVID.

Kari Jo:

You know what the sad part is about that. I'm looking back on that is, at the time I was not filing my business as an S-corp, so I was not on payroll, so I couldn't even get employment, but my employees were getting an unemployment check sitting at home. So I couldn't even get employment, but my employees were getting an unemployment check sitting at home, but I wasn't. But there are benefits to being a W-2 employee. Okay, sorry, we're going back in that.

Kari Jo:

But listen, I know what it is like to be stuck in that place of fear and you're afraid of what your employee is going to think and especially in this case, like when you're switching from an hourly to commission, you're afraid that they think that you're going to be taking something away from them, and that's where the big issue is. You have to reframe how you're thinking about this, because that is your fear, that's not their fear, and so you have to reframe your fear. So you are not taking anything away. Instead, what you are actually doing is you are giving them a chance to grow. So I want to break this down.

Kari Jo:

Why does commission scare so many people estheticians and I'll tell you what it is. I did some research, guys, and what it is is because we have been trained to think that getting paid hourly equals stability where commission rates right, that feels risky and they will think what if I don't make money? But here's the truth is that hourly is capped. Commission is scalable. So if your employees are getting commission, it means if they grow, they earn more, if they hustle, they are rewarded. If they sit around waiting to be fed clients, well, the result matches the effort and maybe they're not great for your team, right? So here's the emotional part is your employees. They may feel like you're asking them to send, like when you switch your employee to going on a commission rate versus an hourly, what most of them are going to feel is, what you are really asking them is that you are asking them to go out and build their own clientele. But here's the thing If they are a part of your team, if they are under your brand, if they are under your brand, your marketing, your training they are not alone, right, they aren't doing this alone. They are just being asked to own their performance, and that isn't punishment. That is actually a true partnership.

Kari Jo:

So how do you make the switch without it sounding like resentment? So let's talk about how you reframe all this. What I want you to try is like this this change is not about cutting your pay. It's about giving you the ability to scale your income. Hourly pay is going to put you at a cap of what you can earn each year, but with commission, you're in control. You have room to grow and I'm here to support you through that and growing your schedule to what you ultimately want it to be. See, commission is also going to be. It's really sustainable for the business and it's because you don't end up draining your resources on all of your slow days. You're not scrambling to justify your hours. You're basically just aligning your payroll with performance. Okay, so that is how you grow without burnout. That is how you scale, without feeling like you're babysitting your payroll every single week.

Kari Jo:

Now, before you run off and decide to switch everyone to commission tomorrow, I do have to say this this is a disclaimer and it is super important Not every state allows commission-based pay. Okay, I'm going to say it again Not every state allows commission-based pay. Some states have super strict laws around it. You would not believe how many people in probably the state of California are doing things totally illegally and can get really, really screwed. Okay, before you make any changes, you need to do your homework, and I highly recommend that you go and talk to an actual unemployment lawyer or attorney that is in your state and generally, what I suggest you do is you give them a plan of how you're planning to pay and be like is this allowed in my state? And let them tell you, because that's what they are known for right, tell them what you're planning to do.

Kari Jo:

Do not chat, gpt this. Don't do it guys. Don't do it and don't just Google it. You can get in big trouble. You can be sued thousands and thousands of dollars. So, protect your business, protect your team and do this the right way. Now let me speak directly. We're going to go back to speaking directly to.

Kari Jo:

If you are a spa owner and you are afraid to be seen as the bad guy, I want you to know this you will always be a villain in somebody's story. You have to let that sink in. If you are going to have employees, if you are going to grow your business, you have to get comfortable being the villain in some people's story, because leadership means doing what's best for the business, always, even if it's uncomfortable. Sometimes you are going to hire someone and they are not the right fit, and it doesn't mean that they're bad people. It just means that they're not the right fit for your company. They might be the right fit at someone else's business, but not yours. And when you let them go or you restructure things and they might not like it. But your job is not to make everybody happy, your job is to protect your vision and if you're sacrificing your business in order to keep someone else comfortable, then you're not leading, you're just babysitting.

Kari Jo:

So if you are sitting here and you are listening and you know something has to change and your pay structure, your systems, your boundaries, all of it but you're scared to do it, get support. I'm telling you. When you understand the why and why it's so important for you to make the shifts in your company and what you are working towards, it becomes so much easier to lead with complete confidence. Don't do this alone. Book a strategy call with me. I will help you get so clear on your pay structure. I will help you protect your profit and help you lead your team in the right way that is aligned and powerful. The link will be in the show notes. Remember you are not the bad guy, You're just being the boss, and that's a whole different kind of leadership. So I will see you guys next week on Wednesday. Please make sure to like and comment and review my podcast. It would really help me out. Thanks, guys.

Kari Jo:

Bye. Thank you for listening to the Esthetician Podcast with Kari Jo Patterson. Each week, Kari brings you real-world lessons on how to grow your empire. To learn more about Kari fearless prosperity mastermind group, one-on-one VIP coaching opportunities and more visit Kari. That's www. karijopatterson. com. See you next week for more insights and strategies on the Esthetician Podcast.

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