Four years ago, Tina Morschauser and Gretchen Brown, co-owners of Rejuvenation Spa in Madison, WI, found themselves dealing with employees who displayed a lack of teamwork, poor attitudes and low morale. "We knew that in order for our business to survive, we had to act swiftly and decisively by switching to a team-based pay system," says Morschauser, who along with Brown was awarded a Global Salon Business Award for Team Philosophy in 2004. Here, Morschauser shares how they implemented the system that rejuvenated their business.

 Gretchen Brown, left, and Tina Morschauser
Gretchen Brown, left, and Tina Morschauser


Morschauser and Brown know that knowledge is power, so they invested in their business' future by attending a Strategies Incubator workshop from Neil Ducoff. This program delves into important topics such as how to build business value, grow the bottom line, put new compensation programs into practice and implement systems that focus on performance and growth. "We spent a lot of time reviewing our P&L statements and our monthly budgets, which is the first step in the whole process," explains Morschauser.


Next, the duo examined the last 13 paychecks of staff members to arrive at an average figure. Then they conducted a staff meeting to explain their new team-based pay structure and announced that all staff members would be receiving a 13-percent increase. They followed up the group gathering with individual performance reviews in which they touched upon each employee's performance and productivity, client retention, average service ticket, average retail ticket, attendance, education and attitude.


Even though Morschauser and Brown don't pay a retail commission, they've still found a way to inspire employees to achieve even greater success and growth. "We always have a contest going on so that the staff can win prizes, such as hotel gift certificates," says Morschauser. The contests differ slightly each month and range from awards for the most makeup touchups per month to who has the highest retail sales volume.


The switch to team-based pay has enabled Morschauser and Brown to become better managers. In addition to conducting performance reviews every four months— because they feel that continuous feedback is key to keeping communication flowing—they also offer one-on-one coaching; orchestrate photo shoots as a way for the staff to showcase their talents; allow the staff to book services during their off-time (the technician is paid her hourly wage while performing the service, and the team member is treated as a guest); provide an education fund to new staff members; and recognize employees' birthdays with a celebration that includes cake, flowers and a card.

The change has also slowed down the turnover at Rejuvenation's front desk. "It's a win-win for everybody," says Morschauser. "No longer do I have some diva saying, 'I'm a revenue-producing employee and she/he is not.' And the front desk stays happy because they know they're going to get a guaranteed salary."