October
21
2018

How To Pay Your Staff

By Chris 0

Go ahead, give them a salary.

 

Then type up the contract on your Electrolux typewriter, send them a turkey at Christmas, and flip your calendar ahead to 1983.

 

35 years from now, you’ll ask your staff what they like; find their strengths; and put them in a job that rewards them financially and emotionally.

 

Or feel free to jump ahead to 2018 now.

 

Pay your staff for the value they bring to your business.

 

Start by breaking down every role in your business. Think of these as the “hats” that must be worn to run it.

 

Now determine the replacement value for each role. What must a person know to be good at that role? What’s that level of education worth? (Don’t worry, there’s an example coming.) How much time is required every week to fulfill that role? How will you measure success?

 

Now group the roles together to create jobs and careers (they’re different).

 

Add up all the roles in your business. Does your total payroll (including taxes and benefits) equal 44.4% of your gross revenue or less? Perfect. Sign the contracts!

 

If your payroll is more than 44% of your total revenue, panic.  Just kidding! Take action to either increase your revenue or decrease your payroll. After you make the free appointment, read “The Salary Cap“.

 

If you have no idea what percentage of your gross revenue goes to payroll, Call a mentor.

 

Now here’s the example:

 

Let’s say a business in the Farmer phase has 14 different roles. These include bookkeeping, personal training, group fitness coaching, nutrition coaching, cleaning, Customer Service Manager, and a few others.

 

We sit down with a staff member and ask a few questions (we teach the exact questions in the Incubator).

 

The staff person says, “I really want to make this my career.”

 

We say, “Fantastic! We’d love to have you. Here’s how we’re going to do it!”

 

We pull out our Career Roadmap tool (given to you in the Incubator) and start filling their cup.

 

First, the big roles: “Here’s how much you can make by coaching classes in our gym. Here’s how much you can make by doing Personal Training.”

 

We total those opportunities. Then we turn to the smaller (but still client-facing) roles:

 

“Here’s how much you can make if we launch a kids’ program. Here’s how much you could make if we start a nutrition program with Healthy Steps.”

 

We add those to the bottom line. Then we turn to the other roles, which are paid hourly.

 

We ask: “Do any of these roles fit into your Perfect Day?”

 

We pay hourly for those roles. For more, read Specializing Your Staff.

 

We add all the roles together, and we say “Here’s the opportunity.”

 

Then we say “Here’s how we’ll get there.”

 

Here’s an example with MATH:

 

A coach says: “I want to make this my career. I need $50,000 per year to quit my job at the glue factory.”

 

We say: “Fantastic! Here’s how we’ll get there. $50,000 per year is $1000 per week, plus two weeks off.”

 

“I can give you 8 classes per week. We pay $25 per class, so that’s $200 to start.”

 

“I can give you 15 personal training hours per week. That’s $31.11 per hour. Add another $466.65 per week. We’re two thirds of the way there already!”

 

(If you don’t have 15 hours of PT to give the coach yet, don’t worry–make it clear that you will, and work with your mentor to get there.)

 

“Now, let’s look at other opportunities. Do you loooooove working with kids?”

“Uh, no.”
“No problem! How about nutrition?”
“Mmmm…”
“Still fine. I have 5 hours per week available for our Customer Success position at $25 per hour. You’d be AWESOME at that. What do you think?”

“Definitely!” – add $150 per week to the $666.65 from PT and coaching classes, and we’re at $816.65 already.

 

“Now, I have a couple of other options. First is sales. Another is cleaning. Yet another is bookkeeping…”

“I actually love cleaning.”
“Great! We pay $15 per hour for cleaning, and we’ll need around 8 hours per week. We’re at $936.65 per week now, or $46,832.50 per year. Are we getting close?”

 

“Yeah, I can start with that!”

 

Notice that the roles carry different values. And they’re transferable: if the staff member isn’t great at one thing, it can be moved to someone else, along with the pay attached. We don’t believe in putting plumbers in charge of the paint department. And we really don’t want to fire a great plumber simply because they suck at bookkeeping. Why group all roles together under one blanket salary, and risk throwing out the baby with the dishwater?

 

Notice, too, that the roles in question total 43 hours per week. In Ontario, that’s fine, but you might want to consider that in your state.

 

You might also consider the Happiness Index to determine what a great wage in your area might be. In my city, $50,000 is good for a dual-income household with a house and a car and a couple of kids. In Vancouver, that’s not enough to share rent with some single roommates. But if you live in an expensive area, your rates should be high enough to keep your payroll at 44% anyway.

 

Making careers in your gym is simple. If you’ve done a good job breaking down your roles and tasks, adding staff comes down to arithmetic.

 

Are there special considerations? How do you start the conversation? How do you handle staff training? Isn’t it easier to just do it myself????

 

There are dozens of other questions around hiring staff. You need a mentor, and a step-by-step program to find, hire and keep staff around. Start with a free call!

 

 

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