Are you increasing your wages?

It’s wage review time – are you increasing your wages by the 5.2% ?

By the time you’re reading this, the National Minimum Wage would have increased by 5.2%, and the Hair & Beauty Award by 4.6%. Business owners have frantically tried to work out where they are going to find the money to cover this additional expense. And employees everywhere have rejoiced over the prospect of a wage increase – even if they’re technically not entitled to it.

Above award wages are paid by most hairdressing employers across the board for senior staff. The ultimate question is, “should their wage be increased in line with the award increase?“

“I already pay above award, so the increase doesn’t apply to me and my staff wages” – a common response from business owners when the increase was announced. But what are the dangers of NOT increasing staff wages annually, even if they are already paid above award?

1.   We are in the most competitive recruitment market that the industry has ever seen.

In a candidate-poor market, skilled hairdressers have become more assured of their worth. Employee benefits are more competitive than ever, the war on wages is driving up the cost of a qualified, senior stylist substantially and salons are employing staff without even so much as an in-person interview. To not review staff wages annually is a major risk to a business. It leaves you open to staff shopping around on what else is out there.

2.   Inflation impacts the lifestyles of everyone.

A stylist that has been paid above-award for the last 12 months will no doubt have their current lifestyles impacted by inflation. They too have to pay more for petrol, groceries, interest rates and childcare, and have to find a way to cover those costs. The last thing you want is for them to be looking at options in another business. Or worse, working for themselves on the side.

3.   We’re competing with the black economy.

In the AHC’s recent surveys, it was established that many sole traders would like to return to a salon environment because they miss the culture, the vibe, and the team atmosphere. In order to ensure these opportunities remain lucrative to this pool of people, paying above-award is essential, and equally, so is reviewing the wage regularly.

4.   Not increasing wages annually can affect morale, performance and even attendance.

Some staff feel incredibly uncomfortable about bringing up the ‘wage increase’ conversation. But with everyone on the internet talking about what they earn now, and the 5.2% wage increase being splashed across every news outlet in Australia, they will likely be expecting the conversation to come up. Complete transparency is important with team members. If you’re not able to facilitate a wage increase this year, you need to let them know when they can expect one. If the topic is left undiscussed in your business, you may find your employees disappointed and lose a sense of motivation. They may look to where they can take advantage of other employee benefits, such as sick leave.

Best practice – Wage reviews should be set, and take place annually without the need for prompting. There should be some KPI’s set in place, and an overall formal review process. Once the review is complete and agreed upon, clear expectations should be put into place for the following year.

Pass it on to the consumer – Everything in the world is costing more and it’s important to consider whether your pricing structure is in line with the current and future expense increases. Consumers, to some extent, expect that costs of living and services are going up, and price increases are reasonable to expect from small business in 2022.

Reach out to your industry association – like the Australian Hairdressing Council or ABIC – for a referral to an expert that can work with you on ensuring you’re covering these upcoming cost increases.

Most importantly, don’t forget to ensure that if you’re increasing your staff wages by a certain percentage, you increase your own by that amount, too. You deserve it!

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Keep up to date with the latest in employment and recruitment in the hair and beauty industries at the HeadHunter blog.