Unlocking Profits Through Productivity - Part Two
How Every Minute Counts

The Business Side of Grooming©
by Ed Carlson
© 2001 Ed Carlson All Rights Reserved Published here with the permission of the author.

In the first article on "Unlocking Profits through Productivity", we learned about the typical "Mid-City" salon owner who starts and builds a profitable business to the point where dealing with hundreds of client visits, employee work schedules and the complexities of a labor-intensive activity like pet grooming becomes an unmanageable task. Somehow the fun part of grooming seems to be a distant 4th priority and you're working harder and seem to be making less.

Collecting some key historical information (at least 26 weeks of data) and calculating your current productivity standards is the first step in understanding where you can look to unlock your profits. The second step is to record real-time information on a weekly basis and to keep a "productivity journal" that describes "what happened" that week from a productivity standpoint to give you the subjective information you need to develop new standards and apply corrective actions to meet those standards.

As a reminder, here is the historical Key Element information you need to collect and record by week on a Ms Excel spreadsheet:

1. Total number of weekly pet visits

2. Weekly grooming and bathing revenue (no retail)

3. Total weekly employee hours

4. Gross weekly payroll which includes employer paid taxes and worker compensation

Here is the information you need to calculate on the spreadsheet and to understand to set new standards (Mid-City examples)

1. Average labor cost per visit (gross payroll divided by weekly visits) i.e. $14.64

2. Average labor minutes per visit (total weekly hours multiplied by 60 minutes divided by weekly visits) i.e. 95 min.

3. Average hourly pay rate including employer paid taxes and workers comp (gross payroll divided by hours) i.e. $9.2

4. Average charge for each pet visit (total weekly revenue divided by weekly visits) i.e. $28.00

5. Gross payroll as a % of gross revenue (gross weekly payroll divided by weekly revenue, calculated as a %) i.e. 52%

In this second article we will explore the "average labor minutes per visit" standard and understand how every minute counts towards productivity gains and unlocking profits. Those unlocked profits will be realized when you are able to reduce your payroll as a percentage of your revenue, for example taking the "Gross payroll as a % of gross revenue" standard above and reducing it from 52% to 50% or lower.

Average Labor Minutes per Visit

The simple calculation for average minutes per pet visit is: Total employee payroll hours for the week multiplied by 60 minutes and divided by the number of pet visits for the week. In the first article I used the fictitious Mid-City salon as an example: the salon had 115 visits for the week and 182 hours of employee payroll. The calculation would be: 182 hours times 60 minutes equals 10,920 minutes divided by 115 pet visits equals an average of 95 minutes per pet visit.   This average time is not to be confused with the total time a pet spends in the salon and it includes both bath-only and groomed pets. It only calculates the amount of compensated employee time allocated to the "average pet visit".   These activities should include but are not limited to:

1. Pet check in by an employee

2. Pre-bath trim 

3. Bathing

4. Hand drying and brush-out

5. Finish grooming

6. Add-on services

7. Potty walk and attending to needs 

8. Pet check out by an employee

The above tasks are in the employee productivity category described as direct labor. The direct labor category involves time spent actually handling the pet. Direct labor is further classified as productive direct labor; those activities actually adding value to the grooming service (adding value defined here as activities that increase revenue, e.g. 2-3-4-5-6) and non-productive direct labor; e.g. 1-7-8, those necessary but non-value added activities.

The second employee productivity category is indirect labor. These activities include but are not limited to:

1. Answering phones and scheduling appointments

2. Setting up the salon to start the day

3. Any time spent supervising other employees

4. Working the card file system and other office activities

5. Cleaning up the salon at days end

Obviously there are a few more direct and indirect labor activities that your employees perform as part of the average labor minutes per pet visit.   The important issue here is to identify and be aware of 15-20 of the most significant activities that employees perform as direct or indirect labor for each pet visit. The ideal situation would be for the majority of your employee hours to be dedicated to the productive direct labor activities, because that's what the client is paying for. The next step is to work within these labor categories to develop and initiate improvements in each activity.

Productive Direct Labor - PDL

Previously we defined PDL as those activities that add tangible value to the service provided. These activities are at the very core of bathing and grooming and without them you could not possibly operate a grooming salon.   Direct labor by definition has direct and sustained contact with each pet, some contact with clients and always involves expertise gained from specialized pet training and experience. PDL employees are likely to have the highest average compensation and productivity gained here will have a significant effect on profit improvements. Productivity changes in this area are not without controversy and careful consideration and collaboration between employees and management needs to occur to insure pet care handling, grooming quality issues and employee issues are maintained at levels established by your salon guidelines and are ultimately acceptable to your paying clients.

PDL Improvement Suggestions

Training: For specific activities such as bathing, select an employee (or yourself if you qualify) that has the best balance of technical and productivity skills and conduct in-salon training to ensure each employee performing those activities is able to apply that training effectively. For example, an owner could conduct in-salon training to demonstrate the proper and productive way to bathe three pet breeds (start with the breeds that represent a significant portion of the salons business). Employees that consistently took 30 minutes or longer to bathe a particular breed can observe that same breed bathed in 20 minutes or less by the owner or an experienced employee. It is not uncommon to reduce your average bathing time by 10 minutes or by a significant percentage using the above training method.   Some training tips: 

1. The trainer demonstrates by example

2. The employee learns by imitating

3. The employee practices through repetition

4. The manager/owner rewards for performance.

As a means to getting everyone "on board" for the training process, the salon owner and a key employee could setup an in-house certification program that involves this "demonstrate, imitate, repetition and perform" training method. Qualifications at various basic and advanced levels would be required to become a permanent employee and to advance to more senior levels in the bathing employee hierarchy. A combination of breed certification and time in employment could be a basis for increased compensation and advancement. The key issue is that the employees know what is expected of them, that they get the proper training and that they are able and willing to consistently perform to that level of expectation.

Outside training may cost more initially, but selecting the most appropriate employee for that training and then conducting in-salon training might prove to be cost effective alternative.

Equipment: Evaluate your salon's equipment and determine if adding or upgrading equipment will improve productivity consistent with your salon guidelines. You can calculate a simple return-on-investment (ROI) analysis to help in the purchase decision. For example, if you are considering adding a Hydrosurge system to your bathing equipment, use an experienced employee's input to develop a conservative estimate of potential bathing timesaving on a variety of pet breeds. Using the Mid-City Salon as an example, 1 1/2 minutes saved on the average pet (ranging from very little savings on the smallest pets to 15 minute savings on the tub-sized pets) will total 150 hours of compensation savings for the year. The calculation would be: 1 1/2 minutes times 115 pets per week times 52 weeks divided by 60 minutes equals the 150 hours of savings per year.   Based on the Mid-City average hourly rate of $9.25, that totals $1390 in yearly payroll savings compared to an estimated $700 expense for the Hydrosurge. This equipment will pay for itself in six months and the purchase decision is easy to make. Just make sure that the timesaving is realized in actual practice through training and monitoring.

In this example, a 11/2-minute reduction per average visit totals less that three hours per week in savings. It is impractical to think that you can record and measure this small level of reduction on a pet by pet basis each week. But, the accumulative effect of six reductions of 1 to 5 minutes each will ultimately total to a number that is measurable on a weekly basis.   Just remember that a 1-minute reduction in the Mid-City Salon scenario represents $922 in payroll over a full year timeframe. Six different 1-minute savings total $5531 in yearly payroll reductions. You need to look for each of those minutes and combine them into an overall salon productivity plan. Due to the varieties of pet breeds and coat conditions, the minimum timeframe for measurement and evaluation should be all visits for one week. A two, three or four week combined evaluation is better as it averages out the small, medium and large pet mix and other variables such as coat condition and pet handling. In the long run, this Hydrosurge example is just one of many reductions you will need to implement to realize your profit potential.

Salon Procedures: Consider this scenario: Pets are scheduled to arrive starting at 8:00am and you arrive at 7:30am to open. An employee arrives at 7:30am to get ready for pet check in. Pets start arriving at 8:00am and the check-in process begins. Your first groomer arrives at 8:00am only to find that her first two clients are late and only bath dogs have been checked in. Your first bather arrives late and the first "pet in the tub" occurs at 8:30am. The two groom pets finally arrive at 8:45am and the groomer pre-trims and sends them back to the bathing area only to have them wait in the queue for the next open tub. It's 9:30am and your groomer finally gets to work on the first groom.   The solution: the salon owner and an experienced employee need to "talk through" this scenario and arrive at some changes in salon procedures to eliminate the productivity loss.

Non-productive Direct Labor - NPDL

Although NPDL is very closely related to each pet visit, it does not materially add revenue to the service provided. Actually, you couldn't really operate a salon without checking pets in and out, and it would be inhumane to not potty walk dogs or care for their needs, but for this productivity process, the distinction exists nevertheless. NPDL employees will have significant pet and client contact and would need to have some pet handling and client relation's experience.

NPDL Improvement Suggestions

Training: Pet check-in and check-out training might not result in any measurable time savings, but improving the information flow between clients and employees is always good business sense.

Utilization: Key to non-productive labor productivity is making sure there is always a backlog of necessary tasks to be completed and you have an employee with the initiative to complete those tasks without any down time or "make-work" activities. Minimizing NPDL, considering your salon guidelines and customer service levels of course, is always the best productivity improvement due to it's non-value related definition. When establishing your salon guidelines and customer service levels, be sure you question each activity for the value it provides. Look for ways to combine activities to meet the same objective with less effort and simplify each activity to its' core elements to minimize wasted effort and time.

Application: You might determine that you need a NPDL employee on a part-time basis for only the busiest days, or you combine NPDL and IL type activities into one position. Due to the variety of NPDL activities in each salon and your personal experience and training, you just need to understand the concept of minimizing NPDL and use your ingenuity.

Indirect Labor - IL

Indirect labor generally provides support to the direct labor employee and salon by providing set up, clean up, supervision and general office duties as needed. Indirect labor is most likely to come in contact with employees and be involved with office systems, salon equipment, supplies and procedures.

IL Improvement Suggestions

Training: Systems and procedural training for indirect employees is necessary to ensure that those activities are maintained at an appropriate level and frequency to adequately support the salon and direct employees and their tasks.

Utilization: Same statement as NPDL including minimizing Indirect Labor where ever possible.

Application: Consider the Mid-City salon where two IL employees took 1 hour 15 minutes each, or 2 1/2 hours total to sweep, mop, cleanup tubs, mats and cages. The division of labor was confusing: they got in each other's way and both worked at the slowest employees pace. The salon owner completed the same task in 1 hour and through that example, one of the employees later completed the end-of-day activities in 11/2 hours without undue effort and in a manner that would be repeatable day after day as required. The previous "demonstrate, imitate, repetition and perform" training method would be very effective for the salon setup and end of day cleanup activities. As a matter of calculation, the difference between 1 1/2 hours and 2 1/2 hours per day cleanup is five payroll hours per week and 260 payroll hours per year, or $2400 in yearly payroll savings.

Extreme Example: To make my point about developing the appropriate level and frequency for cleanup activities, consider these extreme examples:

1. The salon is swept up daily, but mopping only occurs in the "piddle areas" as needed and totally on Saturday

2. The salon is swept up daily and mopping occurs in all high traffic areas daily and totally on Saturday

3. The salon is swept up daily and mopping is done on the entire accessible floor space daily

4. Every piece of equipment is moved for sweeping and mopping of the entire floor space daily

Each of the above scenarios represents a different level of cleaning activity and expense for the salon. To automatically adopt scenario 1 or 4 without further evaluation of the absolute necessity, benefits and costs associated with the cleanup procedure is to either accept a potentially smelly and unsafe salon or an exquisitely clean salon with their vastly different indirect labor costs.   The manager/owner must make the procedural decision based on the necessity (pet and employee safety), benefits (client related) and costs factors by developing and testing a variety of cleanup levels and frequencies and giving each the look and smell test. Revise the procedures until you have confidence that you are slightly exceeding your salon's "clean and safe" standards at the lowest labor costs.

A different productivity scenario

There is an element of risk in describing these next scenarios, but I feel the examples are so compelling that they need to be related in detail as I observed them. In fact I encourage the salon owner to seek out such examples at other service businesses (I doubt many of you will get any opportunity to observe a competitive salon in action) and draw your own conclusions about what is applicable to your situation. Step back from the obvious differences between a grooming salon and a sandwich shop and just look for the common points of how employees can work as an effective and productive team.

SUBWAY SANDWICH SHOP #1

Visited during the busy lunch hour with a line of customers: Five employees taking orders and making sandwiches, one employee at the cash register and another employee, the manager, filling in where ever needed.

* The employees were in each others way at the sandwich board

* There seemed to be some confusion on some orders as condiments were removed from some sandwiches

* The sandwich employees got delayed at the checkout as they tried to relate the order contents to the cashier

* The upgrade suggestion to the "combo order" with chips and soda was inconsistent between employees and ineffective

* The cashier didn't even look at me

SUBWAY SANDWICH SHOP #2

Essentially the same initial scenario as #1 above.

* The employees and sandwiches moved along the sandwich board as if they were on a conveyor belt

* There was an open dialogue between employees and customers to ensure my sandwich was made to their exact specifications

* The upgrade comments suggesting the "combo order"   were timely and solicitous and more effective

* The checkout was seamless. I got eye contact with the cashier including a smile and a thank you.

TOGO'S SANDWICH SHOP

Same scenario as above

* My sandwich maker was more interested in discussing some inside joke with another employee rather than serving me

* The sandwich maker serving the customer next to me completed his order and called out to the "floating cashier" for a ring up, but had to wait while another customers' sales transaction was completed.

* The sandwich maker had to wait longer as the customer searched for the right change, got his return change and finally picked up his sandwich tray and left the sandwich maker station. Only then could another customer be called up from the line.

* The sandwich maker on the other side of me was the manager. She called up a ring up halfway through the assembly and when the sandwich was finished and wrapped, the customer already had his change and left the station immediately. At least the manager knew how to do it, but obviously had not communicated that procedure to the other employees.

To the untrained eye, each sandwich shop looked busy and served their clients well. But from a productivity and customer service standpoint, SHOP #2 won on all counts. It was absolutely clear that each employee had been trained, evaluated and retained based on their ability to perform as individuals with a client and as a closely working team member to meet the customers needs and to do so in a purposefully productive manner without any sign of urgency. Make sure you open up a casual dialogue with the best manager and find some non-peak time to sit and discuss your observations and listen intently to the manager's response to how it was accomplished.

Does every minute count?

Obviously every minute does count, especially when you multiply those minutes by thousands of pet visits per year. It's also obvious that checking for the minute by minute savings on a pet by pet basis would be an impossible and annoying task for any manager, owner or employee.  Additionally, the level of detail presented above may be overwhelming to some salon owners who are struggling to get back to the fun side of grooming. But, read once, read twice and try to internalize the concepts of why "every minute counts" and start working on something that makes sense to you.   To eventually get through this process, you will need to integrate those concepts and numerous improvements into the work culture and job descriptions and then measure them against the standards established at the outset. Make sure you revisit and realign your improvements on a continuous basis. Don't do this alone. Include a key employee in your first attempts and build on small successes and eventually involve all employees in the process.

One last note: the "minute standard" is used as an initial measurement to relate your historical performance to your current performance and eventually to the expected performance brought about by your integration of the concepts and improvements described above. Ultimately the success you measure will result in the overall reduction of your payroll expenses as a percentage of your revenue (going from 52% to 50%, for example). With that profit improvement you can cut yourself a little slack, return some of the profits to the employees and enjoy the salon business once again.

Ed Carlson is a business consultant to the pet care and grooming industry and this is the first in a series of articles on the business side of grooming.

Copyright 2007 Find A Groomer Inc. All rights reserved