Protect your investment: training agreements for your salon team

Hello, Phil Jackson here from Build Your Salon, bringing you the tools you need to master to build the salon business you deserve, and today I'd like to speak to you about the use of training agreements with your salon team. At some stage in every salon business, it's a worthwhile exercise to sit down and discover exactly what it is that you want your salon to be about. What is it you want to be known for? What is the shape of the thumbprint you want to put on the world? Ideally, we'd have this conversation before we even open our businesses, but I also know that most of the people that follow me have already started their business. They're already some entrepreneurs. So it's a worthwhile exercise, if you haven't done it already, to sit down with your business partner or your life partner or maybe even your team and thrash out together exactly what it is that you want your salon to be about. One of the things that we're known for is that we invest extremely heavily in our salon team's ongoing training and development. It's one of the things that I wanted to absolutely maximise was the amount that we would spend on external training so that we can upskill and motivate and inspire our team members to deliver the very best service possible. And I bet you're spending lots of money in your salon as well. So what's really important is that we protect that investment in the event that somebody decides to leave. And this is where something called a salon training agreement comes in. Two points before I carry on, though. The first is that I am not qualified to give you any kind of legal advice around agreements or contracts. And I think that if you think you can get brilliant legal advice for free on the Internet, you are probably heading for something of a fall. So my advice is always to consult with a qualified and indemnified expert before you make any changes in your salon business. And secondly, I'm not talking here around apprenticeship arrangements. In fact, we could shoot a whole series of recordings around apprenticeships and the ups and downs and pitfalls of apprenticeship. What I'm talking about here is the ongoing investment you're making in the development of your salon team. So, salon training agreements. Essentially, this is a contract between you and the team member where they agree to pay back some or all of the value of a training course should they leave in a period following the training.

So in my salon, our agreements last for 18 months and they're on what's called a reducing balance. So if you leave my employee after six months, a third of that training will be paid back already. And you'll owe me two thirds of the value that we invested in you. After 12 months, two thirds will be paid off and you owe me one third. And after 18 months, that agreement can be ignored. So it's called a reducing balance because the amount that they owe you reduces over time. And I suspect that if you try to enforce one of these agreements, the court would want to see that reducing balance arrangement. Because what it does is recognizes that you will have had some utility, some profit even from that training course as time goes on. So if you do send somebody on a new training course for a new facial, the court would like to see that you're taking into account that some people will have had that facial. You'll have had the payback from that training as time goes on. So the amount that the employee therefore has to pay you back by rights should be less as time marches on. Please bear in mind, though, that these are not binding on you. You do not have to enforce these agreements. And I very rarely do. But I do use them as a very useful tool at the end of someone's employment. And let me give you a couple of examples about how these agreements might be used to negotiate a much smoother end to someone else's employment. So we had one fellow who was working for me. He decided he wanted to leave and he gave us lots and lots of notice, much more than was ever required from his contract. He decided he was going to be leaving us at the end of July. But I had an awful lot of people taking holiday during August. So it would have left me very short staffed. What I did with him, he owed us about £800 on training agreements. So what I said was that I would rip those agreements up if he agreed to stay on for the extra month. Now, if you followed me for some time, you will know that normally I get rid of people as soon as they've decided to leave. But actually, he decided he wanted to try his hand at something else and was in fact leaving the industry.

So he couldn't do us any harm. He wasn't going to take any clients with him when he left. He agreed to work for the August, which did me a huge favour. And then I ripped up the training agreement and wrote that money off. A second example, quite a few years ago now, our assistant manager left. And he was a very strong personality in the team, a very popular member of the styling team. So when he left, I was very protective around our customers. So I managed to strike a deal. He owed us quite a lot on training agreements, nearly £2,000 in training agreements. And what I managed to do was get him to disappear for six months. So he'd left the salon. And I'm sure he would have spoken to lots of customers around the fact that he was setting up on his own anyway. But I managed to make a deal where he agreed not to be on social media. So he wasn't on Facebook. He wasn't on Instagram. He wasn't allowed to put any adverts in the local paper. I didn't want to see his face on posters anywhere. He literally disappeared off the radar for six months in exchange for me ripping up those training agreements. Now, the money's already been spent. So I was just basically looking to get the most out of that training agreement and protect my business in the best way that I could. And that's what he did. He stuck to his word, disappeared for six months. And I managed to get those customers protected from any marketing that he might have done. That bought me basically six weeks to impress them and make sure they stayed in the fold. And the final way that I think these are a really useful tool are I'm watching people's reaction when they're signing the agreement. Now, I know lots of you may have a clause around training and protecting your investment in your contract of employment. I would strongly encourage you to look at bringing in separate training agreements for every course that you send somebody on. And the reason for that is that you get to study their reaction. I don't just send these agreements out and get people to sign them when they're at home. I get them as soon as they're happy to sign the agreement with me. And when they pick up the pen, I'm watching them extremely closely to see whether there's any hesitation there. Because if you have somebody who's hesitating, the chances are good that you are going to lose that member of the team or at least considering leaving in the next 18 months. Now, obviously, because we're professionals, we can't do anything rash. We can't act on that information right there and right then.

But what you can do is perhaps dust off that little black book of people who might be looking for jobs in your salon. Perhaps look at your succession plans a little bit and who would take their place or would you replace that member of the team should they decide to leave. So not only are we protecting our investment and there are times when you might well just keep a little bit of payback to cover the cost of training that you sent an employee on. But also, it's a very useful tool for managing the end of someone's career with you. I hope that's been useful to you. If it has, please don't forget to subscribe because I do a broadcast like this every single week. And I would hate you to miss out on the content that I'm sharing. If you've already subscribed, I will speak to you again next week. Take care.