What’s it like to have to recruit for commission based jobs? Find out in this interesting interview with Hair Cuttery’s VP of Human Resources, Gustavo Serbia.
Check out the Hair Cuttery career site at HairCutteryCareers.com
TRANSCRIPT
Hello again, RecTechies. Welcome to the only podcast that helps employers and recruiters connect with more candidates through technology inspired conversations. Current technology is the key to hiring great talent and that's why this show exists. All right, Gustavo Serbia is the Vice President of Human Resources for Hair Cuttery, a retail chain in the beauty space with over 5,000 employees across 10 states. There he leads the planning and execution for the entire employee lifecycle, including employee engagement, compensation benefits, learning and development, employer relations, recruiting, and employer branding. By the way, you can check out their career brand at haircutterycareers.com afterwards. And Gustavo, welcome to the show, it's great to have you.
Gustavo Serbia:
Thank you. Thank you for the invitation, Chris.
Chris Russell:
Excellent. Yeah, we met in Boston, at the HRU Christmas party there and got to chatting and found out you have some interesting stories to tell around recruiting, so that's why I asked Gustavo on the show today. Are you ready for a new year of recruiting? What's in store for 2023 for you guys?
Gustavo Serbia:
Oh yes, definitely. We're certainly looking to improve over 2023. We still think it's going to be a difficult hiring environment. I think a lot of people expect things to get better after COVID. I'm of the mentality that things were not better before COVID. Certainly they were better than COVID, but it's not like we were all able to hire all the positions. I think just COVID accelerated that and made it worse. So internally, we have reset expectations in the fact that the market will continue to be challenging for 2023 and 2024. So we're setting goals based on certainly doing better than 2022, but we are holding back a little on the optimism that we originally had in 2022, at the beginning of the year. "Oh, we're going to do much better than 2021." And then we realize, "Oh crap, it's not turning out to be the case."
Chris Russell:
Such is recruiting. So give us a sense of your hiring needs on a yearly basis. How many people do you hire, and then breakdown positions as well. Talk about that a bit.
Gustavo Serbia:
Yep. We are in the business of hiring hair stylists, hairdressers. So 99% of the hires that we do are specific to finding hair stylists. It doesn't matter if it's a recent graduate that just obtained their license or somebody with 20, 30, 40 years of experience. We hire them all. If you have a cosmetology license, we want to hire you. We do some hiring for receptionists, but just a few roles, because not every salon has a receptionist. We hire some, what we call field leadership role. Think of district managers, regional managers that oversee a number of salons or regions or district. We hire some of those also. And then we also hire a few corporate roles. I'm assuming that if we grow and we're able to successfully grow as a company, then we will be hiring more corporate roles, be it in finance, HR, marketing, IT. But our main bread and butter, day-to-day is cosmetology licensed stylist.
Chris Russell:
And how big your recruiting team there, at Hair Cuttery?
Gustavo Serbia:
So we have 14... Six and six, yes, 14. It's a team. The recruiting team is 14. We have a group of recruiters whose main focus is sourcing and interviewing. And then we have a group of, what we call coordinators whose main job is some of the admin work around moving people in the funnel, following up with candidates that are holding the funnel for whatever the reason, extending job offers and a lot of follow-up with hiring managers. What's the status of this one? Do you want to proceed? There's some coordination around the interview schedule, although we're looking to automate that also as much as possible, both what we call the prescreening stage and at the recruiting stage, at the hiring manager stage, so that there's no manual intervention in scheduling those.
Chris Russell:
So these stylists, you told me at the event we met, that these are commission only roles. So that's one of the more challenging things to do in recruiting, is to recruit for a commission only position. Tell me how you guys approach that, and what are some of the challenges around recruiting for those roles?
Gustavo Serbia:
This was completely new to me, because I spent a lot of my time in hotels and although we had some commission roles, it was not the main focus of the hiring. So I needed to understand what it means. Luckily, the industry is also known for paying commissions. So it's not like we are unique in the sense that we are the only one paying commissions, although we're probably the only chain that does commission based pay for both services and products. A lot of competitors within the industry, they do products. If you sell, "I'll give you $10 an hour and 10% of whatever you sell." In our case, it's straight commission. We do apply the 7(i) exemption under the IRS for compensation purposes. But because the majority of the positions are commission based, we really have to have a conversation about what compensation looks like, right from the get-go.
So what I've learned and what as a team we have built is, it is not enough to say, "Here's what the percentage is", but it's really walking you through what is the potential and how you actually get there. Because the premise is that when you are talking to most stylists, but I think people in general, particularly hourly employees, but even salaried, everybody has a number in mind. This is the number that I need, $12 an hour, $20 an hour, $30 an hour, or $1,000 a week. Whatever that number is, we can't be presenting our compensation plan simply from a percentage standpoint, because most of us are not great at math, including me. So if I tell you a percentage, you'll go, "A percentage of what?" "Oh, what you sell." "Okay, but how much do I sell?" "Well, it depends on what you produce. It depends on your effort, et cetera."
That needs to be really simplified as much as possible. So what we try to do is tie what the percentage might be, to the number the person is expecting. So what number would you like to make? $15 an hour. Well, here's how you get to $15 an hour, $20 an hour, here's how you get to $20 an hour. Because although the industry, you have a lot of people that are commission based, unless you've done it for years and years and years. And the reality is that most of our hires are entry levels. So they're newer to the industry.
The reality is that we have to break it down a little bit further. So that translation of that hourly wage is where most people's mindsets are at. So we try to tie in our commissions to that hourly wage, but obviously with the potential that it can go even higher than that, based on your rebooking abilities, your ability to build the book. So our recruiters understand that in order to successfully attract a lot of people, just throwing out percentages will not cut it. You have to really tie it in to what is the expectation the person has and usually is an hourly rate.
Chris Russell:
Are these full-time employees or they independent contractors?
Gustavo Serbia:
No, in our case, they're actually full-time employees. So they work for us. They're hired by the company and most of our employees are actually part-timers. The industry is known for people that prefer to work part-time. That's another consideration as part of the equation, because now, how do I get to a higher commission when I'm working 25 hours a week or 27 hours a week, because that's what I want to do. I don't want to be working 40 hours a week. I have kids to take care of or pursuing other interests. But it is an industry where a lot of the stylists are looking for that flexibility and that means working less than 30 hours.
Chris Russell:
Gotcha. Do they get paid time off at all? And also, is there any draw for them as a upfront payment there?
Gustavo Serbia:
So I think it is. I think everybody is looking for those benefits. But again, going by what the industry offers, a lot of the industry are small salons, let's say a one owner salon that has other stylists. So there's not a lot of benefits that are offered within the industry. A lot of the salons are franchises. All of our salons are corporate owned, so we own all of them. So we do offer benefits including PTO, medical, dental, vision, et cetera. So that helps us differentiate ourselves against the competition. At times... Not at times. I think most of the time compensation is what drives the decision, most of the time. I think compensation is still in the name of the game. While people may be looking for culture, environment, teamwork, et cetera, the reality is that compensation, from what I'm seeing remains at the top. And then they want to know, "Okay, so now that my compensation needs have been addressed, tell me what you have to offer in terms of benefits." So we do offer them, even though the industry is not necessarily known for offering a package of benefits.
Chris Russell:
I got a look at your career side here and you lead with that fact, says, "Join the industry's highest paid stylists", is your tagline there I guess. And you talk about this compensation underneath. Interesting. Okay. I want to ask you about your recruiting technology stack, because you have Paradox in place here, but first let me ask you about sourcing. What's the sourcing strategy? Give me a sense of what you guys do on that side of the house.
Gustavo Serbia:
So our stylists, for example, we stay away from LinkedIn. Our stylist are not on LinkedIn. We may find corporate roles of course, some of the district managers, people that have been in retail that want to be a district manager or a regional manager, maybe a salon manager we can find on LinkedIn. But transparently, we do very little. We have a presence on LinkedIn, just because I call it as a necessary evil, you need to be on LinkedIn, because there's nothing else out there. So we're there from a presence standpoint, but we really do most of our sourcing through referrals, rehires. There's a lot of churn within the industry. People like to jump and try.
Chris Russell:
Boomerangs are also common.
Gustavo Serbia:
So hires for us are extremely/... Yep, boomerangs. And then beauty schools. So we spend a lot of time on beauty schools, because that's probably the largest pipeline that we will find. [inaudible 00:13:13]
Chris Russell:
How do you work with those schools? Just stroll down that for a second. How do you work with those schools? What do you do? Do you go in house? Do you have relationships with their career people? Give me a sense of how that works.
Gustavo Serbia:
It's probably no different than college recruiting. I think the difference, and I've done college recruiting in the past, I think the difference is that the student expects or wants more hands-on training than a pitch. So instead of going and saying, "Hi, I'm Gustavo from Hair Cuttery and here's what we have to offer." The students prefer, generally speaking, that you are giving them a hands-on experience about being a stylist, be it a technique on how to do a particular hairstyle, things around trends that may be happening in the industry, versus trying to sell them on who we are as a company. Where when I was doing college recruiting, it was a lot more about what we do as a company, what we have to offer as a company. That's what most college recruits were looking for. In this environment, they're really looking for the hands-on experience, because at the end of the day, that's really how they make money is, by the more I learn how to do hair, color, cutting extensions, whatever the services, that's what they really want to know.
So we partner with schools across the states that we operate, and then we establish strong relationships with the directors, the instructors. I wouldn't go to a school, because I'm not a hair stylist, so frankly there's nothing of value for a stylist to hear me as the head of HR, talk about Hair Cuttery family of brands. They really want to hear about stylists. So there's a lot of stylists want to hear from stylists, or higher stylists. So we try to take that approach as much as possible so that they can feel that connection from the start. They can see themselves and say, "Well, I can be that person in three years or four years."
Chris Russell:
Yeah, very interesting. So let's talk about your recruiting technology. I know you have Paradox in place, but what other tools here do you guys have in-house as far as a tech stack goes?
Gustavo Serbia:
Yep. So we just partnered with Paradox a couple of months ago. So that that's a relationship that is still in development, so far, so good. Certainly outside of Paradox, we currently use ADP for our normal part of the onboarding, because we do onboarding within Paradox. Outside of that, we use HireEazy. So HireEazy is a sourcing tool that we're using, and then that's it. From a technology standpoint, from a recruiter technology standpoint, I spend my day in Paradox and HireEaZy. Those are the two tools that I use.
We spend quite a bit of money on the recruitment marketing side. We have partnered with a firm and we do a lot of advertising through social media. We don't do radio, at least not yet. We don't do TV. We try to go where we believe the stylists are at. Typically, Instagram, TikTok is growing more and more as we go, Facebook and like I said, not in LinkedIn. So from a technology standpoint, we have explored adding other components that we are considering. We're not considering a traditional ATS for our environment, a traditional ATS, ISEMS, Taleo, et cetera. It would be a waste of money for us. We don't need it. We've streamlined the entire process-
Chris Russell:
Probably make our process harder if you do that?
Gustavo Serbia:
It would make it harder. It would make the experience both for the recruiter and the candidate much harder. We decided that we can streamline the entire process and decided to, we're going to go all in with Paradox and remove anything that is not necessary from the process. Automate, for example, the self-scheduling of interviews, to try to remove fingers and move it faster. And now we're considering other options around, for example, a 1-800 number so that people can talk to somebody right away, versus having to schedule. We've done all kinds of analysis to know when people are looking for jobs, and we do have a group of stylists that are looking for jobs after 9:00 PM. So we're exploring how do we offer 24/7 coverage, obviously considering the cost of having somebody available 24/7. So we're exploring different options that will probably involve some type of technology. We're just assessing what that will look like.
Chris Russell:
Well, and in a year or two, you might have one of those AI recruiters at your side there and they can take those phone calls at night, right?
Gustavo Serbia:
Yeah. Certainly the challenge that we were facing is, we need recruiters. So even if we were able to automate some of the process, sales scheduling of interviews, for example, we need recruiters to source and we need people that understand at a minimum, the entire compensation structure, to be able to speak to it. Right now, our recruiters are prior stylists, so they understand what it is to be a stylist and getting a license and taking the necessary courses to obtain that license and the waiting periods, et cetera. So that is a plus, because they're able to speak on a peer-to-peer basis to individuals. So even if we were to put AI, which AI can mean many things, but in my mind when I think of AI, I'm thinking of a bot or an automated system that is able to do X, Y, and Z.
And to me that's different than automation, because automation is, in my mind, is the removal of hands from a process. So AI can help you do partial automation, like Paradox can help us now answer basic questions, like do you offer benefits, or what are the hours of operation, or what are your compensation plans? Where are you located? Basic questions. What AI cannot, at least at this stage of the game, is answer more specific questions that are more unique to the individual. So we are in a learning process of saying, "Okay, how do we move from that general level of answering basic questions to a much more personalized experience? And can we do that through AI?" That's going to take a little bit longer, because the AI needs to learn to be able to literally make a change or a decision on the spot based on the question, versus being a prescribed set of questions.
For example, if you ask a question that Paradox is not set up to answer, it says, "I don't know how to answer that. Do you have any other questions?" That's a limitation right now with the current AI technology. It may evolve in a year or six months or two years, but even if we get there, we have made a decision that we need recruiters, people hire people, and while we are able to eliminate a lot of steps from a traditional hiring process, be it backgrounds, be it references, for example, for us, we don't do references. We still need that individual to answer that specific question that an AI cannot answer.
Chris Russell:
Yeah. I want to ask about the speed of hiring, Gustavo. It's something that I've been harping on for many years now, and I was just talking to my daughter the other day, job hunting, and she was pulling her hair out. She's 19, so I'm trying to explain to her, most companies suck at recruiting, but she applied to 14 jobs in last week, heard back from one company. And I had no answers for her, all I could say was that these companies suck at recruiting.
Gustavo Serbia:
Yep.
Chris Russell:
When are they going to get it? When are companies going to realize the speed of the process is so critical now. These kids coming out of college now, they expect simple, quick processes when it comes to applying for jobs and getting hired these days.
Gustavo Serbia:
I have the same discussion with my daughter. She's like, "Can they at least respond, even if they don't hire me?" And similar to you, I said, "Look, most companies are not set up for that." And I've been around the block a bit to know that for this to change, the problem is not recruiting, believing that it has to change. It's really executives. There's a cost associated with it. You have to be willing to consider what may not be... At least on the surface, there's certain things that you can see in a P&L and read in a P&L. And for a lot of the companies out there, that delay, it's not something that you can put a dollar amount. Now there's a lot of consultants and companies that say, "Oh, the cost of turnover, the cost of delays is how much it cost you."
But for most executives, because they don't see it in the P&L, they don't feel the pain. And because they don't feel the pain, they don't think that it's really a problem. So that's why I'm saying that recruiting, recruiting doesn't have to make the change, because recruiting sees it, they feel it every day, but it's hard to translate that into a dollar amount that an executive goes, "Oh, I see what you're saying. So this is how much it is really costing me." Because there's a lot of skepticism and cynicism and executives out there say, "Oh, consultants are just trying to make money, so they're just making up numbers to try to make me believe, but I don't see it on the P&L." That's the same issue with turnover. So I don't know what it will take. I think it will be a gradual process anyways.
Not everybody jumps on the bandwagon immediately, number one. Number two, there's companies of different sizes and different beliefs. I have to admit that I am lucky, because I came to an environment where immediately from the CEO, to the CFO, to the head of operations, everybody was on the same page of saying... Because our stylist produced money for us. So I don't have to convince the CFO that the faster I put somebody behind the chair, the better it is for us, right?
Chris Russell:
Exactly. Yeah.
Gustavo Serbia:
I didn't have to sell them on that. Where in other industries you have the difficulty of, actually you have the opposite, where a CFO [inaudible 00:25:10] hold for 30 days. Can you hold on hiring somebody for 30 or 60 days instead? Right here, I never hear that. It's all, "How quickly can you move?"
That's why if you go to our site, we promote, we want to have you behind the chair in three days. So I'm in a luxury position that a lot of people are not in the industry, that I don't have to sell them on speed. And we are also in such a tight labor market that I don't have high number of applicants per job that do not allow us to respond. Everybody gets a response from us. And I think that's the minimum, even if it's an automated, people need to know, "Okay, I applied, they told me no." I think it's a hard sell in other industries simply because man, it's like many things. Until you're in it, you just don't feel it, and it doesn't translate financially. We can discuss all we want about it, how it impacts the bottom line. It's like culture, "Well, show me on the P&L. Where is that?"
Nobody can, not even the big consulting firms that have done millions of tests and exercise, everybody puts an estimate. Nobody can guarantee you. I'm yet to find a consulting firm out there that says, "I guarantee that I will improve your culture by X amount." Nobody can do that, because it's all based on the most intriguing variable in the world, which is humans. And unfortunately, most of the executives are driven by numbers. So that's what they're looking at primarily. So there has to be a shift to where the intangibles not necessarily have a dollar amount attached to it, but the intangibles are relevant and important to the executives.
Chris Russell:
Yeah. Good stuff. Gustavo, as we wrap things up, I want to again, appreciate your time today for taking the time out to talk to us, but are you hiring your crews today? And if so, what do you look for when hiring them? And how do they impress you?
Gustavo Serbia:
Right now, we're not looking for recruiters, certainly fully staffed, but if we were to be looking for recruiters, the conversation internally is always, "Do you hire a stylist and convert them to a recruiter, or do you hire a recruiter who has done recruiting, and then they learn the industry?" I'm open to both. I think both can do it. I'm not married to one or the other. Certainly a stylist will be able to speak to our compensation plans, what it is to be a stylist. They may or may not be able to speak to what happens at the salon, because they're not at that particular salon, but they have an idea of what happens. But they may not have the skillset to be hunters, to really go out there and do the chase. Even though a stylist on a commission environment, the way they make money is by being hunters.
Meaning how do I increase my rebooking capacity? How do I sell more? How do I find more clients? So there's a hunting mentality there, but a hunting mentality, just because you are doing that doesn't mean that you want to do that forever. That's why not everybody can be in sales. So we're open to both. And it really comes down to, who do we find? We just hired our first... Last year, our first person outside of the industry, who had been in recruiting. And we found no difference in the difficulty or the learning curve between the recruiter and the stylist. So that's why we're open to both. So it really depends on what is in front of us. What I do say to stylists that are interested in recruiting is that a lot of them come and say, "Oh, I do a lot of hiring."
And when you look at it, they're hiring three or four or five people a year. It does not compare to have to do it day in and day out, being rejected 70% of the time. So it's a different ballgame. And we actually have one person that used to be a stylist and became a recruiter, and she was doing a lot of hiring and she was like, "Oh, this is definitely different than hiring at the salon level. Because at the salon level, we have other responsibilities that you can say, well, I'm doing this too." Here, you're solely hiring. So if we were to be looking right now, we would just try to find the best possible person that would fit the... But needs to have a little bit of that hunting mentality, sales mentality, and be comfortable with rejection.
Chris Russell:
Good stuff, Gustavo. Well, getting checked on at haircutterycareers.com and Gustavo Serbia, I want to thank you for coming on the show today. It's great to catch up again, and thank you very much for the knowledge drop in the air window. We appreciate it.
Gustavo Serbia:
Absolutely. Thank you, Chris. Take care.
Chris Russell:
That will do for this episode of the RecTech podcast. Be sure to follow us on the socials, Facebook, Twitter, LinkedIn, via the @RecTech media handle. See every podcast, video blog we publish. Thanks for listening everyone, and remember, always be recruiting.
