Bella’s
THE COMPANY
Bella's is a full service day spa and hair salon featuring a wide variety of spa treatments including full body massages, body scrubs and wraps, European facials, skin treatments, waxing, and complete varieties chemical services for the hair. Bella’s also features a retail department which specializes in unique custom jewelry. Bella’s flagship store and headquarters are in a city with a population of approximately 250,000 people in the southern United States. It also has spas/salons in four other smaller cities (all with populations over 40,000) in the same state. Last year, Bella’s averaged approximately 25 employees per store; annual sales last year were approximately $ 3,000,000, a decrease of 12% from the previous year. The company lost money last year for the first time since its initial year of operation. The success and growth of Bella’s has far exceeded Illa Fitzgerald’s (the founder and owner of the business) original expectations.
COMPANY HISTORY
The company was founded twelve years ago by Illa Fitzgerald, a former beautician/massage therapist who had worked in the salon industry since finishing cosmetology school at age 21. She used an SBA loan, investment dollars from five family members, and her personal life savings to fulfill her dream-owning spa salon. Her vision was to create unique company that offered a complete array of products and services aimed at creating and maintaining healthy minds, bodies, and spirits. Bella’s is now more than a decade old.
Illa fully recognized from the very beginning that her business/managerial experience was very limited. She was also fully aware that managing the day to day operations of her business had very limited appeal to her anyway. Therefore, her first critical decision was made three months before the salon opened- the decision to hire Lynne Gibson as general manager of Bella's.
Lynne Gibson had served as the general manager of Bella’s since its inception. Prior to taking this position, Lynne had worked at a major women’s clothing retailer, initially as a management trainee and finally as a regional manager. Before Bella’s, Lynne and Illa were not a close friend, were certainly acquaintances who had gotten to know each other professionally. Illa had shared her dream with Lynne and had often told her “you know when I do this thing, I want you to come run it for me.” Lynne never really gave it much thought, but when Illa made a formal offer, Lynne decided it would be a good move. She had been very successful in retailing- but the long hours plus the weekend demands had begun to take her personal life. A single mother of two, Lynne decided that this change would be a new challenge, and it would also enable her to be more successful in balancing family and career. From day one, Lynne basically was involved in or actually made all the managerial decisions at Bella’s. Though Illa was certainly the lead player in strategic decisions, Lynne was the ultimate decision maker for anything operational. Bella’s began with six employees: Illa, Lynne, three hair stylists, and one massage therapist. All were friends or acquaintances of the owner. A salary was offered with a promise of “as we grow and become more and more successful, I’ll make sure you’re rewarded for your contribution.”
A year ago, Lynn Gibson decided to leave Bella’s to pursue her Master degree in education. As one who was not only resistant to and often paralyzed by change, this greatly troubled Illa—so she managed to convince Lynn to remain as a consultant to the company while working on her degree. Lynn’s new role was to offer input and advice on any and all issues of Illa’s choosing. Prior to this point, the basic structure of Bella’s was: Lynn was The GM Incorporated; she also served as the store manager of its flagship location. Within her store, a Retail Manager and a Service Manger reported directly to Lynne. Additionally, the Store Managers at each of the other four Bella locations reported directly to Lynne. Within each store, individual store managers were the only employees serving in a supervisory position with each being responsible for all daily operational issues of his/her salon. All other responsibilities/decisions for individual locations are Lynne’s. This includes all purchasing, marketing, financial, and human resource decisions. Individual store managers did have the opportunity to offer informal input into hiring decisions for his/her store. The salon managers’ salaries averaged approximately $32,000 annually. Three had college degrees, and they averaged four years experience. Each began as a part-time sales clerk/ receptionist in salon. Bella’s offered a benefits package that was fairly standard for an organization of its size. This included health insurance (of which the employees shared in the cost of the premiums with Illa’s and Lynne’s being paid totally by the firm) and retirement (in which Bella’s made modest contributions.
T