Increasing production through staff bonus systems

by Roger P. Levin, DDS

When I presented a seminar at the Chicago Midwinter this year, a dentist pulled me aside during a break to say, “Roger, you’ve talked about staff bonus systems many times over the years, but my budget is pretty tight. I really cannot afford a bonus system until the economy gets better.” I advised him that he should not be dissuaded from staff bonus systems because of the economy. I reminded him that bonus systems are not a giveaway to staff members. A properly structured staff bonus system awards bonuses only when production and collection targets are reached.

In fact, this may be the best possible time to implement a bonus system. Many people, including dental staff members, are struggling with higher fixed expenses such as gas and food. They have less spending money and are feeling frustrated. The opportunity to supplement normal salaries in a down economy can be a tremendous motivator for team members. For the dentist, a bonus system represents a remarkable opportunity to improve morale. With the constant demands of patient care, doctors are often at a loss as to how to keep their teams motivated. Even with the best of teams, a sense of complacency can settle in over time.

In the new economy, many practices are looking to increase production, decrease stress, and keep team members happy. Bonus systems give team members a strong incentive to work together. A team that works well together means less stress in the office and better customer service. A motivated team is more likely to reach the goals of increasing collections and production. When bonus targets are achieved, the team and the practice benefit.

Bonus systems spark commitment

Creating a well run and organized practice and implementing a bonus system are effective ways to inspire the dental team. The potential of a bonus brings the team together in a spirit of cooperation. Team members work hard, perform efficiently, and improve their skills because their collective efforts will raise practice production and result in bonuses. This type of incentive is an excellent way to foster a genuine sense of ownership in the practice among team members.

When practices implement a bonus program tied to practice performance, it becomes clear to team members that practice growth will directly affect their personal income. Because most dental staff members never have the opportunity to move up the corporate ladder, be promoted, or switch to another department, the bonus creates motivation that cannot be achieved by asking individuals to simply improve their skills. While each team member can certainly learn more about dentistry and receive some advanced training, remember that an opportunity to increase compensation matters more.

The change that a bonus system can bring to a practice is remarkable. Levin Group recently worked with a client who implemented a bonus system and witnessed his production increase by nearly 12%. When we spoke with this client recently, he explained that the bonus system was like a shot in the arm for his team. “It’s like night and day,” he told me. “They all found an extra gear and are performing better than ever.”

When is a practice ready for a bonus system?

Introducing a bonus system at the right time, with the right factors, is critical to the program’s success. Not every practice is ready to implement a bonus system. Where should your practice be for the timing to be right? Here are three clear indicators:

1. A practice must be profitable for at least six to eight months.
2. All practice systems must be working effectively before introducing a bonus system.
3. The doctor must be drawing a consistent, fixed salary.

Once a practice has met each of these qualifications, a bonus system can be successfully introduced. While the first two indicators may seem somewhat obvious, the third indicator may be a revelation to many doctors.

Doctors often do not realize that simply drawing a regular salary is a major contributing factor to predictable profitability. Some dentists are in the habit of deciding how much salary to collect each month based on their practice production and current needs. They may not be aware that this habit causes the practice’s revenue to fluctuate wildly.

Proper implementation of a bonus system

There are many types of bonus systems, and some work better than others. Sometimes dentists attempt to implement bonus programs in their offices, only to find that the result is confusion or complacency, depending on how the bonus system is structured. In these cases, dentists could simply decide that bonus programs do not work. This may appear to be true after a bad experience. However, it is not bonus systems in general that failed but rather:

• The dentist implemented the wrong type of bonus system. Employees were unclear about what they were working toward or how the bonus system worked.

Successful bonus systems adhere to the following four rules:

1. The bonus is based on revenue, not production. Bonuses based on production are ineffective because you cannot spend what you have not collected. The entire team needs to realize that revenue must be collected to run an efficient business.
2. The program must be easy to understand. If the bonus system is so complicated that staff members cannot track their progress daily, the system will fail to have any motivating effect. Explain how the bonus system will work during staff meetings before you implement it. Once it is in effect, post a chart in an employee-only area that tracks the team’s progress toward their bonuses.
3. Tie the bonus to team performance. Many staff members tend to view a bonus simply as extra pay that automatically comes their way. Thinking that a bonus will occur regardless of performance encourages a sense of complacency, hardly conducive to creating a more productive team. Team members must realize the bonus will only be earned when the practice meets set goals.
4. The bonus system is about the entire team. For the practice to meet its goals, everyone must contribute. When the practice does well, then everyone does well. An effective bonus system can help create an even stronger team, while increasing job satisfaction for both the staff and the dentist.

Leading the team

Remember, staff members cannot effectively work toward a bonus without the doctor’s guidance. As the practice CEO, the dentist must provide the dental team with clearly defined skills to accomplish established goals and achieve bonuses. The dentist must implement efficient systems that allow employees to excel in their performance. Developing powerful scripts for patient communication and providing training on all systems allow team members to grow in their jobs.

Good leaders motivate staff members to reach their potential. By reminding the team about the bonus and working with them to achieve it, the leader shows appreciation for staff members and helps develop an “inclusive” practice culture. Another important factor is to always create excitement. In every new bonus period, remind the team about what their possible reward is, post it in the staff room, mention it at morning meetings, and celebrate successes as they occur.

An ownership mentality

In an era where dentists have experienced decreases in production, a bonus system offers an excellent opportunity to grow the practice and build greater esprit de corps.

A strong bonus program can create an ownership mentality among the staff members, which can be a force that shifts practice production into higher gear. Over nearly 30 years, Levin Group has worked with thousands of practices and has repeatedly witnessed teams becoming highly energized by a bonus system. When this occurs, a vibrant practice culture is created that takes the office to the next level. Both team members and the doctor benefit from a properly implemented bonus system, where increased production, collections, and profitability provide rewards for everyone.

To learn how to run a more profitable, efficient, and satisfying practice, visit the Levin Group Resource Center at www.levingroup.com/gp. This is a free online resource with tips, videos, and other valuable information. You can also connect with Levin Group on Facebook and Twitter (@Levin_Group) for learning strategies and sharing ideas.