Dianne Glasscoe Watterson, MBA
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About two years ago, I decided to institute a bonus system for my staff members. I told them there would be no more regular pay raises, and that future increases in salary would come from our bonus program. I thought it was a great idea that would help me keep salaries as a percentage of overhead at an acceptable rate. However, we've noticed a drop in production over the past year and have not hit our bonus goal for several months. Now, one of my key staff members has given her notice. She said she is unhappy with the pay arrangement. I'm devastated that she is leaving, and now I'm rethinking the wisdom of the bonus system I have in place. Do you have any thoughts about bonus programs that might help me?
Dear Dr. Jim,
It seems to me that the biggest problem here is that you failed to adjust your bonus goal when your business slowed down. The only way a bonus system is motivating is if it is attainable. If you are going to use a bonus system, you have to be willing to adjust it when downturns in the business cycle occur.
First, please understand that many staff members live from paycheck to paycheck. If they go for several months making $xxx and suddenly their pay is "cut" because of things they cannot control (such as the economy) and they do not get the expected bonus, the bonus becomes a de-motivator.
There are some realities about bonuses you should understand. First, everyone is not motivated by the same thing or to the same degree. While the possibility of extra pay for extra work may be motivating to some people, there are staff members who feel they are already giving 110%.
So the thought of working even harder is just not an option. The bonus opportunity may cause the business assistants to push clinical people beyond their physical limits through overscheduling. This situation could foster resentment between clinical and business staff members.
Second, using a bonus system to prop up a weak salary system is a bad idea. If a staff member leaves, it may be very difficult to attract a high-quality candidate with seemingly low wages, albeit a bonus possibility.
It would help if you put yourself in your staff members' shoes. Can you imagine how defeated you would feel as an employee if your boss announced that there will be no more raises, even if there is a bonus possibility? Such a pronouncement would make most staff members feel sad, demoralized, disgusted, and/or discontent.
Here is a list of disadvantages and caveats of bonus systems:
- Bonuses do not compensate for poor schedule control.
- Staff members come to expect the bonus.
- Bonus incentives should not be a way to prop up weak base pay.
- Some doctors become unhappy when the financial impact of a bonus system becomes a reality.
- When production and/or collections are part of the bonus formula, scheduling coordinators have been known to delay certain procedures or delay posting payments to the next month if the goal has already been met.
Bonus incentives can be a motivating force among staff members if:
- The bonus is attainable.
- The bonus is fair.
- The bonus is understandable and simple.
- The reason for having a bonus is to allow staff members to share the wealth when the practice is financially healthy, since they are such an integral part of the total practice success.
Evaluate the goal of the bonus system in your practice, and do not allow a "stale" bonus system to become a demotivator. If you would like a copy of an article titled "Bonus Systems that Work," send me an e-mail with "Bonus Systems" in the subject line.
Dianne Glasscoe Watterson, MBA, helps good practices become better through practical on-site consulting. Her book, "Manage Your Practice Well," is available for purchase at www.professional dentalmgmt.com. For consulting or speaking inquiries, contact Dianne at email@example.com or telephone her at (301) 874-5240.
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