Staff motivation and compensation

April 1, 2004
Installing a bonus plan takes a leap of faith. The reward will be exponential increases in staff efficiency and practice profitability.

by George Salem, DMD, FAGD

If you talk with dentists about their practice frustrations, most will describe staffing issues and, more specifically, compensation, as one of their most pressing and least favorite concerns. One of the most perplexing and daunting tasks in any dental practice is the hiring, training, and motivation of staff. If we were to somehow secure our respective "dream staffs," our lives in dentistry would be vastly more pleasurable and fulfilling on several levels.

With the exception of that 1 percent of the workforce that arrives fully equipped to work enthusiastically and efficiently, regardless of the compensation or work conditions, staff members require proper education and a generous amount of motivation to realize their potential as contributors to the success of the practice. Like it or not, we depend on these people to support us in nearly every aspect of our practice.

Many dentists believe staff members can determine to a great extent our day-to-day stress levels, as well as the practice's ultimate success. In reality, we determine these aspects. It is our ability to educate and, more importantly, to motivate our staffs that actually determines stress levels and practice prosperity. Yet, we will analyze and study various bonding agents ad infinitum and not spend one moment developing or motivating the people around us who can have a profound effect on our practices and lives. The only point more remarkable than this is that staff members actually want to be trained and motivated to positively impact the practice and their compensation. When we as dentists and business owners evade this important responsibility, we forfeit so many of the benefits that a cohesive, highly focused staff can provide us and our patients. We also forfeit our responsibilities as mentors to our staff members in the professional and personal growth arenas. In fact, one of the greatest pleasures I have in my role as an employer is the cultivation of talents and work ethics in staff members that go far beyond their initial expectations.

When I began my practice in 1989, one of the surprising pleasures for me, as an owner of a small business, was distributing paychecks to my staff. It made me feel downright magnanimous that I actually created a few jobs in a retracting economy. As my practice grew, I required continual advancements in the sophistication of my staff members' skills. This resulted in the replacement of certain staff members and the enhancement of the skills of other existing staff members. I realized at that time that I was not going to be successful in reaching my practice goals with average dental office employees. It was clear that I had to provide not only jobs, but actual careers that would compete favorably with careers in other industries that potential staff members might consider. I also realized I had to do this within parameters that would allow my practice to be profitable.

Now for the multi-million-dollar question that confronts each of us as dentists and employers: How do we attract, develop, and retain a staff that is no less than an unstoppable force in the quest for ever-higher practice success, whatever your vision of success may be? Oh, and don't forget, we have to work within our budget.

To answer this important question, you must first understand the motivating forces common to all of the potential candidates for employment in dental practices. For example, we all want acceptance by others around us, respect from our peers, and, yes, the freedom and security that money provides. The more money we have, the better. When we reflect honestly on why we begin every morning with the hope of improving our skills, our knowledge, and our practice systems, we have to conclude it is because we have something to gain — usually money, but sometimes more time off or a higher level of care for our patients.

Unfortunately, staff members have nothing whatsoever to gain from these efforts if they are compensated solely by a traditional hourly wage plus benefits program. This is a recipe for staff complacency at best and continuous turnover at worst!

Another prickly area in the staff compensation equation is the raise process or annual review. How much of a raise is justified and how often should it be given? Yearly? Whenever the fee schedule increases? Whenever "the practice can afford it?" And when can the practice afford it? Which staff members deserve a raise and which do not? Do we give raises only to those staff members we "get along with" and exclude the ones we have personality conflicts with? Should the raise be a specific dollar amount or a percentage of salary? Do hygienists automatically get raises because they are in short supply? Do we give raises only when someone threatens to resign? I could go on and on with these necessary questions.

Recently, I attended a lecture sponsored by our state dental society about the "art and science of staff compensation." It was given by a partner in a law firm and, as such, it was so complex and convoluted that you would have had to hire a full-time staff member just to administer the plan! Ladies and gentleman, we are talking about dental offices with an average of 3.5 staff members! It does not have to be that complex.

If you would like to bring simplicity, fairness, and an overwhelming reason for staff members to go above and beyond, you need to institute a bonus system. Not just any hastily fabricated bonus system will do. It must have certain features and boundaries so that everyone — the staff, the doctor, and the patients — win.

Let me share with you those boundaries and parameters that are critical to the effective utilization of a staff bonus system.

1)The bonus plan must have long-term positive effects on every aspect of the practice. These areas include practice profitability, patient service, treatment quality, staff efficiency, and staff loyalty to name a few. The enhancement of some of these aspects at the expense of others will not be beneficial in the long term.

2) Although the positive effects of a bonus system must be long-term, rewards to the staff should be given on both a short-term and long-term basis. Long-term bonuses have the ability to shape the long-term philosophy, skills, and even the disposition of staff members. However, they do not promote the necessary creative thinking and risk-taking activities that result in rapid and consistent improvements to multiple-office systems. It also is difficult for staff members to stay focused for an entire year to earn a bonus. A better way of saying this might be: It is much easier to stay focused when the bonuses are distributed often and the staff person's new skills and improved performance are reinforced repeatedly over shorter time spans.

Timing of the bonus

In our practice, we give a yearly bonus based on 28 percent of office collections dedicated to staff. If the total of all wages, taxes, and benefits are less than 28 percent, the staff is rewarded with a bonus (split equally among all full-time staff members) which brings the total compensation to 28 percent. I chose the 28-percent coefficient based on historical percentages in our practice and the requirement that we had to actually improve collections before we paid any bonuses. Otherwise, there would be no benefit for the practice to have the bonus system. We call this bonus the "corporate bonus." The corporate bonus addresses the long-term molding of staff members' (and my own) skills, disposition, and philosophy.

One of the greatest advantages of this plan is the philosophy that is created among existing staff members that the fewer additional employees hired, the better. It does not take them long to calculate that each additional new hire detracts from the bonuses of the existing staff. It will amaze you how creative they can become to minimize staff size. When was the last time a staff member or even your entire staff asked you to terminate someone because that person's inefficiency or philosophy was detracting from their profitability (and indirectly, that of the office)? Without this type of bonus system, existing staff members would rather hire more employees to reduce their work load.

In addition to this bonus, we also have what we call the "world record bonus." We pay each full-time staff member a net check of $300 for each month in which we break the record for monthly collections. However, we must break the record by more than the total world record bonus payment for that month. As you can see, this is an ever-upward, moving collection target. To repeatedly make this bonus, we must all take part in the type of creative thinking that I explained previously.

3) The plan must not place the practice in financial jeopardy. Obviously, if the practice must borrow money to pay the bonus or the practice cannot afford equipment investments, the bonus system must be altered.

4) The doctor must reserve the right to alter the bonus system, but only after the plan year has ended. There is no faster way to deflate the enthusiasm of an incentive-motivated staff than to change the bonus system in midstream because the doctor feels he or she will be paying too much. Design a well thought-out plan and stick to it. Make changes, as necessary, only after the bonuses have been paid for the year.

5) The bonus plan must not discriminate between departments (hygiene vs. assistants vs. front desk). All staff must have equal access to the pie to promote true teamwork.

6) Staff members not actively employed at the time of the bonus distribution do not receive bonuses. If an employee leaves the practice before the bonus is distributed, that person is not eligible for a bonus. Employees must work the entire plan year to be eligible for bonus pay.

7) The plan must be dependent on practice collections (not production). It should not be based on profits after overhead and capital investments. Another sure-fire way to diminish staff enthusiasm and absolutely kill the effectiveness of the bonus system is for the staff to work diligently for the entire year with the hope of securing a bonus, only to have the doctor purchase a laser and usurp the staff bonus.

8) Do not pay a low wage with the idea that the bonus might bring an employee's total compensation back to average. You will not attract top-notch staff members with this strategy. You should also make certain that all new hires and existing staff understand that there are no guarantees of any bonuses.

9) Structure the bonus system so that it is attainable. Nothing is more demotivating to a staff than a bonus that they perceive to be unattainable (and they will all believe that it is unattainable at the outset). Conversely, nothing is more motivating to the staff than a bonus actually paid!

10) Make the bonus plan simple for the staff to understand and easy for you to calculate. It is nearly impossible for staff members to get behind a bonus plan they cannot understand. We doctors also have better things to do than spend a weekend crunching numbers with our accountants in order to calculate the bonus.

As of this writing, I have been in practice for 20 years and we have had a bonus system on top of strong wages and an extremely generous benefit plan for the last five of those years. I am proud to report that my staff has earned bonuses each and every year since the bonus system was employed. The corporate bonuses alone have ranged from approximately $1,100 per staff member to more than $5,200 per full-time staff member, depending on the year. The world record bonus is typically secured two to three times per year.

Raises and reviews

The bonuses are in lieu of any "raises." This is the epitome of fairness. If the practice does well and everyone works efficiently, staff members secures their raises by virtue of the bonus system. In fact, this is actually more beneficial for the staff because they receive their "raises" in one lump sum at the beginning of the next fiscal year. With traditional "raises," they would receive their increase slowly over the course of the entire year. Conversely, if the practice does poorly and we do not

work efficiently, the office cannot afford raises and none are given. This has never happened, and nothing would make me happier than my staff securing big, fat bonuses every single year until I retire!

When I graduated from dental school, I could not understand why staff members in every practice were not "chomping at the bit" to do their best each day. After all, we have to be awake somewhere anyway. We are all different, with varying goals and dreams and life philosophies.

Nevertheless, we also are very much alike. We all share the desire to live a secure and fulfilling life in a country with so much abundance for us to capture. This common trait is best utilized for our common good when we allow people to be rewarded handsomely for their accomplishments.

The changes in my practice due to the positive changes in my staff are profound. They have grown in ways that they could not have predicted, and my practice has grown in ways that I could not have foreseen. In the process, we have collectively created not merely "jobs at a dental office," but careers at a highly sophisticated and successful multispecialty group dental practice.

Each of my staff members who began employment in my practice at a young age will likely retire with dignity as a millionaire due to the corporate retirement plan that their efforts allow me to generously fund.

Putting a staff bonus plan in place is a leap of faith. Installing it in a practice that the dentist perceives to be already running smoothly is daunting. I took that leap of faith five years ago because my practice was proceeding exceptionally well and this seemed like a logical, rational step in the further development of my staff and, therefore, my practice. I can confidently report that I would never go back to a non-bonus compensation system as a result of my experience. A small leap of faith in the motivating forces common to all people has resulted in a huge amount of growth in every aspect of my practice, as well as allowing me to provide real careers to my staff.

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