Dr. Michael Gradeless
How much am I worth? What should I be paid? Judging from my e-mails, this is the question that is asked most often by recent dental graduates. There are two correct answers to this question.
1) You are worth more than you are being paid. If you are not worth more than you are being paid, you are on your way out the door. The only valid reason an employer has for hiring someone is if he or she increases profit. The gap between what you are worth and what you are paid is determined by the amount of risk that you assume. The level of risk for each party is influenced by how much of your pay is guaranteed and how much is based on a percentage.
2) You are worth less than you think you are. Very often, new doctors look at their gross production and are amazed at what a great amount of money it is. Everyone realizes that there is also a big number called overhead. The number that is forgotten, however, is investment return. The doctor who owns the practice must be compensated for his or her investment in equipment, building, or leasehold improvements, and the investment in you. If you want to look at a really scary number, total the cost of four years of undergraduate education plus four years of dental school plus $300,000 to purchase a dental practice. Now imagine that, rather than spending all that money, you invested that much in the stock market at an average rate of return of 10 percent per year and worked those eight years for the phone company at $30,000 per year. Everyone in dentistry is underpaid, most especially the doctors who invest in their practices and create jobs.
If you are worth more than you are being paid and worth less than you think you are, how can you maximize your income while being fair to your employer? Here are three simple steps to fair compensation.
1) Formal growth conferences. You may feel you are producing a lot of dentistry, but how do you know if you are meeting your employer's expectations? A quarterly growth conference would be good; if it is not automatically scheduled at least every year, ask to schedule your growth conference tomorrow. The growth conference is not a salary review. Raises are not discussed. This is time to set up standard expectations and discuss the areas where you can help the practice move ahead and, most importantly, how will your progress be evaluated.
2) Raises based on production increases. All raises must come from increased production. The practice owner should apply 20 to 25 percent of increased annual production to increased staff compensation. This means that if productivity goes from $800,000 to $1 million, there would be $40,000-$50,000 allocated to the staff. The owner will allocate the raises based upon the individual contributions to the practice success. A 20 to 25 percent distribution of increased production to the staff will benefit everyone. Tying staff compensation to production will allow everyone to essentially write his or her own raises while allowing the owner to hold his or her staff compensation costs stable.
3) Chopping wood and carrying water. There is an ancient Buddhist saying. "Before enlightenment, chopping wood and carrying water. After enlightenment, chopping wood and carrying water." In dentistry, chopping wood and carrying water is the equivalent of confronting employee performance and managing the accounts receivable. If you are absolutely flawless in the performance of your procedures, the patient may still have a bad experience. We all work on improving our skills. When you have improved your dental skills to where you can place the perfect veneer and have achieved the Buddhist equivalent of enlightenment, your willingness to take on management responsibilities should be rewarded. The doctor who employed you can already perform great dentistry. He or she will value your willingness to chop wood and carry water within the practice.
The most important factor in determining your pay is how well you achieve the standards of your employer. If you have no standards of performance, request them. Your pay must also be based on an increase in total office production. Lastly, your pay must be based on your ability to improve the practice when you are not actively producing dentistry.
Dr. Michael Gradeless, a 1980 graduate of Indiana University, practices preventive dentistry in Indianapolis with an emphasis on cosmetics and implants. He is an adjunct faculty member at Indiana University, where he teaches the Pride Institute university curriculum of dental management. He also is the editor for the Indiana Dental Association. Contact him at (317) 841-3130 or e-mail to [email protected].