by James R. Pride, DDS; Amy Morgan; and Mary Lynn Wheaton
Dr. Thompson had expanded and improved her practice, but much more was possible! Starting the second year of her management program, she developed a new annual plan. Under her consultant's direction, Dr. Thompson involved her staff in setting the goals. This strengthened their commitment to achieving those goals and opened the door to a self-directed team environment.
The new plan set a production goal of $699,714, a 27 percent increase over the prior year. The staff had been indispensable in achieving success the first year; now they would need to stretch their abilities even farther as a group. How should Dr. Thompson reward past achievement and motivate the team to new success? The first item to address was compensation.
When staff members feel a lack of control over compensation, it leads to job insecurity and they will perceive no amount of money as enough. Dr. Thompson learned how to take the arbitrariness out of staff compensation and link it to increases in production, collections, and demonstrated skills. To do this, she set up a system of expectations and accountability. She established clear, reasonable, and challenging expectations for each job position. The pay raises that staff members earn are now based on how well they meet these expectations and the effect on the practice's bottom line. This gives each staff member control of her own compensation.
Dr. Thompson set aside a "salary pool" - a specific, budgeted amount of money to be used for the staff's pay increases, based on increased collections from the previous year. This amount ranges from 10 to 20 percent of the increase in collections. Individual performance is now linked to an increase in profitability over the prior year.
As part of the larger compensation package, Dr. Thompson also established a 401(k) retirement program that allowed her to contribute the $40,000 maximum toward her own pension and a percentage toward that of her staff. With the 401(k), she and her staff contribute significantly more than they could in their previous plan. Benefits in addition to wages are an important way to attract and maintain a professional team.
Prior to issuing raises, Dr. Thompson held a "growth conference" with each staff member as a forum to discuss job performance and growth opportunities, based on the practice vision. When held separately from a salary review, a growth conference helps take the issue of money out of the conversation, focusing on future development instead. After discussing growth opportunities, the doctor and employee mutually agree on a set of expectations to be achieved in the future. The tension of "Will I get a raise?" does not cloud the conversations.
Based on the salary pool created from a portion of increased collections, Dr. Thompson determined that each team member could obtain a raise up to 10 percent of the employee's prior year gross income, dependent upon the individual's meeting certain criteria:
•Basic job tasks performed adequately and consistently as outlined in the job description
•Enhanced teamwork, such as taking out the trash, helping set up trays, filing charts, or otherwise pitching in to assist
•Acquiring three new skills (one verbal, two technical) chosen from areas of improvement identified at the growth conference
For example, the three new skills for chairside assistants were verbal skills for "debriefing" the patient after the appointment, A properly entering data on new chart forms, and A mastering new techniques and materials used in the practice. The three skills for hygienists were verbal skills for influencing patients to keep on a proper continuing-care schedule, A preparing the patient for the doctor's exam and what to anticipate, and A improving diagnostics.
Dr. Thompson evaluated her staff members individually and privately, then discussed the percentage increase merited and what it was based upon. When staff members failed to earn the maximum percentage increase, Dr. Thompson explained why and how it could be achieved in the future. As a result, the staff members were excited about the raises, believed they were fair, and were motivated to continue improving.
"Dr. Thompson didn't just give me my raise," said one employee proudly. "The practice profited, and I earned it."
"I like the structure," said another staff member. "The doctor and I know what I do well and what I need to work on, so it's very clear. Her feedback is constructive. We both see improvement, which gives me self-confidence. No other dentist I ever worked for took this much time with me. I have grown from this program."
Dr. Thompson's compensation also improved. "I was moving ahead!" she recalled. "Before I established an effective pension plan and knew how to give raises that I could afford, I felt stagnant regarding financial issues. Now I have a great sense of security."
With confidence rising, Dr. Thompson and her staff were poised to meet the challenges of their ambitious new annual plan. Next month, more adventures!
For details on educational materials, seminars, and management programs, call Pride Institute at (800) 925-2600.
•Reward the staff with raises derived from a portion of the increase in collections from the prior year that they helped to achieve.
•Establish clear-cut expectations for the staff to meet in order to earn pay raises.
•Give constructive feedback to the staff, indicating their strong points and areas for growth, so that they understand the fairness of the raises they earn.
This series chronicles the true story of a young dentist whom we're calling Dr. Mary Thompson. In two years, she transformed her $255,000-a-year start-up practice into an $812,099-a-year, high-quality office. Our previous articles in Dental Economics described how Dr. Thompson, just three years out of school, began her program of management improvement with the dream of buying the practice next door and doubling her patient base of 1,200. Pride Institute consultants helped her develop a plan to purchase the second practice and raise production incrementally - not only to meet the greater overhead, but to substantially improve earnings for both doctor and staff. Eight months into the program, production was 24 percent higher than the entire previous year and 12 percent over the year-to-date goal. When collections fell below Dr. Thompson's goal, developing methods for staff training and accountability, and ultimately replacing the front-office coordinator, put the office back on track. The result was a year-end finish of $549,169 in production, 20 percent higher than the goal and a remarkable 115 percent over the previous year. Now it was time to carry this momentum forward.