Staff Salary and Bonus Plans
Every dentist dreams of a fully motivated staff. At least in my dental school we were taught the Maslow heirarchy of needs. These rankings of employee needs put recognition on the upper echelons and salary way down on the list. We wanted to believe that salary was not all that important. Our staffs were motivated by far more lofty goals than merely making money.
I propose that this is an outstanding example of a dental school maxim that is absolute and total baloney! It ranks right up there with centric occlusion and gnathological dogma as being the greatest dental myths of our time.
I propose that all items of the hierarchy are very important and must be fulfilled to achieve a happy and motivated employee. Let's face it. If you were accorded worth and respect would you work for nothing? It is totally absurd to expect that your staff wouldbe happy and motivated with a substandard salary. It would be also foolish to believe that they would put forth the extra effort, mental exercise, etc. if not having a monetary stake in increasing production.
In my office we have instituted various bonus plans over the years. Some have worked well, some have not. I wish to share my experiences with you so you may benefit from my mistakes.
The first bonus plan we tried was purely based on production of the entire office. A certain level was reached and X amount of dollars were placed towards a trip.
This plan failed miserably.
The reasons for failure were threefold:
- Many staff members were unable to participate in the trip. Spouses and children created logistics problems. They would rather have the cash instead.
- Problems developed with feelings about who really contributed to the increased production. They felt some staff members were undeserving and they were more deserving.
- As production increased certain plateaus were reached requiring more staff, etc. There were also fee increases due to inflation of supply costs which this type of bonus system didn't take into account. Just try and raise the threshold bonus level. The staff will have a hissy fit.
I gave up bonuses for a few years, discouraged by it all. At the end everyone was arguing about fairness. I just scrapped the whole plan. It cost me money and I had only received a brief increase in production with big aggravation.
I decided to try bonus plans again for two reasons. My hygiene department was doing major root planings daily and they were reluctant to charge for the work they were doing. They kept on charging for a simple prophy when they were doing exstensive root planing. They just didn't feel right about charging the extra fee. A clear case of a mind block and low self worth.
I mean really! A pair of good shoes cost more than $80 and they felt that the patient could not afford to have root planed teeth and charged for a routing prophy! The hygienist spent an hour of treatment time (for which I paid them $21/hr and overhead for equipment, desk etc.) Let me tell you this attitude changed after I instituted a bonus directly related to hygiene production.
The second reason I wanted to try another bonus was because they constantly wanted higher salaries. They didn't seem to connect salaries with production but seemed to think that hanging around the office for a certain number of years entitled them to higher pay.
Hey! I'm all for higher pay but they couldn't connect with the concept that that pay, without increased productivity, was coming out of my personal wallet!
I made a fateful statement. I used Mr. Rhode's illustration about the 100 marbles and explained that 100 was all the marbles I had to spend. I said to the staff they could keep a certain number of marbles and then I would get a certain number. Neither they nor me would profit at the expense of the other. Of course the number of marbles translates into the percentage I would take and they would take.
You have to present an illustration of, say, the practice produced $30,000 a month and $60,000 per month. If they get 4500 marbles at 30 thousand then at 60 thousand they get 9,000. This finally gets the point accross. Guess what? Our production went up 30% the next year. We only raised fees 5% that year.
Now hold on to your hats! Don't lose your marbles! I will explain the finer points. First, I highly recommend a computer spreadsheet program to keep track of the bonus. I also recommend that you print out where they stand monthly and pay out only quarterly.
They need to see their standing monthly because for the program to be a good motivator they must get regular feedback on how they are doing. Quarterly payout evens out the normal ups-and-downs of a practice. It also prevents the receptionist from pushing collections and production into one month then having a really poor month the next.
Another important point: It is very important to correct the production numbers for collections. Hey, if you don't have the money how are you going to pay them!
Here's the nitty gritty. We separate the production into doctor fees and the hygiene fees. Hygiene does not get credit for the doctor exams. The reason we split off the exam fees is twofold:
- We want the front desk (they are in charge of scheduling recalls) to be motivated to keep the hygiene schedule full.
- Profit lies in the exam fees. Whatever fees they charge for other services goes to them and covering their overhead.
Now we have two departments: hygiene and production. The hygiene department consists of hygienists and their assistants. The production department includes the receptionist and all dental assistants for the doctors and the office manager. We keep track of production for each department and collections overall. On my spreadsheet I put the numbers for the production and collections for the month and my computer formula calculates the number we will use for figuring how to separate the marbles.
For example, say we produce 40,000 in June and collect 42,000. The next month we produce 38,000 and collect 36,000. Over the two months we averaged 39,000 and we figure we collected 100% so we have 39,000 to use as a figure to split the marbles. This is the overall number for the two departments. We take their individual production number and use 100% in this case as the number to figure the bonus money.
Next we figure all employee expenses. I mean all! I have a number for medical insurance, pension plan, uniforms, 10% of salaries for payroll taxes I have to pay over and above what they have to pay, etc. I enter for the month what I paid them, including vacations, etc. I use a percentage for production staff of 21%. After I add up all expenses for production staff I subtract that amount from 21% of the production department's production number corrected for collections and get the gross bonus amount for the production department. For hygiene I use 54% (too high). For hygiene I would suggest 50-52% as a better number.
We split up the Bonus Gross amount among staff in the production department based on the number of hours worked. In the hygiene department we split it among hygienists based on their individual production numbers among dental assistants based on hours worked. The assistants for hygiene get 25% of the hygiene bonus.
This bonus system has worked well. We have not given "raises" for two years, but my staff is earning more money. Automatic increases are figured in for inflation by fee increases upping production. They are far less critical of fee increases! They hate to have me hire someone unless we really need that person because adding salaries without increasing production cuts into their bonus. My hygienists are chargeing for what they doand are very interested in filling holes in their schedule!
In another article we can talk about why I switched to no benefit hourly rate !Robert H. Doty D.D.S.
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- Take over your bookkeeping: Off the shelf computer programs you can use in y our practice.
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