Too often dentists give raises based on two factors: Fear and Emotion. Worse yet, many dentists find they have reached a plateau in practice revenues yet feel pressured to continue giving employees raises and even bonuses in some cases. Meanwhile, employees, unaware of the practice’s financial situation, will continue to expect those raises and bonuses.
Consequently, another year rolls by. Nothing has been changed in the compensation system, the profit margin shrinks ever further, and wages are creeping well beyond the industry benchmark of 22% of gross production (not including taxes/benefits or the doctor’s salary). But, in the interest of democracy and equality for all, doctor doles out another token 2%.
Resentment grows, doctor is stressed, and tension is thick. This ineffective compensation structure is clobbering your profitability and rippling overall practice success. Take action! First, forget democracy, it’s time to establish a meritocracy – raises are earned based on individual ability or achievement. Without exception, this is most effective compensation system because it is contingent upon demonstrated results for the dental practice. What’s more, it enables every team member to understand that individual job success equates to practice success, which equates to increased compensation. Today, nearly 70% of all employers give raises to reward excellence, not to mark another year on the calendar.