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11.14.08 Issue #349 Forward This Newsletter To A Colleague


Nancy Caudill
Senior Consultant
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Are You Santa Claus Or Scrooge This Year?

Dr. Harry Jessup—Case Study #621

Dr. Jessup was experiencing that anxious feeling he gets every year over the dreaded holiday bonus! Do I or don’t I? What happens if I don’t? If I do, how much should it be? If it’s not enough, will they be disappointed or even mad at me?

For some dentists, it is difficult to say no to their team members. You recall how hard they worked through their cherished lunch hour to help you with an extraction on #32, or the afternoon that Mrs. Smith stopped by on her way to church to ask you to look at a tooth with a “rough spot.” As it turned out, she needed a root canal, build-up and crown!

But what about those days that the entire team left early to celebrate Suzie’s birthday, and you sent along your credit card? It all evens out. Right?

Around this time of year the whispers in the office are beginning… the phrase “holiday bonus” is being heard by Dr. Jessup and his anxiety is increasing. What if someone asks him if they are going to get bonuses this year? What will he say? He knows that he has a tendency to say yes to everything.

Why a Holiday Bonus?
Is the purpose to share the wealth with your team for a great year? If that is the case, it isn’t a great year for Dr. Jessup. Fixed expenses remain the same and collections are down.

Is the purpose to follow a tradition because he has given a bonus every year before this year? This year he is really feeling the financial pinch but dreads that look on their faces when he hands them a check for $50 instead of the usual $500.

In order to help Dr. Jessup with his inner struggle, it was necessary to look at his practice expenses for the past ten months.

Dr. Jessup’s Practice Facts:

  • 15-year-old general family practice
  • 6 team members
  • Collections of $850,000 for the past 10 months
  • Total practice expenses are $646,000
  • Gross wages for the staff are $229,500

The overhead percentage for staff gross wages in a practice like Dr. Jessup’s should be 19–22%. In this case, he’s at 27%! This is at least $42,500 more than it should be, which is a bonus in itself! The practice was not performing as a result of the difficult economy, yet no team members were laid off or required to work fewer hours. It is obvious when looking at his schedule that he did not need two assistants and he could have reduced the number of hours for his hygienists. However, he elected not to.

Clearly Dr. Jessup cannot afford bonuses this year, based on the total practice overhead as well as the staff wage overhead.

Mixed Signals
Because Dr. Jessup wants to be included as part of the team when it comes to discussing personal life experiences, he also shares with his team stories about the lavish vacations that he and his family take, as well as the new cars that they are all driving. These revelations make it impossible for his team to buy into the concept that the practice is not doing as well as it did last year.

Recommendation #1: Always think before blurting out an answer to a question. Say to your employee, “Jane, that is a good question. Let me think about it and I will get back to you.”

Recommendation #2: Do not share information about your personal lifestyle with your staff.

Recommendation #3: Make decisions based on statistical facts.

Conclusions
With a little scripting from his consultant, Dr. Jessup expressed to his team members how much he valued them and that he would like to be able to continue the tradition of annual holiday bonuses. However, based on the information that is reviewed every month, this year the practice cannot pay a holiday bonus.

The doctor and team will celebrate the holidays with a lunch at the office and draw names to exchange gifts with a purchase price of no more than $25.00 each. After all, camaraderie is the most important part of being a team.

If you would like more information on how McKenzie's Practice Enrichment Programs can help you IMPLEMENT proven strategies, email info@mckenziemgmt.com.

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