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11.4.05 Issue #191  
   
Managing a Raise without Maxing-out Payroll


Sally McKenzie, CEO
The McKenzie Company
sallymck@mckenziemgmt.com

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“Doctor, I need a raise.” You can feel the hairs stand up on the back of your neck, your heart starts to pound, and fear is racing through your bloodstream. Halloween may be over, but few things will cause bone-chilling terror faster than when an employee asks for more money.  It’s one sentence that will send the most rational doctors into the most irrational, emotional tailspins. The imaginary scenarios flood your mind, what if she quits, how can I afford it, what will the other employees expect … and on and on.

Unfortunately, when an employee asks for a raise, the dentist is a day late and likely to be several dollars short at this point. When it gets to this stage, doctors can feel backed into a corner. Consequently they go into reactionary response mode, rather than addressing the request logically and thoughtfully.

Step back, take a deep breath, and avoid the urge to respond immediately. Take control of the conversation and avoid replies, such as, “I can’t afford it right now.” In the employee’s mind, those large veneer cases you just completed should finance her/his meager little request with barely a scrape to the bottom line. “You haven’t been here long enough.” How long is long enough? And why doesn’t the employee know the answer to that question. “I need to be fair to the other employees.” This implies that hard work and dedication won’t get the employee far in your practice because there might be someone else on the team who doesn’t work as hard but would feel slighted by any hint of inequity. No better way to squelch a high achiever than to tell them their efforts won’t be rewarded.

Managing requests for more money begins with managing employee expectations at the outset. It starts day one, not six, eight, or twelve months after the employee is working for you.  Spell out the guidelines the first day the employee becomes a member of your team. Explain when raises will be discussed and under what circumstances a raise will be given. Follow the same script with every employee and you’ll ensure everyone knows their lines and yours. I recommend this type of approach: Betsy, your yearly salary will be reviewed on your one-year anniversary date. At that time, any increase in your salary will be dependent upon your performance and contributions to the practice as well as the financial condition of the business.

This makes it clear that more money isn’t just handed over because the employee has marked 12 months on the payroll. Enhanced compensation is contingent upon the employee’s performance as well as the financial health of the practice. There are expectations to be met. It’s about commitment, results, and a willingness to do more than hang around for a year. Which means you will need to provide performance reviews and measurements that enable employees to see the direct relationship between their performance, the success of the practice, and ultimately their potential for increased compensation.

Next week, respond to raise request without compromising the employee or the practice.

If you have any question or comments, please email Sally McKenzie at sallymck@mckenziemgmt.com.

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