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11.11.05 Issue #192  
   
What to do When You're Called on the Cash Carpet


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

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It’s one of the most awkward situations you can be confronted with. An employee pops into your personal office, asks to speak to you, sits down, and with these words puts you on the hot seat: Doctor, I need a raise. Just thinking about such a situation can cause a terrific case of anxiety; having to respond under those circumstances can have you making any number of promises you’ll likely regret.

So what do you do to preserve the good will of the employee and the sound financial standing of the practice? Ideally, you manage the situation well before it ever occurs by spelling out the parameters for giving raises the day the employee starts on the job.

However, if you find yourself called on the cash carpet, you take a deep breath and explain to the employee that you would like to take their request under consideration, but you will need more information. I recommend this approach: Mary, to help me make an informed decision I would like you to provide me with sound business reasons for paying you more. I would like a written list of the contributions you have made to the practice.

Mary should be able to document a list of recent problems or critical issues in the practice that she has resolved. She should also be able to point to new responsibilities that she has taken on since her last raise. In addition, she should be able to spell out what she has done to increase practice revenues and/or cut costs or save time. For example, has Mary taken the initiative to get patient treatment out of the charts and into the schedule? Has Mary instituted a patient education program to inform patients about new or existing treatments that may benefit them? If Mary is the Scheduling Coordinator, what proactive steps has Mary taken to curb last-minute cancellations and no shows?

Conversely, Mary should be able to expect a few things from you, the doctor. Number one: a clear, results-oriented job description. If Mary is your dental assistant, her job description should include things like attending beginning of the day meetings, completing case presentations, reinforcing the quality of care delivered, directing the doctor to check hygiene patients, completing post treatment care calls, converting emergency patients to new patients, turning the treatment room around promptly, etc.

Mary should also know what quantifiable measurements will be used to gauge her performance. For example, she needs to know that you expect her to achieve an 85% case acceptance, that she is to give a daily report on her post-treatment calls, that she should be converting 75% of emergency patients to comprehensive exams, and that she should be able to keep the cost of dental supplies at no more than 5% of practice collections. In addition, you should be able to see the distal of the cuspid on every bitewing X-ray, you should never have to reach for an instrument on any setup, and the molds Mary pours should be free of defects. Get the idea? When you and Mary both know what is expected you can better assess if Mary is just doing her job or truly making a difference in the practice.

The other critically important factor in giving a raise is determining if the business can actually afford it. Wages should be in the 19- 22% range of gross collections, not including taxes/benefits, which is typically another 3-5%.

If your current monthly collections are $48,325 per month and your existing salaries are $9,353 a $2 hourly raise for the dental assistant from $15 to $17 and working a 36 hr. week will increase existing salaries to $9,665, which is within the 20% industry benchmark. However, if your current monthly collections are $39,000, existing salaries are $9,353 that puts you at 24% of gross production and well above the standard. You better start bringing in more cash before you start doling out more money.  

Like every major expenditure and employee raises are a major expenditure –no matter how seemingly small – salary adjustments require a careful and deliberate approach that is clearly understood by everyone on the team.

If your payroll expenditures are out of control, it often times works best to have the “outside expert opinion” come into the practice and assess the situation. It can be caused by too many employees, unproductive job descriptions, long-term employees with no change in their performance, lack of training or an under-producing hygiene department. A statement of the facts as they exist takes emotions out of the equation and maintains a sense of goodwill.  If you are interested please email me at sallymck@mckenziemgmt.com.

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