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2.15.08 Issue #310 Forward This Newsletter To A Colleague

Hygiene Salaries – How Does Your Practice Rate?
by Sally McKenzie CEO
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It’s that time of year again; time to see how your practice fares on the salary survey. RDH Magazine’s annual hygiene salary survey results were recently released. For some practices, dentists can breathe a sigh of relief – they are right on track with averages. For others, you may find that the results pour emotional gasoline on an already raging wage war in your office.

Of the top 15 states listed, 13 of those reported that 40% or more of the hygienists surveyed do not believe they receive raises in “fair intervals.” Yet in 12 of those states 50% or more of the respondents had received a raise within the past year. We’ll talk about “fair” in a minute. First, here’s how hourly wages break down in the top 15 states:

  • California $46.53
  • Washington $42.52
  • Illinois $36.85
  • Massachusetts $36.24
  • Oregon $36.13
  • Texas $33.84
  • North Carolina $31.36
  • Ohio $25.03
  • Tennessee $31.16
  • New York $30.65
  • Michigan $28.95
  • Wisconsin $29.28
  • Florida $29.09
  • Pennsylvania $28.13
  • Virginia $35.41

Now, let’s talk about “fair.” Obviously, what one employee perceives as fair pay could spell overhead disaster for a practice. Similarly, a dentist’s idea of a “reasonable employee wage” can keep the staff revolving door spinning. Certainly, compensation is one of the most emotional and challenging issues practices face, which is why it requires clearly defined guidelines. I recommend the following “Raise Rules.”

Rule #1 - Don’t increase anyone’s salary until you conduct a Salary Review. This mathematical tool enables practices to quickly and clearly determine how much of a raise they can afford while keeping total salary overhead in line with the industry.

Rule # 2 - Raises must be based on individual ability or achievement. This is the most effective compensation system because it is contingent upon demonstrated results. Moreover, it enables every team member to understand that individual job success equates to practice success, which equates to increased compensation.

Rule # 3 - Employee salaries should account for no more than 22% of your total overhead, not including doctor’s compensation or benefits, which will run an additional 3%-5%. For example, if your staff salaries for January were $14,300 and your average monthly collections are $65,000, you are within the recommended industry range of 19%-22% of monthly collections. However, you would be at the top of that recommended range.

Rule # 4 – Spell out exactly how the compensation system works in the practice, what is available, what formulas are used, what it takes to earn more money, and how much more an employee can earn in that position. Employees must understand how compensation is established – including benefits, bonuses, special perks, and their role in influencing their pay. If the employee does not understand the fundamental elements of compensation, whatever the doctor dishes out will never be “fair.”

Rule #5 - Pay close attention to hygiene compensation. If hygiene salaries are beyond 33% of production, consider paying the hygienist on a commission basis of 33%. If a hygienist is making $300/day, production needs to be three times her salary or $900 at a minimum. This is not the responsibility of the hygienist but the person responsible for scheduling the hygienist.

Another option would be to pay a guaranteed base wage plus commission. For example, if the hygienist works10 days a month and makes $300/day her monthly earnings are $3000. She must produce $9,000. If she produces $10,000 for the month the doctor could pay her commission of 15-33% on the $1,000 over her monthly goal. Next year, if her performance warrants a raise, she would get a percentage increase on the commission, provided it’s less than 33%, which is the maximum.

Don’t let the dollars slip through during non-production time. The hygienist should be paid 50% of her production salary for staff meetings, continuing education, and other non-production activity. But don’t spring it on the individual. Ideally, this should be spelled out during the hiring process. If not, you’re going to have to invest some time in staff education.

For starters, give staff a general overview of the financial picture of the practice to help them understand the real costs of operating a dental office. Unless overhead and expenses are clearly explained employees won’t get it. Consequently, they fill in what they don’t know with their perceptions – “Dr. is a miserly scrooge because I’m just sure the practice is raking in millions and we get a paltry 2% pay raise.” Team members must be given the opportunity to understand the raise rules and especially what influences them.

For information on the RDH Salary and Benefits Survey, visit www.rdhmag.com.

Interested in speaking to Sally about your practice concerns? Email her at sallymck@mckenziemgmt.com.
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