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11.7.08 Issue #348 Forward This Newsletter To A Colleague

Pay Raise - They Deserve It. Can You Afford It?
by Sally McKenzie CEO
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Managing the ever-touchy issue of employee compensation is a challenge for virtually every dental team. Reward some people and you seemingly punish the rest. Reward all and you appear to value excellence no more than mediocrity. It’s a management minefield for most dentists who struggle with balancing the financial needs of the practice with the financial desires of the staff. How do you navigate this tricky issue? Manage expectations.

Certainly, it’s imperative that employees understand how their roles fit into the overall success of the practice. And it’s critical that they have a clear understanding of the financial health of the practice. But above all else, effectively handling the matter of money with your staff requires that you manage their expectations from the outset. It starts day one—not six, eight or twelve months after the employee comes to work 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.

I recommend this approach: Jess, 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 raises are not given merely because the employee stays with the practice for a certain number of months. Rather, raises are a form of recognition for an employee’s commitment and willingness to learn and grow as a team member.

However, in order for the employee to hold up his/her commitment to the practice, the doctor must hold up his/her commitment to the employees. This means that every staff member must be given a specific, results-oriented job description and have regularly scheduled performance reviews.

For example, if Jess is your new 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.

Jess should also know which 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 set-up and the molds Jess pours should be free of defects.

When you and Jess both know what is expected you can better assess if Jess is just doing her job or truly making a difference in the practice.

So if Jess truly is a key contributor to the team, if she’s working hard and she’s delivering on her job expectations, after a certain amount of time she wants and expects a raise. Understandably, the doctor feels an obligation to reward the employee. But what if the practice cannot afford it? What does the doctor do? Go back and review what I said a few paragraphs back: Enhanced compensation is contingent upon the employee’s performance as well as the financial health of the practice. If you and your team regularly review the numbers in the monthly meetings as I discussed last week, everyone should be well aware of where practice’s monthly collections stand.

If your practice follows industry benchmarks (as it should), the team realizes that wages should be in the 19–22% range of gross collections, not including the doctor’s salary or taxes/benefits.

If your current monthly collections are $48,325 per month and your existing salaries are $9,353, a $2 hourly raise for Jess from $15 to $17 for a 36-hour work week would increase existing salaries to $9,665, which is within the 20% industry benchmark. However, if your current monthly collections are $39,000 and existing salaries are $9,353, that raise would put you at 24% of gross production and well above the standard. You and your team need to focus on strategies for bringing in more money before the practice can afford to hand out any more.

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