How Team Members Can Help Improve Practice Profits and Earn More Raises

By Sally McKenzie, CEO Printer Friendly Version

Your team members want and expect bumps in pay from time to time. They work hard, after all, and want their efforts to be recognized. The problem is, you can’t hand out larger paychecks if practice revenues are down. Of course, this isn’t something team members want to hear, which means they might start to resent the practice and become unhappy with their job if raise requests aren’t granted—especially if they’re under the impression the practice is doing better financially than it really is.

Some dentists give in to requests for raises simply to avoid upsetting team members, even if they know they don’t have the money for it. They convince themselves the extra few dollars an hour won’t really hurt the practice. But while employees are thrilled with their higher income, even those small increases can send overhead costs soaring—causing financial damage to the practice.

Managing expectations
Here’s an important benchmark to remember: employee salaries should not exceed 22 percent of average monthly collections. To keep salaries at or below that number, you can’t give out raises every time an employee asks or just because a year has gone by since the last pay increase. Raises only should be given out if you can afford them and if they’ve been earned. Team members should know exactly what they need to do to earn raises and when they’ll be discussed. That understanding starts with you managing expectations from the time team members are hired.

Here’s an example of what you can say to new employees to make your approach to raises clear:

Sarah, I’ll review your salary on your one-year employment anniversary. Any increase will be dependent on your performance and contributions to the practice, as well as the financial health of the business.
This lets employees know they shouldn’t expect a pay raise unless they’ve met expectations. Raises must be earned; they’re not something employees will receive no matter what.

Earning raises
It’s important for team members to understand how their contributions help move the practice forward, and what they’re expected to do each day. You can outline this through detailed job descriptions. I know what you’re thinking. Job descriptions are a waste of time. They’re not. They serve as a road map to success and should include the various tasks team members are responsible for along with performance measurements.

When outlining performance measurements, be specific. For example, don’t just say you want your Treatment Coordinator to reach out to past due patients. Instead, say you expect this team member to reach out to five patients on the recall list every day and to get those patients on the schedule.

To keep team members on the right track, I also suggest you offer continual feedback. When you see them doing something that isn’t quite right, take them aside to discuss how they can improve. When you see them going above and beyond, offer them praise and let them know you appreciate their efforts. They’ll be more motivated to either improve their performance or keep up the good work—doing their part to move the practice forward while also earning their raises.

Make raises possible
No matter how good your employees are at their jobs or how much they contribute, you simply can’t give out raises if the money isn’t there—a fact that’s important for your team members to understand.
Remind employees raises are also contingent upon the practice’s financial health. Educate them on practice economics and make a commitment to regularly reviewing practice numbers with them during monthly meetings. This will ensure they all know where the practice’s shortcomings are and enable them to work together to come up with and implement positive changes.

I also suggest you conduct an Employee Salary Review before giving out any raises. In about 10 minutes, you’ll know exactly how much money you need to bring in to grow the practice and make pay increases possible, which will help ensure you keep salaries within the industry benchmark.

Just in case you’re tempted to ignore the salary benchmark and give out raises when you really shouldn’t, let me give you can example of how that can hurt your practice:

Let’s say your current monthly collections are $48,325 and your existing salaries are $9,353. That means a $2 hourly raise from $15 to $17 for your assistant, who works a 36-hour week, will increase existing salaries to $9,665. This is within the 20% industry benchmark and won’t hurt your practice. But, if collections are $39,000 and existing salaries are $9,353, that small $2 pay bump puts salaries at 24% of collections. That’s well above the industry standard and is enough to leave you struggling to make ends meet.

A more profitable practice leads to more raises
Team members want and expect raises, but it’s important they understand bumps in pay must be earned and that they can only be given if the practice can afford them. Working together to develop strategies to make the practice more profitable will help grow your bottom line, while enabling you to reward hardworking team members with higher salaries.

Until Next Thursday - Please Share this Newsletter

Interested in speaking to Sally about your practice concerns? Email sallymck@mckenziemgmt.com
Interested in hosting McKenzie Management Seminars for your dental society or study club? Click here.
Be sure to find us on Facebook! Facebook Page