Bonus Or Bust?
Dr. Jill Gordon—Case Study #426
As more and more dentists are scrutinizing their practices in the areas of expenditures versus income, there is one area that seems to be at the top of the list during this economic downturn: bonuses. Let's take a look at a scenario that you may find relevant.
Dr. Gordon requested consulting assistance for her practice:
Dr. Gordon’s Practice Statistics:
Dr. Gordon was managing the practice by the seat of her pants, allowing her team to make many management decisions for her based on their past experiences in other practices. She also brought with her from her previous associateship some protocols that she felt were applicable in her practice. Unfortunately, she didn’t know what she didn't know!
As the months went by, Dr. Gordon witnessed a decrease in the number of new patients as well as a reduction in hygiene production because of openings in the hygiene schedule. As a result of fewer patients being seen in hygiene, this also reduced the number of opportunities she had to diagnose and recommend treatment. This was affecting her production and manifested itself in more openings on her schedule.
She is now concerned about the future of her practice and how long she can carry on. The practice is only five years old and she is still carrying a substantial debt load from school loans, equipment and facility overhead.
The Most Shocking News:
What was shocking about this bonus plan was not the way the bonus plan was structured, even though it wasn't a good plan. What WAS shocking was the fact that she was still offering it to her employees! As poorly as the practice was performing over the past two months, the overhead at 80%, the employee gross wages and benefits too high, she was still paying a bonus.
When questioned about this, after showing her the statistical facts, her response was, "I don't know how to take it away from them…they expect it."
Keeping The Doors Open
If a practice has instituted a bonus plan, and it does seem that this is common even though McKenzie Management recommends that alternative methods of rewarding your team be utilized, it should be made VERY clear to the employees that when the practice is not performing, there is NO bonus paid out. It is more important for the practice to remain as profitable as possible to meet monthly obligations to keep the door open to provide employees with a place to work—not to pay out bonuses that the practice can't afford.
Just Say "No"!
Serious times make for serious business decisions. It is not the time to be a "buddy" to your team but a time to be a leader. If you are unsure about the health of your practice, contact McKenzie Management today.
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