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6.30.06 Issue #225

The Four Rules of Staff Compensation

Sally McKenzie, CEO
The McKenzie Company

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Managing patient expectations is something that you probably focus the majority of your energy on. Makes sense, particularly since the patient is the paying “customer.” But chances are you don’t give quite as much attention to managing staff expectations. After all, the employees work for you, right?  And shouldn’t they be more concerned about meeting your expectations than whether you are properly managing theirs? Actually, this one cuts both ways.

Employees walk into employment with any number of expectations, particularly when it comes to compensation. Perhaps in their last job they received a salary increase every year. Therefore, they expect the same in your practice. And maybe everyone received the same percentage increase regardless of their performance. Thus, they believe that’s how it will be in your office. Or perhaps, you’ve started giving out a little extra throughout the year, bonuses here and there, and the team has developed a sense of entitlement –they feel they deserve that little extra on a regular basis. However, when those expectations are not met or managed, resentment takes root and begins to grow. Negative attitudes interfere. More time is spent putting out fires and dealing with conflict, etc.

If there is no established procedure or no guidelines for employee compensation in your practice, you are setting yourself and your team up for disappointment and disgruntlement. Implement the four rules of staff compensation and start managing compensation expectations immediately. 

Rule #1 – Before you give the green, spell it out in black and white. Establish a clear compensation policy. Based on the market, identify the pay range for each position in the office. Explain to every team member exactly how the compensation system will work, how much is available to the employee, what formulas are used, what it takes for them to earn more money, and how much more they can earn in that specific position.

Rule #2 – Conduct a Salary Review. Before you convince yourself that another buck-fifty an hour isn’t going to break your bank, check the balance sheet. The Salary Review is a clear and simple mathematical tool you can access immediately to determine exactly how much more money you’ll need to collect each month to cover that seemingly insignificant pay increase. It ensures that you are making an informed rather than emotional decision when it comes to salary increases.

Rule #3 – Develop a plan as a team to make more before you spend more. Every salary increase, no matter how seemingly small, has a direct impact on overhead. But staff don’t understand this unless you explain it. They do not comprehend the real costs of running a dental practice. It is very easy for employees to perceive that the doctor is lining his/her pockets with the profits unless they are educated otherwise. If the team wants to make more money, the practice must make more money. For example, consider new strategies to boost hygiene production and treatment acceptance. Take a close look at collections, and make one employee accountable for collecting money, generating accounts receivable reports, and following up on delinquent accounts. The Financial Coordinator should achieve a daily collections rate of 45% or higher. In addition, expect full payment for all procedures under $200. Provide patient financing through CareCredit. Require insurance patients to pay the portion of their payment responsibility. Reinforce your recall system, and look at your fees. They should be increased 3%-5% each year.

Rule #4 – Make staff, not the doctor, responsible for their success, their income, and their advancement. Develop results-oriented job descriptions for all staff. Involve each team member in establishing their own performance objectives that are consistent with overall practice goals, such as scheduling to meet production goals, keeping the hygiene schedule full, etc. Offer necessary training for employees to help them succeed, and provide constructive and instructive feedback regularly. Finally, hold employees accountable for their systems.

When employees have clear priorities and individual performance objectives, and when they understand how salaries are determined and what they can do to increase their own compensation, their expectations are managed and not at the expense of the practice’s bottom-line.

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McKenzie Management's Seminar Schedule
  July 20 Del Mar, CA - Ortho Symposium * Sally McKenzie  
  July 26 San Diego, CA - San Diego Womens Dental Society Nancy Haller  
  Aug. 2-6 Denver, CO - Academy of General Dentistry * Sally McKenzie  
  Sept. 15-17 San Francisco, CA - California Dental Association * Sally McKenzie  
  Sept. 29-30 Oviedo, Spain - Clinica Sicilia Sally McKenzie  
  Oct. 7-8 Krakow, Poland - UNO Dental Sally McKenzie  
  Nov. 2-3 Santa Barbara - The Art of Endodontics Sally McKenzie  
  Nov. 8 San Diego, CA - San Diego Womens Dental Society Sally McKenzie  
  Nov. 17 Concord, NH - New Hampshire Dental Society Sally McKenzie  
  Dec. 7-8 Santa Barbara, CA - The Art of Endodontics Sally McKenzie  
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