4 Rules for Effective Compensation
Is it time to increase pay in your practice? According to PayScale.com, 88% of employers set their sights on increasing pay this calendar year, and the average pay increase is expected to be 4.5%. But rest assured, the majority of those increases are determined based on careful planning and consideration. In fact, more than 73% of respondents indicated that their businesses use a formal compensation strategy.
It is that last point that dental practice owners would be wise to take note of - a formal compensation strategy. In many dental practices the “compensation strategy” typically involves an exchange between the doctor and the employee that goes something like this:
Employee: “Dr. Tom, could I talk to you for a moment?”
Dr. Tom means well, but he has absolutely no idea how much the employee’s change in pay will impact his bottom line. Certainly, creating a “fair” system for compensation can be challenging in any workplace that is dependent upon teamwork and trust, which would be virtually every dental practice. Reward some and you seemingly punish the rest. Reward all and you send the message that average effort pays the same as excellent. 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? With clear leadership and specific salary guidelines.
Effectively handling the matter of money with your staff requires that you manage their expectations from the outset. It starts on day one - not six, eight, or twelve months after the employee comes to work for you. Explain when raises will be discussed and under what circumstances a raise will be given. Implement the following four rules of staff compensation and start managing payment expectations immediately.
Rule #1 – Establish a Clear Compensation Policy
Rule #2 – Conduct a Salary Review
Consider this example: If your current monthly collections are $48,325 per month and your existing salaries are $9,353, then a $2 hourly raise from $15 to $17 for your assistant who is working a 36 hr. week will 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 puts you at 24% of gross production and well above the standard.
Rule #3 – Develop a Plan
Rule #4 – Develop Job Descriptions
For more information on this topic, visit my blog: The Lighter Side
Interested in speaking to me about your practice concerns? Email email@example.com
McKenzie Newsletter Information:
To unsubscribe: To discontinue receiving the Sally McKenzie eManagment newsletter,
click on the link at the very bottom of this page for instant removal,
To report technical problems with this newsletter or to request technical help,
please send a descriptive email to: firstname.lastname@example.org
To request services, products or general inquires about The McKenzie Company activities
please send a descriptive email to: email@example.com
If you would like to have any of your dental practice concerns answered personally by Sally McKenzie,
please send a descriptive email to her at: firstname.lastname@example.org
Copyrights 1980-Present The McKenzie Company - All Rights Reserved.