6.12.15 Issue #692 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

Why a Two-Tier Hygiene Salary May Work Best
By Sally McKenzie, CEO

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As the CEO of your dental practice, there’s a lot you need to think about to ensure you run a successful, profitable business – including how much you compensate your staff.
Most dentists pay all of their team members as employees, with guaranteed hourly wages. This is fine if you’re talking about a non-producing team member, but it really isn’t the best method for hygiene salaries. This guaranteed wage gives hygienists no motivation to increase productivity, and because of that their salary often soars well beyond 33% of their production. And when your hygiene salaries go above that 33% benchmark, your overhead goes up while your revenues go down.

With this system, your hygienists get paid while sitting in team meetings or attending continuing education courses, when they are clearly not producing. Associates don’t get paid to sit in meetings or CE, so why should hygiene?

Some dentists pay their hygienists straight commission, but this can lead to trouble if you have a hygienist willing to sacrifice quality for quantity to up his or her earnings. This scenario is pretty rare, but it isn’t the only pitfall that comes with straight commission. It’s a pay structure that most hygienists don’t like. They want the security of knowing how much they’ll bring in each pay period, and many just aren’t willing to consider a commission based salary.

So how can you develop a payment structure that is fair to both the hygiene team and the practice? I recommend implementing a two-tier system. I truly believe this is the best system, and is one that benefits both the practice and the hygienist.

In this system, you pay hygienists a guaranteed base plus commission. For example, if your hygienist Susie works 10 days a month at $300 a day, she earns $3,000 a month. So she needs to produce $9,000 a month to meet her goal. Let’s say she produced $10,000 last month. With the two-tier structure, you can pay her commission of 15-33% on the $1,000 she brought in over her monthly goal.

This extra incentive gives Susie motivation to produce more than three times her salary, which results in a boost in your practice productivity numbers and your bottom line. This system also makes figuring out raises relatively simple. If your hygienist earns a pay bump, her raise would be based on a percentage increase on the commission, as long as it’s less than the 33% maximum.

If you pay Susie straight commission, she basically gets a raise every time you implement a fee increase, whether she’s earned it or not. What if she just isn’t performing to your expectations? Maybe she comes in late every day, or leaves her instruments for someone else to clean up. With the commission system, she gets more money with every fee increase despite her performance, sending mixed messages and giving her no reason to improve performance.

Then there’s the problem of the long-time hygienist who asks you to raise her commission to more than 33%. This loyal employee has been with you for years, and the patients love her. You really can’t risk losing her to another practice, so you give in and increase her commission rate. Your hygienist is happy, but your practice suffers.

Remember, you’re not in business to lose money. This is why it’s best to implement a payment structure, like guaranteed base plus commission, which rewards hygienists for good performance without hurting the practice in the process.

Keeping Salary Under Control
The two-tier system keeps your hygienists happy, while also keeping salaries at that 33% of production benchmark. If you pay hygienists a guaranteed wage, there are plenty of opportunities for that salary to go well above 33% of production, including in these scenarios:

• You have a long-term hygienist who you pay top dollar. This hygienist gets a raise every year no matter what, so performance never improves.

• Hygiene is under-producing because your fees are too low or the hygienists take too long on each patient for the service provided and fee charged.

• Hygienists are under-producing because they only perform basic prophys and the practice has no periodontal therapy program.

• The practice has more days of hygiene per week than it has patients to fill them.

• Your practice has a high cancellation and no-show rate because you rely on pre-appointing six months out.

• No one is accountable for keeping the schedule booked or for following up on past due patients.

If any of these scenarios are playing out in your practice, it may be time for you to not only look at how you compensate your hygienists, but also have a professional analysis of your hygiene department. Cleaning up your salary/production ratio is a good start, and if you implement a two-tier payment structure, it will lead to a more profitable practice with hygienists who are motivated to increase production and boost your bottom line.

For a complimentary base-line hygiene assessment go here: http://www.mckenziemgmt.com/cons-hygieneassessment.php

For additional information on this topic and more, visit my blog: The Lighter Side

Interested in speaking to me about your practice concerns? Email sallymck@mckenziemgmt.com
Interested in having McKenzie Management Seminars speak to your dental society or study club? Click here.
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