July 26, 2007
In many dental offices across America, the new year means “Doctor, it’s time for my automatic annual raise!”
Many dentists across the country start dreading this phenomenon at the beginning of the holiday season. Staff raises without increased production and collection can mean only one thing: the doctor’s salary decreases. This often alienates both doctor and staff, especially if the annual raise is very low.
This concept is known as the money tree. I'll bet you don't have one growing in your backyard, but your staff may think you do.
You are generous by nature and want to pay your staff well, but the Overhead Monster is eating you alive! Where is the money for raises going to come from? Your staffers are performing the same duties they always have performed and the practice's profit is about the same as last year.
New Year raises are one ownership headache you can eliminate!
Working in a dental office has its limits. Most dental offices are not large corporations with a tall ladder to climb. You would like to keep your staff - – you do not enjoy constant turnover – yet it seems the only way you can control costs is to allow your good staff people to find other jobs in higher-paying offices, then hire younger, more inexperienced staff to replace them.
If you have a great staff and want to keep them, then put the annual raise issue to bed and put the onus where it belongs: on the staff.
A great long-term staff is one of your practice's most valuable assets, and through them your practice will continue to grow and prosper. Your patients also be happier knowing they can expect to see the same staff at each visit.
A paradigm shift is necessary for continued profitability of the practice, and the attitude and behavior of the team must be reassessed continuously. The only way you can afford to give your staff that raise is for the staffers to earn their way into more money:
Doctors often feel backed against the wall when it comes to the issue of raises. Do not let this happen to you! It's time to educate your staff.
Let the staff feel some ownership in the practice by teaching them what office overhead means. They only see the amount of money coming into the practice each day but they do not consider the overhead expense.
Before you can consider salary increases for the staff, there are specific areas you must address:
Bonus systems can work in some offices with some team members, but seldom does the bonus system positively impact the practice numbers in the long term, and most doctors see a change in attitude the first time the team fails to meet the practice goals. Most doctors who have used the bonus system for any length of time now realize it is not a true team motivator. Staffers often grow accustomed to the bonus and come to expect it whether or not the practice meets its goals each month.
If you give your team a raise once a year whether they earned it or not, you are setting the stage for apathetic behavior rather than practice growth. Raises should be based on individual merit, and every team member should be reviewed at least once per year. Many people look for personal-worth validation through pay increases, while many others strive to increase their performance in order to be better compensated. Seldom is it a complete team effort, for there is usually one team member not pulling his or her weight in the practice.
Semi-annual staff reviews are paramount to effective communication between the doctor and the individual staff member. While I agree that problems should be dealt with immediately as they arise, it is prudent to sit down with each staff member twice per year to evaluate their overall performance. A comfortable approach is for both staff member and doctor to complete the employee evaluation, then sit down together and compare to identify differences in opinions. This method opens the door for improved communication and honest discussion about job performance and attitude.
To compute staff salaries, look at the last 12 months’ payroll percentage. If it is less than 24 percent of net collections, you know you have room for staff salary increases. If it is more than 24 percent, explain that to the staff and help them understand that production and collections must increase before you can increase their salaries.
Review your payroll overhead every six months and adjust staff salaries as allowable. Your payroll overhead percentage should include gross salary, employer tax, benefits, continuing education and bonuses (if you pay them).
This system works better than any complicated, formulated bonus system. Staffers know where they stand with their salary, they know if they work more efficiently the money will be there for raises and, most importantly, they will learn to work together as a team.
You owe it to yourself and your team to maintain a healthy fee schedule which must be updated annually. Many doctors fear they will lose patients if they increase fees. But if you increase your fees by a small amount annually rather than waiting several years and finding it necessary to make a large fee-schedule increase to keep up with the costs of living and doing business, you will be much better off and certainly more profitable over time.
Managing a practice is much more involved than showing up and providing clinical dentistry to your patients. Every doctor-owner should understand the business side of dentistry and know how to crunch the numbers that provide the necessary information to tweak the practice.
If you do not have employee review forms, please e-mail our office or call us at 303-412-5749 with your e-mail address and we will be happy to share them with you for your exclusive use. Start this year on the right track!
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