A MOTIVATING STAFF BONUS PLAN

Historically, many dentists have chosen to give annual pay raises.  Times are changing, however, as practices are forced to tighten figurative belts to survive.  Besides the economic slowdown that is negatively affecting production and profit, dentists will have to pay more for dental equipment, supplies, and lab due to the new 2.3% medical device tax implemented to help fund Obamacare.  Additionally, those who provide   health insurance as a benefit will quite possibly absorb a significant increase in staff health insurance costs.  All this may preclude annual salary increases.

With all considered, most practice management advisors are recommending basing increases in staff compensation on increased collection during a particular period compared to the same period last year.  If collections increase, there will be a bonus to distribute among staff; if no increase, no bonus.  Bonuses may be paid every three or six months.  The six month plan is easiest with calculation made and checks written less frequently than the three month plan.  And an annual distribution means such a long wait that it is less motivating than the six month plan.

Suggestion:  if you try such a plan, calculate as bonus dollars the same percent of the  increase in collection as staff wages are of total overhead.  Example:  if collection for the comparable period increases $20,000 and staff wages require 25% of total overhead, share 25% of $20,000 or $4,000 as staff bonus.  Also, distribute bonus according to individual staff member’s performance; hence, rewarding high performers more substantially than mediocre performers.