The secret rules of sharing numbers with your dental team members
Open book management is a business technique that gives employees all the relevant financial information about their company so that they can make better decisions as workers. Amy Morgan, CEO of Pride Institute, talks about four distinct rules that will eliminate the fear of being held hostage to demands for a salary increase or that staff members will complain that the numbers make the practice too production driven.
What are the secrets of sharing numbers with your staff, or open book management*? Open book management is a business technique that gives all employees all relevant financial information about their company so that they can make better decisions as workers. This information includes, but has never been limited to, revenue, productivity, profit, cost of goods, cash flow, and expenses. Initially, some of our clients at Pride Institute have expressed concerns about practicing the fine art of open book management due to the fear of being held hostage to demands for a salary increase or that staff members will complain that the numbers make the practice too production driven. However, there are four distinct rules (secrets) that will eliminate those fears.
Rule No. 1:Your team needs training so that they fully understand all of the statistical information. This means that the dentist, as the leader, needs training too. In the absence of training, the doctor and team pick up certain pieces of information “on the street” or “in the aisles of conventions” that may or may not be relevant to the customized needs of the practice. How many times have I walked through dental meetings and heard things such as, “I heard I should be able to produce a million dollars,” or “employee expenses should only be 25% of production”? True training helps you find and define the key success factors that most closely represent your vision, goals, and strategies. This training may include practice management workshops and/or webinars with you and your team so that your staff can identify the numbers that need to be tracked. Pride’s clients have shown that when you invest in a course on numerical management, you can watch your team’s understanding and ultimately the profits of your business increase by leaps and bounds.
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Rule No. 2: Give your team all relevant information. “All,” you say? Yup. “But won’t they figure out what I bring home as compensation?” In the absence of concrete information, your staff will still guess and, most likely, their guess can be as crazy as, “What she produces, she keeps.” Now, of course, there are professional boundaries. You do not need to share your Visa bills or parade your personal checks to your team members. Practice-driven information should be shared including statistics on marketing, continuing care, new patient case presentation, collections, and production. You may also include expense management indicators such as percentages of lab, supplies, and employee costs as they relate to cash flow and productivity. Many dentists also monitor numbers that measure the work-life balance of the team, quality of service, efficiency, and profitability.
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Rule No. 3:Give your team responsibility for the numbers under their control. Over the past 35 years, Pride has found that your team doesn’t worry about expense management, because they do not feel like they have control. It is one thing to say, “Through statistical interpretation, you’re not as effective as you should be.” It’s another thing to give your staff the room to control the number and make it better. If you want your employee expense percentage to be less than 32% of total office production, then all of your team members need to understand what they can do from their job description to influence that number and how those numbers affect their compensation.
Rule No. 4: Give your employees a financial stake in how your practice performs. In order for a compensation model to be effective, you must tie salary increases, benefit increases, and potential employee rewards to statistical interpretations of success. That’s the icing on the cake. If you want an entrepreneurial staff member to take creative risks for you and your practice, then there must be the potential for reward.
All in all, practicing the art of open book management is a proven business model, because it allows your team to become Olympic athletes in representing your vision and values. Your team can turn in gold medal performances that advance you, your patients’ care, and their own success as well.
* Open book management is an important business principle, created in 1986 by a gentleman named Jack Stack who took a dying division of International Harvester, made it into one of the most competitive small companies today, and spawned a revolution in the process. The term was popularized by a senior writer, John Case, at Inc. Magazine in 1995.
Learn more about open book management, other dental business systems, and leadership training at Pride’s seminar, “Managing By the Numbers.” For specific course dates or further information on individual consulting services, other continuous education seminars, and training products, please call (800) 925-2600 or visit www.prideinstitute.com.
Amy Morgan is the CEO of Pride Institute, a respected dental practice management firm. For more than 30 years, Pride’s team of dental business and financial experts have helped dentists at all stages of their careers achieve the practice of their dreams.