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Question: I own and operate a medium-sized practice in the south with 10-12 full-time employees. We are predominately a PPO practice (60% plus), and along with Washington state we have the lowest fees in the nation. I need advice on a bonus system and have tried a couple of different ones that are either unfair to the practice or heavily weighted toward the employees. I have looked at having hygienists on their own system based on an hourly salary with the bonus tied to a collection/production goal. Other systems involve splitting it all up evenly among the team members, where a highly productive hygienist receives the same bonus as a less productive hygienist.
I look forward to your ideas on creating a bonus system that is simple to track and fair for the business owners and each team member.
Answer from Dianne Glasscoe Watterson, MBA, RDH:
I think you need to evaluate why you want to have a bonus system. There are some realities about bonuses that you should understand. First, everyone is not motivated by the same thing or to the same degree. While the possibility of extra pay for extra work may be motivating to some people, there are staff members who feel they are already giving 110%. So, the thought of working even harder is not an option.
Second, using a bonus system to prop up a weak salary system is a bad idea. If a staff member leaves, it might be very difficult to attract a high-quality candidate with seemingly low wages, albeit a bonus possibility.
Disadvantages and caveats of bonus systems
- Bonuses do not compensate for poor schedule control.
- Staff members come to expect the bonus.
- Bonus incentives should not be a way to prop up weak base pay.
- Some doctors become unhappy when the financial impact of a bonus system becomes a reality.
- When production and/or collections are part of the bonus formula, scheduling coordinators have been known to delay certain procedures or wait to post payments to the next month if the goal has already been met.
Bonus incentives can be a motivating force among staff members if:
- The bonus is attainable.
- The bonus is fair.
- The bonus is understandable and simple.
- The reason for having the bonus is to allow staff members to share the wealth when the practice is financially healthy since they are such an integral part of the total practice success.
Having said all that, my favorite bonus is one that is given when the staff members are not expecting it. I call it a “random act of kindness” bonus. Believe me, it is powerful when a staff member receives something extra, plus a little handwritten thank-you note from you. You control the amount and frequency of the bonuses. This is a great way to build staff loyalty. And let’s face it, when staff members like you, it increases their desire to please you with their work.
Editor's note: Originally posted in 2019 and updated regularly