Can I Afford My Next Dental Employee?

by | Oct 25, 2023 | Employer advice, Guest Blog Post, Practice Advice | 0 comments

This weeks post comes from our friend and Dental Employee Expert, Sharyn Weiss, the CEO of Weiss Practice Enhancement. Weiss Practice Enhancement is a practice management firm serving dentists nationwide. Weiss was the curriculum director and senior consultant at Pride Institute for 17 years and is the author of multiple books for dentists on topics such as how to compensate employees, how to hire, and how to lead great team meetings.

In this post, Sharyn explores with you, your current compensation plan, cost of benefits and how to hire without paying a ridiculous hourly wage. This is a post you will ABSOLUTELY want to save to reference often.

“This is going to be blunt. Because most dentists don’t have a compensation system, they don’t know their true payroll costs and salary decisions are reactive, subjective and frequently unfair.  Without a system, everyone approaches compensation as gingerly, and with a similar amount of dread, as an unexploded bomb.

You don’t have a compensation plan if you:

  • Mechanically give every employee an annual cost-of-living increase because that’s the easy thing to do.
  • Hide out until employees approach you for a raise.
  • Dole out raises piecemeal at each employee’s anniversary date.
  • Use a bonus plan in lieu of raises, hoping that will satisfy employees.
  • Give new employees any salary they demand just to fill an opening.

Tenets of a Healthy Compensation System

Just like any other operating system, a compensation system should be perceived as fair, objective and transparent. It should support employees’ financial, social and emotional well-being and, crucially, it must be affordable for the practice.  It should be underpinned by these tenets:

  • Compensation levels match the attributes/skills of the employees you want to attract and retain.
  • Raises are linked to employee performance.
  • Raises are affordable for the practice. 
  • Affordability is determined by an increase in collections from one year to the next. 
  • Raises are drawn from a salary pool, created from a portion of the collections increase. 
  • Employees understand the compensation system and how you determine raises. 

How to Enlist Your Team

It’s healthy to want to make more money and to be recognized for your performance.  Partner with your employees and explain that if they want raises, they need to collaborate to ensure that they collect more this year than last year. This will generate a salary pool for the whole team. If they personally want a larger slice from that pool, then they need to develop and achieve individual performance goals.

Your role therefore is to:

  1. Describe the system to the team so that everyone understands it.
  2. Practice open-book management so the team comprehends the practice’s statistics.
  3. Hold annual salary conversations at the same time of year for everyone, after you have 12 months of collections data.
  4. Lead performance conversations to review each employee’s contribution for the last year and co-design goals for the next year.
  5. Provide coaching and feedback throughout the year so that employees have the opportunity to improve their performance and thus merit a raise.
  6. Provide on-going recognition and appreciation in the way most valued by the employee.

If a Candidate Requests More Than You Expect

I work with a dentist who felt backed into a corner and agreed to pay a newly hired hygienist $93.00 per/hr.  This means she’s making more than $800 per day when you factor in benefits. Since hygiene salaries are ideally 30% of their production, she will need to produce $2,400 a day.  That’s more than $1,000 a day than his hygienists currently produce.

If an employee asks for more money than you can afford, use that request as part of the interviewing process.

  • Hmm, that’s interesting. What led you to ask for that specific amount?
  • That salary is much higher than I’ve paid other hygienists. If I were to offer you that, what would you do in my practice to merit it?
  • Hygiene salaries are typically about 30% of their production. Walk me through how you will produce the amount required to keep you within a healthy range norm.
  • Aside from the salary, what are other reasons you would accept or not accept a position in our practice? What else are you looking for?
  • How willing are you to consider a lower salary in lieu of other benefits?

Asking these types of questions communicates that you want to pay employees fairly but that you also expect they will provide a return on your investment in them.

Is Your Payroll Expense Healthy?

You may have been told that your payroll expenses must be within a specific range.  Like so much in life, there is truth to this and also some complexity. Range norms can vary dramatically because you must take geography and demographics into account when you assess salary ranges, just as you do in setting fees.  Here are some accepted range norms for employee expenses.

  • 20%-25% of collections. If you have a fee-for-service practice, and your production is close to collections, you can use production or collections as your barometer.
  • 25% -38% of production. I prefer this metric, because expenses like lab fees, supplies and team size are determined by the size of your patient base and the production they generate, not by what you collect. If your practice has a significant gap between production and collection, then evaluate your payroll expenses against production.

What Are Your True Payroll Costs?

Many dentists and employees equate compensation only with an hourly wage.  When I ask dentists to tell me how much they spent in payroll taxes, most respond with wide-eyed confusion. (It’s generally 8% of an employee’s gross salary.)  And dentists, like their employees, often under-estimate the value and costs of benefits. This means that when employees declare they are under-paid, it may be because they don’t appreciate the dollar value of their:

  • Dental treatment at the practice
  • Sick and vacation benefits
  • Health benefits
  • Retirement benefits
  • CE classes & certification
  • Holiday “bonus” or gifts
  • Uniforms

Interestingly, employees might not know the value of these benefits because the dentist doesn’t either! This underestimation leads to all sorts of misperceptions and problems.

The Dental Wage Planner Tool

Ideally, dentists show employees the value of their entire compensation package at annual salary review conversations.  I developed a Dental Wage Planner Tool so that dentists can:

You can download the Dental Wage Planner by contacting [email protected] or by Knowing and communicating  each employee’s total compensation is essential, but remember, that compensation is not only about money;  it includes all the ways an employee is rewarded and recognized in the practice.”

Thank you Sharyn for an amazing post!


Holli Perez

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