This weeks post comes from my good friend Sharyn: Sharyn Weiss, M.A., is the founder of Weiss Practice Enhancement, a practice management firm for dentists who want actionable, easy-to-implement guidance to enhance their leadership. (https://weisspractice.com). As a frequent contributor to Dental Economics and HR for Health, her work focuses on harnessing team and patient motivation. Her latest book, How to Pay Employees without Clenching Your Teeth, is a step-by-step guide for dentists who want to implement a motivational and fair compensation system.
A word from Holli:
“Sharyn and I recently hosted a webinar where she shared some seriously eye-opening insights about the difference between having a Compensation Approach versus a Compensation System. What she said had me ready to shout it from the rooftops!
Compensation is such a tricky topic—especially these days, when candidates are asking for more than what your current team is making. But Sharyn explained how to navigate this challenge so clearly and effectively that I had to ask her to turn it into a blog post.
And lucky for us, she did. So here it is—enjoy!”
Does your Dental Practice Have a Compensation System or an Approach?
Employee compensation should be just another system in the dental practice, but it generates so much angst, stress, and dread, it’s as if it was a nuclear device.
Perhaps this is because most of us have “relationship issues” with money. We conflate money with self-worth, value, and success, generating huge emotional reactions to compensation. Making this topic even more loaded is the perception that the dentist and the team are on opposite sides: employees want to “extract” money from the practice while dentists want to preserve their profitability.
The best path out of this web of conflicting perspectives is to view employee compensation as objectively as any other system in the practice. Unfortunately, most dentists don’t have a compensation system; instead, they make subjective salary decisions on a case-by-case basis.
So, let’s begin with a deceptively simple question: how do you make your salary decisions? Your response will reveal whether you use a case-by-case approach or use a predictable, objective system.
Symptoms of an Approach:
- You give every employee an annual cost-of-living increase.
Dentists appreciate the simplicity of giving everyone automatic, annual increases but this means that compensation isn’t linked to performance, only to longevity. My favorite example of how this can backfire is to point to a dental assistant who earned $90K a year and who was nevertheless resentful and uncooperative. When raises don’t correlate with performance, employees lose any incentive for improvement.
- You give raises when employees ambush you and the amount they get depends on your mood, how much you like that person, how hangry you are at that moment and last month’s production.
This approach puts you in a permanent state of reaction and defense. Employees dread having to initiate this conversation and it can result in subjective, deeply unfair salary decisions. Finally, awarding raises piecemeal throughout the year, prevents you from being able to predict and manage your payroll costs.
- Raises are given at each employee’s hiring anniversary date.
This oddly popular approach forces dentists to somehow track when every employee was hired – even if that was a decade ago. This approach has all the issues associated with the symptom above and adds calendar-keeping into the mix.
- You use a bonus plan in lieu of raises because you think it will be less expensive than committing to a new salary level and because you’ve heard bonuses improve motivation.
Bonus plans have numerous problems: they rarely define what employees need to do differently to earn the bonus, they can lead to unethical treatment of patients, they can foment team conflict and contrary, to what dentist believe, 60 years of research shows they actually decrease motivation and performance. On top of all that, bonus plans make it difficult to predict your payroll costs, which means they can undercut the practice’s profitability.
- You give new employees any salary they demand to fill an opening.
When desperate dentists agree to a new employee’s salary demands, they immediately create equity issues with their veteran employees. (In one practice, the new hygienist now makes more than the dentist!) Ultimately dentists are forced to either increase everyone’s salaries or hope to heck the team doesn’t learn what the new employee earns. This won’t end well.
- You feel stress, pressure, or guilt about your compensation decisions. While it’s normal to feel some stress, dentists only need antacids when they know their salary decisions are more subjective than objective. Stomach aches are a signal that there isn’t a transparent criteria for how employees merit raises.
- You give raises without a plan to afford it. For your new payroll costs to be sustainable, you’ll need a plan on how to increase production and collection. Raising fees to match your payroll cost isn’t a sustainable plan!
If you checked any of these symptoms, you are needlessly suffering. What you need is a compensation system.
Defining the Compensation System
Let’s define a system as a predictable, objective, and fair way of organizing tasks and behaviors. Therefore:
A compensation system is a fair and objective way of evaluating employees so that their compensation matches their contribution and the community in which you work.
To make this system sustainable, we’ll add one more element: compensation must also be affordable and sustainable for the practice.
I help dentists implement a compensation system based on 6 tenets.
The Six Tenets
- Compensation must be commensurate with the attributes/skills of the employees you want to attract and retain.
- Employees merit raises only if their performance improves.
- Raises are considered only if the practice is profitable, as measured by a collections increase.
- Individual raises are drawn from a salary pool carved from that collections increase.
- Performance and salary conversations are scheduled at the same time of year for everyone.
- The compensation system must be transparent so that employees know how to merit raises.
If you’d like a turnkey system that embodies these tenets, contact me at [email protected] I created a Compensation Kit with all the tools, resources and scripts that will help you move from salary stress to salary peace-of-mind.
As a first step, I’m happy to send you a Dental Wage Planner to any Direct Dental subscriber. This free tool helps you analyze your current payroll costs including taxes and benefits and allows you to forecast the impact of raises and new employees.
Let’s create a more objective, equitable plan to paying your employees so that you, your team and your practice can flourish.
Thank you Sharyn for sharing your amazing insight to this challenging topic.
If you want to watch the Webinar where Sharyn breaks this down even more – Click here!
Smiles,
Holli Perez
DirectDental
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