Got a call the other day from a doctor who was perturbed by the fact that their office has had 5 employees quit in the last couple of months. There was one that was moving, but all five of the employees who quit went to other offices that paid them more. According to the doctor, they all left for more money. This doctor was a client back three or four years ago and was very precise in explaining the situation. It began by the doctor explaining that they had their compensation overhead at 25% and thought that all of the staff was completely happy. Then human nature and COVID-19 happened.
Like most of us during this pandemic, this doctor was surprised that they would leave for money, that the culture they had was not the culture they had hoped for, and that that the realization of their situation meant that they really did not have control of their office. This is a practice that produces close to $4,000,000 a year, but it also is an office that has been chasing production without really keeping a hand on overhead and net.
I want to take a few minutes and remind you that your target for total compensation for all of your employees should be at around 25%. That would include everything you spend for all of your staff: Pay, bonuses, taxes, uniforms, workman’s comp, any form of benefit, continuing education, staff meals and meetings, cost of preparing payroll, etc. In addition, I consider that staff compensation, as a group, should also include any activity or third-party company or individual that you hire to perform services for your corporation. This will include but not be limited to, a consultant, your spouse if they work in the office, third party companies that do your payroll, collections, data mining, etc. You get the idea. Every person that is employed to work for your office should be included. A lot of you will probably pass out when you see what you spend on staff.
With this 25% being the target, you need to go a couple of steps more to understand what really makes this work and what affects making it work for your office. It is far more encompassing than a simple percentage goal. The next few bullet points define the what, when, where, and how of successful the 25% compensation goal.
- What you pay has to be competitive in the demographic your office is located in. It has to be slightly above the going rate as far as hourly, commissions, and/or total pay.
- You have to offer better benefits than the office down the street. Today’s market requires paid holidays, insurance, free dental care for their family, uniforms, continuing education, and a great culture.
- Your office has to have protocols for interviewing, hiring, onboarding, training, and continuing to build a “Staff Driven Practice” (see more info in the “PS” section below).
- You have to be the leader and accountable for the everyday workings and success of building a team.
Employees will move towards offices that have better pay, working conditions, and opportunities and I encourage them to do that.
The 25% goal has to have all of these components to be a worthy goal that will continue to inspire your team and ensure long-term commitment from each position in the office. In the Super General Dental Practice, we also add an additional layer of reward that will eliminate cost of living raises and longevity-based pay increases, while educating your team to see the cause and effect of creating profit and sharing with the staff. It creates and reinforces the reality that when the office does better (production, collection, profit, growth, etc.) the employees enjoy that consistent success in the form of profit sharing. This 25% includes this component and is the reason why we rarely have anyone leave our practices for better pay. Your long-term goal is to create a work environment so strong and well thought out that your employees could never imaging themselves leaving. This profit sharing became the cornerstone of each and every team member’s pay. My goal was to have the highest paid staff in the US while maintaining the cost of compensation in the 25% range. Our “bonus system” or profit-sharing pay became the largest portion of what they were payed. The base salary was more than competitive, but the profit sharing meant that our staff made double what they could make anywhere else.
Hopefully you now see that while 25% is the goal for the percentage of collections paid out in the form of compensation to our team, that percentage has to be at a pay level that rivals the best paid dental offices and staff members in your area. One will not work without the other.
This is how you Summit.
PS. If you want to go a little deeper and learn more about a Staff Driven Practice, simply click here to view a video. You can also see Chapter 18 of The Super General Dental Practice (2nd Edition)
For more information on our partner, Summit Practice Solutions or to learn more about our other partnerships, contact BEST for Dentistry at email@example.com, 877-669-6320 or visit bestfordentistry.com