3 things to consider before giving a raise

All too often, dentists give their team members raises for the wrong reasons. You want to keep your team happy, after all, and what better way to motivate them than with a bump in pay? So you give out raises just because a team member asks, or just because it's been a year since the last pay hike.

Sally McKenzie, CEO of McKenzie Management.

The truth is, giving out raises "just because" doesn't motivate your team members at all. Instead, it tells them all they have to do to earn a raise is show up to work each day. And the worst part? These seemingly small raises might be sending your overhead costs soaring.

Employee salaries shouldn't exceed 22% of average monthly collections. Did you just do a double take? If you did, it's time to change the way you think about raises. Here are three things you should consider before you hand out raises and also advice to help you motivate your team members to actually earn their bumps in pay.

1. Your practice's finances

Before you agree to any pay increases, you have to make sure you can afford it. I suggest conducting an employee salary review to find out. This review will tell you how much money you need to bring in to cover salary hikes and help ensure your total salary overhead is in line with the industry benchmark.

2. The employee's performance

I know it can be difficult to say no to a team member who's asking for a raise, especially if that team member is struggling financially or has been a loyal employee for years. But these are all emotional reasons to give raises. You need to base the decision for pay increases on facts and if the employee has earned it.

To avoid being taken off guard by employees asking for raises, it's important to establish a clear compensation policy that tells employees when they're eligible for them. Give a copy of the policy to all new employees and make sure current employees have it, too.

As the CEO of your practice, you must also provide guidance to your team members. Make your expectations clear, and let your team members know what they need to do to earn more money. How? Create detailed job descriptions that include performance measurements and involve your team members in the process. Together, develop individual goals that complement practice goals.

Make sure team members know they'll be held accountable for their systems and that you'll provide them with the training they need to excel in their roles. This will motivate them to improve their performance, making them more efficient, productive team members who not only know what it takes to earn a raise, but who understand how their contributions help the practice succeed.

3. How you're going to cover the raises

If your team members want to make more money, the practice has to bring in more money. Before you give out raises, you need to put a plan in place to make that happen. I suggest sitting down with the team to brainstorm ideas.

Here are a few to get you started:

• Find ways to improve case acceptance, including following up with patients after their initial case presentation, improving patient education, and offering third-party financing through companies such as CareCredit.
• Determine how you can boost hygiene production.
• Train your financial coordinator to reach a daily over-the-counter collection rate of 45% or higher if accepting assignment of insurance benefits.
• Establish a collections policy and communicate that policy with your patients. That policy might require insurance patients to pay their share before they leave the practice, or require patients to pay for all procedures less than $200 at the time of service.
• Revamp your recall. Put a team member in charge of calling a specific number of past-due patients a day to get more patients in the chair.
• Review collections. Task one team member with collecting money, generating accounts-receivable reports, and following up with past-due accounts.

Raises aren't a guarantee. Your employees have to earn them. If you give raises just to keep your team members happy, it's not only increasing your overhead costs, it's encouraging your employees to do the bare minimum, rather than focusing on improving their performance. When employees understand they have to earn pay increases and know what they need to do to get them, they'll be much more motivated to excel in their roles -- improving practice productivity and your bottom line.

Sally McKenzie is CEO of McKenzie Management, which offers educational and management products available at www.mckenziemgmt.com. Contact her directly at 877-777-6151 or at [email protected].

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