When planned well, bonuses can be a powerful incentive to incentivize team members. But how do you plan them well? That was a question one member of The Business of Dentistry Facebook group posed. Like most discussions in the community, Business of Dentistry members responded to share their experiences, policies, and other useful tips. Here are four suggestions to help you think through how to start or improve a bonus structure in your practice.
Experiment with short-term key performance indicators.
Many bonus structures are based on monthly or quarterly goals. Consider experimenting with and rewarding production on a daily or weekly timeframe. Doing so could better connect production with reward and motivate people to do their best on a daily basis. While monthly or quarterly goals could work, too, you might find high production levels toward the end of the month or quarter and then a dip in production at the beginning of the next period.
One dentist in the community recommended rewarding daily production goals and paying team members their bonuses daily. You would need to coordinate with your tax adviser to make sure all payments are properly reported, but your team members will learn they can leave with cash in hand if they perform.
Identify the right key performance indicators to reward.
Just as important as the timeframe you incentivize are the measures you incentivize. What gets rewarded and measured will often get done.
What do you want your team to do? Do you want them to make more phone calls? Reward phone calls. Do you want them to book more cleanings? Set a target and incentivize that. Do you want them to book more crowns? Incentivize that.
The key is to incentivize things that lead to greater productivity and profits so the bonus will be paid out of increased revenue.
Keep it simple, listen to feedback, and be flexible.
One dentist who offered advice said he improved his bonus program based on team member feedback. He had developed a highly complicated program and received numerous complaints about the sophisticated bonus calculation system. The perception was that the program wasn’t fair. So, he switched to a simpler system that distributed 20% of collections above the practice’s monthly goal, and it would be divided equally among the team members. Since then, nobody complains.
Unlike using daily goals or measuring different key performance indicators for different team members, this system is based on a group goal and monthly target. That might be best in some practices, so just because daily goals and individualized bonus plans work in one place doesn’t mean it’s the only way to do it. What is important is that all team members understand the program, you listen to feedback and evaluate and adjust your program based on the feedback you receive. Remember, the goal is to incentivize performance. Like anything in business, be willing to adjust the program to better fit the intended purpose.
Consider hiring a consultant to help.
If you have trouble implementing your own system, consider reaching out to a consultant who specializes in team member performance and productivity. The advantage of doing so is you get the benefit of that consultant’s experiences helping other practices. They will have a better sense of what works and what doesn’t work to shorten your learning curve and help put into place a system that boosts production in a profitable way.
How is performance incentivized at your practice?
Do you have a performance-based bonus structure in your practice? If so, how do you structure it? What key performance indicators do you use? What time periods do you measure? How has your system changed over time? Did you have help putting it into place?
Let us know in the comments and share your thoughts and advice with your peers in The Business of Dentistry Facebook community.