What separates a good dental practice from a great one? Your team. You want your employees to feel invested in what they do. To them, being part of your practice is about more than just cashing a paycheck. Studies suggest that employees’ productivity increases if their earnings are tied to performance or productivity goals. To take your practice to the next level, you should implement a bonus system. Maybe you already have a bonus system in place, but it’s not yielding the results you want. No worries, that’s why Bryant Consultants is here to suggest a different approach to the bonus system at your dental practice.
Make the terms clear
By incorporating a bonus system, your team members become invested in the success of your practice. They also are going to gain a greater insight into the financial details of the practice. This is not the time to be obscure or hide numbers from your team. Speaking in clear terms is crucial.
This starts by establishing a few revenue thresholds and communicating that information to your staff. The B.A.M. (standing for bare and minimal) are figures that guide the practice for at least the next six months. It includes the total amount of revenue needed to break even, as well as the total budget for the next six months of operations.
We recommend using average collections as the basis for the amount of any profit-sharing bonus. Average collections are defined as the total amount of revenue collected over a three-month span, which is then divided by three.
From that, you determine the profit-sharing bonus. We advise the following formula: take the average collections, then subtract the B.A.M. What is left represents your profit. Take 20% of that profit, and divide it among the members of your staff. In other words, one-fifth of every dollar of profit over the monthly collection B.A.M. is placed into a pot and split among your team.
Have set rules
Certain qualifications should be met for team members to qualify for the bonus system. First, he or she should not be on probation. You can also use the bonus system as a guide for behavior by disqualifying employees who have any disciplinary action added to their file or incurred more than one unexcused absence in the previous month of work.
Follow this guide when implementing a new bonus system
- Calculate your B.A.M., and then re-calculate to make sure it is correct. This should not be a quick process. Start by looking at the profits and losses from the previous year of business, then compare it with your current budget. Your salary as the practice owner needs to be figured into the B.A.M. You also need to examine your practice needs and current staffing levels. Do you plan on adding new equipment or team members? That cost needs to be figured into the B.A.M. as well.
- Give notice to your team. Whether you already have a bonus system in place or you’re adopting one for the first time, you want to give your team 30-day notice of the new bonus system being implemented. Explain there are no limits to the additional money each member of the team could bring home under this bonus system. The more the practice makes the more extra money that generates for your staff.
- Make sure your management team is on board. Implementing a successful bonus system will not work if you are the only advocate. Get your associate dentist or office manager to buy in on the new system.
- Run the numbers. Once your management team has bought in, schedule a full team meeting to review the new bonus system. Run some scenarios—both good and bad, showing the potential money that could be made. You can also have the team determine how much they would like to make under the bonus system, then determine the amount of average monthly collections needed to reach that goal. This gives you a talking point on each business day to show your team what is needed in order to achieve that goal.
- Do your part. If you install a bonus system, follow through on it. That means making payments on time every month. Maybe your practice has an off month and doesn’t hit the amount needed to qualify for the bonus. Do the math and show them how the practice missed the mark. This invests your team in the success of your practice and also establishes a culture of consistency.
Dental Practice Consulting
Maybe you’re lost on finding ways to raise your profit margin in a post-COVID world. Maybe you like the idea of a bonus system but have no idea how to implement it. Maybe your existing bonus system isn’t working, and your staff is resistant to the entire concept. Whatever situation your practice faces, the dental practice experts at Bryant Consultants are here to help. We have decades of combined experience in the dental industry and put that expertise to work for you. To find out more, schedule your consultation today by calling (877) 768-4799. We provide consultation, training, and coaching to help improve the operations of your practice so that you can provide exceptional results to your patients. No office is out of reach for us; we will even come to you!
