Episode 489: Implementing a HEALTHY Bonus Structure

Question: What are the pros and cons of bonuses, and which way should I lean?

Bonuses: There’s a good side and a bad side. (You may be surprised where Kiera falls.)

In this episode, Kiera shares how to create a bonus structure in your practice without creating entitlement, what needs to happen to consider a bonus, and how to roll everything out.

P.S. There are other ways to show appreciation than extra money in someone’s bank account — Kiera talks about those too.

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Transcript: 

0:00:05.6 Kiera Dent: Hey everyone, welcome to the Dental A Team podcast. I'm your host, Kiera Dent, and I have this crazy idea that maybe I could combine a doctor and a team member's perspective, because let's face it, dentistry can be a challenging profession with those two perspectives. I've been a dental assistant, treatment coordinator, scheduler, filler, office manager, regional manager, practice owner and I have a team of traveling consultant, where we have traveled to over 165 different offices, coaching teams. Yep, we don't just understand you, we are you. Our mission is to positively impact the world of dental, and I believe that this podcast is the greatest way I can help elevate teams, grow VIP experiences, reduce stress and create A teams. Welcome to the Dental A Team podcast.

0:00:49.7 KD: Hello, Dental A Team listeners, this is Kiera, and you guys, I hope today is an awesome day for you, wherever you are. I am car casting today. It's just fun. It's a beautiful, snowy drive, don't worry guys. Totally safe. The roads are, nice and clear, we got snowed in at my parents house, so I put at their house for a long time, and now we're driving back home. So excited to be car casting with you. I hope you are somewhere awesome today, I hope you're excited to go to the office or go for a run or working out, or getting ready. Whatever you're doing, I hope it's a great day for you. Also, if this podcast has helped you in any way, shape or form, please guys help us out. Our goal is to do over a million downloads, and I would love your guys' help getting there, so please rate and review. It's really simple, just go on your phone, scroll down to where all the episodes are and just leave us five stars, also share it with a friend, that would be really, really awesome. That's gonna help us on our mission to positively impact the world of dentistry in the greatest way possible.

0:01:54.7 KD: Also, if you are new to the Dental A Team podcast, welcome. My name is Kiera Dent, I get asked every single time if that really is my name, my name really is Kiera Dent. It really did take me three fiancees, I only got married once, but I was engaged three times, you better believe my husband had a tricky time figuring out what ring to get me after I already had had two other fiancees. And it was pretty funny when he was asking my dad to marry me. My husband said, "Hey, Rick, I know me, and the other guys... " He's like, "Me... " I think he said something along the lines of like, "Hey Rick, me like the other guys, I also want to marry your daughter." And I thought, "Oh, what a sad go." I had already been engaged two other times, and the way he proposed to me, he literally said, 'Even though it took me three months to find a ring to surprise you, I still was able to pull it off." It was a bit tricky to find a ring because I didn't... I had already chosen the other two rings I wanted. [chuckle] So, but yes, Dent really is my last name.

0:03:00.9 KD: My husband should have been a dentist, his name is Jason Dent, which actually means tooth healer, but he decided to be a pharmacist. So I get the dental side, he gets the pharmacy side, and together we love medicine. We love healthcare, we love helping people. So it's a good time. So that's kind of... Us, the Dental A Team podcast was created to elevate team members. As a team member myself, I've been a treatment coordinator, a dental assistant, a scheduler, filler, office manager, regional manager, I've worked at a dental college, I have owned several dental practices, and I... Me personally, have consulted in probably well over 200 dental practices now in my career. Our team travels to your practices, we also coach virtually, and our whole team, we say We don't just understand you, we are you. So I'm very choosy on who gets to work in the Dental A Team. All of us have had to have clinical experience, plus front office experience. And I grill them on being office managers. So they have to know what KPIs are, they actually have to know how to build. They have to know how to coach and elevate teams, they have had to have grown multiple dental practices.

0:04:06.8 KD: So my first practice, I took from 500000 to 2.4 million in nine months and opened our second location with a brand new grad straight out of school, so I'm definitely pro, at those grads, I think that you are the future of dentistry, and so definitely wanting to give back and help out. So we really found that as team members ourselves, a lot of the CE out there is geared towards the dentist, and we thought, we wanna create a company that is actually geared towards teams, of how to implement all these different systems of how to make it so your life is easier, and you can give a better patient experience. Because we believe as a full team, which includes the dentist and the team that that is how you're going to impact your communities, your patient experience the best. And it's going to make it easier for everyone, if everybody is rowing in the same direction together, you better believe it's going to be much easier to grow a ship, versus people growing at their own cadences in their own way. And so that's really what the Dental A Team's about.

0:05:00.8 KD: So we have the podcast to elevate team members, we are ADD PACE-accredited, so our... All of our online resources are all CE for you and your team, our webinars, our events that we put on every single year, also CE. So, try really hard to give back to you guys, grow you into the best practices, and that's what the Dental A Team company is all about, is elevating people and expanding what they believe is possible in themselves and their businesses. So we focus on you as people, we focus on the profitability of your practice, and we focus on system implementation top to bottom, plus team development, top to bottom. So if that resonates with you, you are in the right place, if it doesn't, hey, hang out with us, maybe it will one day. But we really love to elevate teams and help you guys have insane success, so that way you're able to give back in a greater way to your communities. So today's topic, I really wanted to just dive into bonuses. [chuckle] Bonuses, I get asked a lot about bonuses and how to implement a bonus structure into your practice.

0:06:01.4 KD: Which kudos to those doctors, I really love that doctors wanna give back to their teams. If they're being successful, they want to have their practices be successful as well, which I am all for. You guys know, I believe that we don't just succeed as one person, it takes a team effort, and as we're all going together, I really do believe, let's benefit everybody. As companies get larger, you should grow as well, if that's what you wanna do. However, I'm super kind of anti-bonuses, I said it out loud, guys. The reason why is because I feel like bonuses can create an entitlement mentality. And not that we try to, but I've also kind of watched to see that... I just heard of a practice and they were giving end of your bonuses, and guess what? People were complaining and people literally were quitting because of these bonuses, and I just sat back and thought, "Yuck." I am not okay with this, because a bonus is something above and beyond. A bonus is something where you do go above and beyond.

0:06:57.6 KD: And guess what? Your employers don't actually owe you anything other than your job, and so I also don't like bonuses just for hitting status quo. A bonus should be for going above and beyond, so I'm not a pro-bonus-er guys, you could hang up right now on the podcast, that's fine. But I'm gonna go through and explain to you why, but I'm also gonna tell you a way that I think you could put in a healthy bonus that could benefit everybody. Because at the end of the day, I want teams to flourish, I want teams to be successful, I also don't wanna create an entitled snooty practice either, because what happens oftentimes with bonuses is people start to then rely on that bonus for their income, versus seeing it as a bonus that can come and go, and it's a great thing when we really do crush it and go above and beyond versus it being something that's expected. And so that's where I draw the line on bonuses, is bonuses should never, ever, ever be expected. Bonuses should be appreciated for something where we kick booty, we go above and beyond. And that is something that we do as a team.

0:07:57.4 KD: So I'm pro having bonuses as a team, you guys there's 1000 bajillion different ways to do bonuses, and I've worked in almost every single one of them. The one where it's individualized, so our schedulers, if they keep the schedule rocking and rolling, they get bonus on it. Our office managers, if we're killing it and we're producing, they're getting bonus for it. Our hygienist, if they're producing, awesome, they're getting bonus for it. So I really... There are a lot of perks to that, there's also a lot of perks to having it as a team bonus where everybody's bonus-ing together, that you guys are growing and working together as a team versus individuals. And honestly... A lot of these things work. I've done same day treatment bonuses, I've done whitening and ortho bonuses, I've done profit sharing. So, lots of different ways to do it. I just am pro... Don't you dare do a bonus that becomes entitled, so usually to prevent entitlement, I like to shake up my bonuses every quarter, that way it doesn't become a set thing. And it also needs to be, again, where we're growing. And guys, just so you know, a healthy practice should be growing if it's not a massive growth mode, meaning a brand new practice, it should be growing at a minimum of 10% year over year over year.

0:09:11.5 KD: So guys, as a team member, I always hated getting this dumb bonus, because every year I felt like they were just changing the bonus so they wouldn't have to pay me. I was naive, I didn't know that to have a very successful practice. You actually needed it to be growing every single year, otherwise, we're dying, guys, bottom line is, we are dying as a practice, so I didn't know that as a team member, I just thought it was because people didn't want to pay me for a bonus. So I just wanna clear up that misnomer out there that that's actually not true, that's not what people are doing, that's not why they want to increase the bonuses year over a year, but it's because we do need to be growing and it's... That doesn't need to happen. Otherwise, we're gonna go out of business, and that's going to be a sad day for everybody involved. So with that said, year over year, the number should increase every single year and maybe even quarter by quarter, also if you are a new start-up practice, that number should be growing even more than that, that way we can get up to the max that we can possibly produce in our practice. So certain bonuses that I like, I actually like profit shares, so... And you can break this up to where if we hit X amount. And you can also tier it, so let's say that we go... If our goal is 100000 and we go up to say 125, 150, 175, there are different bonus tiers within those three amounts.

0:10:33.4 KD: So maybe it's a 1% or 2% or 3%, it also could be a dollar amount. 'Cause I'll be honest, as a team member I didn't really love percentages, because I did understand how much I was making. So if you're going to implement a bonus structure, I am insanely pro that you need to make sure that your team can actually figure this bonus out easily. So let's say maybe it's that they get a 25 cent raise, they get a 50 cent raises or 75 cent raise. Now again, before I even think about rolling these bonuses out, I'm going to actually run my numbers, I'm going to see, "Okay, if the practice does 10%, that's a no-brainer. Okay, so we're gonna increase it 10%." So if last year my goal was 100000, at a minimum, my goal this year should be 110000 per month. Okay? That's just our standard baseline. The next year, it's gonna go up 110, we're gonna go up 11000, so we should be at 121, so that's how it should go year over year over year. Guys, that also goes to where we need to make sure our fees are up-to date that we are negotiating with our insurance plans, that we're looking at our insurance plans to possibly drop. Lots of different ways that you guys can make sure that we're achieving this goal, it should not be out of cherish.

0:11:45.8 KD: Also, we should be adding additional procedures to the practice to help our patients, so we're adding those different ones to our practice. That way we can ensure we're doing better. We should also be looking at our frequencies, so by increasing these goals, it forces us to innovate, create and become better as a company as well. Hey Dental A Team listeners. How was your 2021? Have you reflected back? Where did you really win? Where did you really not win? If 2021 was a year of yours, congratulations, I am celebrating with you, and I would love to invite you to take it to the next level. If 2021 wasn't quite your year, hey, it's alright, I'm there for you, and I would love to invite you to make 2022 the year for you. That's right, guys, if you're ready to take massive action, if you're ready to take your practice and your team to the next level, increase your profitability, yeah, guys, through an easy way. Get your entire team aligned and you're ready to just have your life be different. That's right, team development top to bottom, system development, top to bottom, changing and shifting your culture, improving your team moral. If that sounds like what you're interested in, guys, I'd love to invite you to join us in our Dental A Team platinum group.

0:12:57.2 KD: It's the exclusive group where we physically fly to your practice, we give you insider tips, we share with you, we have a quarterly newsletter that goes to that shares all the updates were coming up with, and we share it with our platinum group. We'd love to have you and I would like to invite you because guys remember, you're always one decision away from a completely different life. So reach out guys, I'd love to chat with you, I'd love to see if you're a great platinum client or what works best for you. Email me [email protected], and I can't wait to welcome you as our newest platinum client. Take massive action. This is your year. Let's make sure 2022 is your year. [email protected] Can't wait to welcome you.

0:13:37.9 KD: So with that said, then what I like to do is, let's say we go... So 10% an hour, our base is 110. So that's our base, so if we go up, let's say we add 10%, 20%, 30%, so if we go up an extra 11 grand or 22 or 33000 per month, then we can break it down of like maybe it's a 25 cent raise, a 50 cent raises or 75 cent raise. Again, it's not an actual raise, but that would be the amount of bonus that you would get and base it on the number of hours. So if you're full-time, part-time, or whatnot, that's what we do. You can also break it down per quarter, so it's only paid out per quarter, or you can do it monthly. If you're going to implement a bonus or a profit share or whatever you choose to call it, I am pretty pro that you guys actually include it monthly. The reason I like it monthly is because it does help people to stay incentivized, versus quarterly, it tends to be a little too far. Now again, there can be a purpose of having that quarterly bonus in play, it totally is up to you. Sometimes my leadership team, if they are rocking and rolling and they're crushing it quarter over quarter, fantastic, that could be a zone where we have it.

0:14:45.2 KD: You also can put this profit share based on your overhead or the profitability of the business. Because just because we're growing doesn't mean that we're actually a more profitable business. Guys, you want your practice to be profitable, the reason being is, if your practice owner is actually secure, you're going to have more opportunities and have less stress in your practice, I will promise you this over and over and over again. When dentists are very stressed out about profitability of their practice, wondering, can we afford payroll, can I afford to do this, this or this, it becomes a very, very, very stressful situation for everybody in the practice. So we wanna make sure that we actually alleviate that stress, that we're not having that stress on our offices, that we're able to make sure that everybody is successful. Everybody isn't stressed, everybody is able to grow together. So that's really what we're looking for. We wanna make sure that that's happening. So with that said, you can do monthly or you can do quarterly, also you could break this bonus up to where it every single month, if we are at our revenue plus our overhead or profitability, and maybe we got X number of Google reviews, I don't care.

0:15:57.2 KD: Then at that point, we maybe share 1%, 1.5% or 2% of collections divided amongst our team based on full-time, part-time hours worked. That's another way that you can do it. Whatever you choose to do, I am always, always, always pro making it simple, making team members know how to get there with success, and also making it easy for them to know what they're going to be getting. It's much more motivating if I know that I'm going to get $100, if I lose three pounds, five pounds, 10 pounds, whatever you guys wanna do, versus saying, "Kiera, you're gonna get 1%." Well, what the heck is one percent? I don't know what this is, it's much more motivating to know I'm going to make 100 bucks. So depending up on your team, some teams will have percentages, some teams are very pro that way, I don't care how you do it, everybody just has to understand the rules of the game, that way we also eliminate that frustration because our expectations are being met. You can also do other bonuses, some people like to bonus for every fluoride application or for every night guard that we do, or for every whitening that we do. Again, that totally works. Or ortho, we're wanting to do a lot of ortho cases, maybe we ramp that up for a quarter, maybe it's for every ortho case that we do, it's 50 bucks into the pot.

0:17:12.8 KD: I don't know, you can come up with a thousand different ones. I really prefer though, as a business owner, I'm going to say I prefer percentages or set dollar amounts, that way I can calculate that in and add that into my forecast, if you will, or into my numbers to know, are we profitable or are we not profitable with that. When it becomes that dollar amount per service that we offer, you can add that in so you can ensure your profitable or not, but just making sure that you don't ever over-leverage or get into two hot of water for these bonus systems. Again, these bonus systems have to be for going above and beyond, and bonus systems only, and I'm going to scream this from the rooftop, they only come into play when the practice is profitable. If your practice is not profitable, please do not be implementing a bonus structure. You might think it's a great idea, it just ends up usually adding heartache, stress and frustration, because now we're paying more for the same type of work that's happening, we're stressed out for it, and it doesn't make anybody happy if we're doing this. So make sure that you're profitable before you even think about it.

0:18:16.9 KD: Also make sure your team even wants it, some teams aren't motivated by money guys. Some teams would much rather have a day off, so calculate that out, what would it cost the practice to have everybody have an extra day off every quarter, or every single month? What would that cost? And you... And it's just not the hourly amount per employee, it also is the amount that we're paying for, like what would we be producing that day. So calculate that up. Those are different ways that you can do it. Another bonus structure is for your hygiene team, I'm really pro actually having hygienist bonus for every day, or it can also be broken into that month where they need to be hitting it on a monthly versus just a daily, of going over what they should be producing as a healthy provider. So let's say, for example, a hygienist should be producing at a minimum three times their pay on a PPO practice. Fee for service, I typically say it's a four times their pay. So if I'm making, I'm gonna do real easy math for you guys, if I'm making $10 an hour, which no hygienists would ever take that job. I should be producing $30 per hour, okay?

0:19:23.0 KD: If I'm making... If I'm fee for service, it should be $40 per hour is what I should be producing as a healthy hygienist producing in a practice, so with that said, any dollar above and beyond that... So let's say again, I'm in a PPO practice, I'm making 10 an hour. Any dollar that I make above that $30 an hour, I would be bonused. So let's break it down for an eight-hour day, I should be producing $240 for that day. Anything that go above and beyond 240 is going to be bonused out at either a 10 or a 15%. So let's say that day I do 250, I would possibly get 10% of my $10, which is a $1. Guys, if I'm making 10 bucks an hour, that is a sweet bonus for me, alright. If I'm making 50 an hour, that's not a great bonus. So again, though, it is. Did you just hear me? That's bratty, I should be grateful. Even that extra dollar I should be thankful for, because guess what, that's something above and beyond what I'm being paid, and it is not required by my doctor to do that for me.

0:20:25.9 KD: So you just heard me and please guys, change your expectations for appreciation and you're gonna have a completely different life. That goes for employees and employers, change your expectations for appreciation and see what kind of a life you have. So with that said, I want you guys next thinking about, how do you wanna roll this out? I would strongly suggest, number one, let's take a look at our numbers before you do anything, look at your numbers, calculate this in. Because the worst thing that's gonna happen is if you add this in and then guess what? You can't afford it, then you have to take it back. Oh, that's just a bad day, which is why I'm not always crazy pro on bonuses. They stress me out because again, I know if we take them away from team members, team members get frustrated. So, that's the reason why... Make sure before you do this, you understand your reason why. Why do you wanna do this? If it's because you guys are profitable and you're killing it and your team's doing amazing, then guess what, do it. I'm all for it. I think it's great, I'm totally for it.

0:21:29.5 KD: If your team... The business has been growing and they've been kicking their booties, maybe you just do a bonus for them of like an end of year thank you, and that doesn't necessarily have to be monetary, maybe that's an extra day off, maybe that a... Everybody gets snowboarding passes for the year, I don't know, look to see what your team actually wants. Get to know your team. I think oftentimes, we throw money at team members thinking this is going to get them to stay, and the bottom line is, it is nice, however, let's make sure we're actually truly appreciating our team members in the way that they wanna be appreciated. I think that that's ultimately the driving reason behind bonuses is we wanna show appreciation for them going above and beyond, so play it out, check your numbers. So I'm gonna walk you guys through this. The way I implement bonuses is number one, I gotta make sure I'm profitable, I prefer practices to be sitting at a minimum of 50% overhead, a 20% profit after all doctors are paid.

0:22:22.2 KD: That way doctors, owners, 20% profit. Okay? Then from there, I'm going to calculate out and see what's a 10% growth at a minimum on the practice. Then what happens if we do a 10, 20, 30% increase? You might even do 10, 15, 20 might be too high. Look back on the last year and see what were your numbers that you were hitting month over month, is that bonus or profit share even feasible for your team? Can they even get there? Because we don't wanna put something too far out either, then determine how much are you going to pay, and then calculate out if you were to pay them every single month at the max bonus, what would your profitability margin be at the end of the year? Again, that's assuming that you're going to be more profitable, because you're producing higher, it's also assuming that you're going to be growing, it's also assuming that you're going to be benefiting on your team.

0:23:13.9 KD: Also look to see what is that going to do for each of your team members as far as their pay, like what type of a raise. 'Cause also, you need to make sure that you map out how far team members will ever grow. So for example, having a ratio of hygienists are paid a range from, let's say it's $25 to $35 per hour, we're at the top of our area, and we wanna make sure... Telling your team that this is where you're going to max out, eliminates a lot of stress and frustration. Then when they know they're tapped out there at the top of that range, the next piece does come into profit sharing. So if all your team members are topped out, maybe you do wanna add in this profit sharing because that's a way for them to continue to grow. Progress equals happiness, growth equals happiness. So that's a way to keep team members engaged, but make sure you also know your team that this is something that they actually want to have, not something that you think that they wanna have. Check and see, make sure you have it that way, so we went really long on this podcast, I really wanted to make sure I dove into the pros and cons of bonuses, also different ways to set up bonus structures, different ways that you can implement them.

0:24:21.2 KD: And again, set the expectation that we're gonna try this for a quarter and assess. You can try it per position, there's lots of different ways you can bonus, maybe it's $100 for every month that they keep the schedule full. But before you roll this out, calculate out, how much is this actually going to cost the practice? Can we afford it? And then roll it out. Benefit your teams, guys, I love it. I love that this is why you wanna do it. I love that you wanna give them growth opportunities, but find out. Not all team members want extra money, not all team members want an extra day off, maybe there is an option, they can have this or this. But make sure it's just very clear, very simple and sustainable. If you have questions or you want help setting this up or you've been thinking about it, reach out, we'd love to. This is what we consult on, we dive it into your practice specifically, everything we do in Dental A Team is customized to your practice. It's not a cookie-cutter A to Z, it's customized for what your practice and your employees and your team need. So guys, reach out [email protected] And it's always thanks so much for listening and I will catch you next time on the Dental A Team podcast.

[music]

0:25:28.2 KD: And that wraps it up for another episode of The Dental A Team Podcast. Thank you so much for listening and we'll talk to you next time

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