Giving Raises Confidently Without Risking Cash Flow

Giving raises shouldn’t be a gamble. It’s a strategic decision that impacts retention, morale, and profitability. Yet many practice owners make these decisions based on emotion, or worse, pressure from team members, without a clear framework.

Here’s how high-performing dental practices approach raises with confidence, clarity, and control.

1. Know Your Numbers First

Before giving raises, understand how it affects your practice’s financial foundation. The ideal payroll benchmark is:

• 30% of total collections, including fringe benefits like 401k and insurance

• This fits within a healthy 50% overhead, leaving 30% for doctor pay and 20% for profit

If your practice is exceeding these benchmarks, it’s time to assess whether you need to cut labor costs or increase production and collections before issuing raises.

Use a financial model that includes:

• A conservative baseline (bare minimum to operate)

• A middle-ground forecast (current costs and output)

• A high-end scenario (including raises and hiring plans)

This gives you visibility into what you can afford and what you need to produce to make raises sustainable.

2. Tie Raises to Performance and Value

Giving raises should not be automatic. The most sustainable practices implement tiered job descriptions and pay bands for each role.

Example: For a dental assistant earning between $18–$25/hour:

• At $18: Basic assistant responsibilities

• At $20: Intermediate skillset and additional tasks

• At $25: Lead assistant, added responsibilities and leadership role

Apply this model to all roles:

• Hygienists

• Treatment coordinators

• Schedulers

• Office managers

Define what value looks like at each tier, and use annual reviews to assess who qualifies. Check market averages on Glassdoor or Indeed to stay competitive, aiming to pay in the top 90% for your region without overspending.

3. Communicate Raises with Clarity and Boundaries

When raises are done right, they boost morale and team culture. But without structure, they cause confusion and resentment.

Set a cadence for performance reviews and compensation adjustments, ideally once per year when budgeting. Use clear communication to:

• Outline how raises are earned

• Tie performance to growth opportunities

• Avoid inconsistent or emotional decisions

If a team member demands a raise outside this process, refer back to the system. This protects your culture, prevents favoritism, and creates fairness.

Build Your Raise Process for Long-Term Stability

Action Items for Dental Leaders:

• Audit your current payroll and compare it to collections

• Implement tiered roles with defined expectations

• Set annual review cycles tied to budgeting

• Communicate openly and consistently with your team

When owners lead with data and strategy, raises become a tool to retain talent and grow the business, not a source of stress. Need our help? Schedule A Free Call today!

For more tips, check out our podcast.

Last updated: August 2025
Written by Jacintha Ham, Dental A Team