Whether to offer an office-wide bonus program or not is a topic that comes up quite often in 1:1 consultations with dentists.

What I’ve noticed is most WANT to offer a bonus plan, they just are unsure where to start. My goal for this short article is to plant a few ideas and thoughts I have on the subject. Surprise, I have an opinion!

First off, you have to ask “why” you want to do a bonus program (what’s the purpose?) and the second thing is, if you want to offer one, you have to decide and write down specific benchmarks you want to hit – you know, goals.

The idea being, that whenever a goal is reached, the entire organization you operate, shares in some of the upside.

Pretty straight-forward, right?

You should expect, at a minimum, your team is already performing and giving you 100% in exchange for their current pay. If you have slackers, generally speaking, a bonus program won’t do much to stimulate them – they’ll just find other ways to slack and get the benefit of their fellow employees’ dedication. So, use the swift sword (credit to Lee Milteer for that idea) and cut the fat, get rid of anyone who isn’t already happy, ready, willing and able to perform at a high level for their regular salary.

In my eyes, there can be two different, separate bonus systems in play.

I think there needs to be a group goal, that everyone participates in reaching (doctors included) and I think there needs to be individual goals you work with your employees on a 1:1 basis to agree upon, measure and encourage, then reward accordingly.

Here, I’ll just give you some thoughts on group-wide bonuses. If you contact me directly, I’ll give you my thoughts on 1:1 goals and how those interact with the total overall goals and bonuses (Why I say this is because you have to consider all goals combined when calculating your expenses – You don’t want to spend profits that aren’t there on bonuses so be sure to have an idea what your monthly total bonus line-item (I hate to use the word ‘expense’) is – $1000, $2000 or $3000 – examples only of course!).

There are two basic ways I hear discussed between dentists: paying a bonus on collections and paying a bonus based on production.

If you pay on production, unless your collections are 100% or better (anyone that consistently has over 98% has probably not checked their real numbers lately and they think because collections in 2006 after they attended a seminar went up to 105% that they’ve stayed there – complete B.S.), you’ll be paying out a bonus you might not ever see. So if you decide to pay that way, consider lowering the bonus to compensate. Example: If you pay a $500 bonus when production is between $20,000 and $25,000 and you only collected $19,000, then you’re paying out money not fully collecting what you produced, which may hamper or screw-up your ability to cover overhead or pay yourself.

You can also pay your staff based on collections.

Or, do what I did and blend the two – a production goal must be met as well as as a collections goal. e.g. Collections must be at 95% or better, of production.

Bottom line, if you choose to offer an office-wide bonus program, be sure:

1) It rewards all employees equally (you can still have individual incentive programs for each person, which is what I encourage)

2) It’s adjustable – when you’re doing well, the bonus is larger. When you have down months, the bonus disappears or is significantly reduced. I prefer it be gone altogether so you can stay in business.

3) Periodic review is a necessity. 6 months or no longer than 12. Be sure to review and make sure the numbers make sense.

4) A bonus should take work to reach. However, when your staff and you bust your ass, you should be reaching it.

I could go on, but for this post, those are some good basics. And yes, if not managed properly, a bonus program can turn into an entitlement. I’ve seen it rear its head where suddenly, staff think it is their RIGHT to a bonus. Bluntly, that’s B.S.

One last thing: I am a big believer in the unannounced, random act of “Hey, you’ve been busting your hump!” bonus. Nothing speaks louder than a crisp $100 Ben Franklin in an envelope with a sticky note praising the employee.

I’d be happy to share the bonus plan I have. Just drop me an email.