Bonuses – the Good and the Bad

Bonus programs are the stuff of urban legends. When you ask a dental team to make a wish list, one thing that consistently comes high on their lists is a bonus program. They talk about some other practices where they used to work and had a bonus and it was the best bonus and paid out every month and everybody was thrilled and lived happily ever after! I am always suspicious as to the historical accuracy of such tales. Plus, if everything was so great, why aren’t they still working there?

Reality is that bonuses can in some circumstances be an effective motivational tool that can result in increased production and collections and make team members operate like stakeholders in the practice. But a bonus program alone won’t fix or override other practice problems that may exist and can intensify some issues at times, resulting in demotivating the team.

In an ideal world, a doctor implements a bonus plan that is fair to the team and fair to himself/herself. Bonuses can only come out of profit and profit is what is left after all practice expenses have been paid and the doctor has been paid their fair, marketable compensation. There is no point in trying to motivate the team by paying them a bonus at the expense of the doctor not receiving appropriate income. The doctor could understandably grow resentful.

To me the best bonus program does NOT pay out monthly but is more sporadic throughout the year. This prevents team members from relying on the bonus and making financial choices that they could not afford without a bonus. If people rely on this money and they hit a month that does not pay out a bonus, morale can drop and the team can be disgruntled and resentful − just the opposite of what the doctor intends their bonus program to do.

Some doctors opt to dole out spot bonuses versus a full blown, monthly bonus program.  These rewards can vary in value and be more targeted to personal interests. Examples could be car detailing for a busy mom, ski tickets for one day or a half day, or the more commonly seen spa day or gift certificate to a nail salon. Doctors should talk to their accountants to be sure IRS rules are followed for what reward needs to be counted as taxable income.

No matter what kind of bonus you decide to set up in your practice, connect the dotted lines to accomplishment of some goal. What gets rewarded, gets repeated. So make a bonus a reward for specific jobs well done and lessen the chances your team only sees their bonus as a gift.

2 thoughts on “Bonuses – the Good and the Bad

  1. This is one is the most thoughtful articles on a practical bonus system I have ever read. I completed training at LVI and tried to lmplement the “peice of the pie” concept taught by Dr Dickerson. It woked fine until we didn’t make a bonus and just try to take money away when the team doesn’t make their base. It is very demotivating. Thanks for your thoughts. It would just be nice if every team member thought like an owner, but I guess that is why they are “good employees” and not owners.
    David S Pererson DDS

  2. Dr. Pererson –
    Glad this article was helpful to you! Bonus systems can be a motivator as long as they are managed carefully, tied to goal achievements, are fairly distributed among the team, and don’t leave the Dr. in a cash flow crunch. Let me know if I can clarify anything, Dr. Pererson, in the event you choose to do a bonus program again.

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