By Carole Burns, OD, FCOVD
and Mark Wright, OD, FCOVD
Staff management—especially hiring– is one of the most challenging tasks for practice owners. Here are key findings on staff management trends from the MBA Staff Management Survey: 2013, from the Management & Business Academy, sponsored by Essilor, including insights and action points on the findings.
As practice owner and leader, it is your job to hire people who can best help you to meet your patients’ needs. At the very least, you hope these people do no harm to your patients and your practice brand, and at the very best, you hope your employees add to the quality of the patient experience. Key point: The right people in the right number in your office also are a key to efficiently operating your practice. To help you compare your staff to other practices, it is useful to take a look at recent research findings on staff management in optometric practices. Here are major findings from the Essilor-sponsored Management & Business Academy MBA Staff Management Survey: 2013, along with our tips for better handling this vital part of your practice.
Staff Management: Your Action Plan
Right-sizing your staff is critical. Staffs can be small, one person too few or too many throws off all of your profitability. Before hiring that next non-OD employee, think about how that employee will help you generate at least $136,000 in additional revenue–the dollar amount MBA Key Metrics has shown each non-OD employee of the average independent optometric practice should generate for practice profitability.
Based on this article, here are five actions for you to take:
1. Evaluate the number of staff members you have by looking at …
A) The number of staff per OD
B) Your payroll % of gross revenue
2. Review your staff management processes.
3. Create the perfect staff. This may be the time for you to lose that non-performing staff member and replace them with a better team member.
4. Review how often you have staff meetings.
5. Review the average staff working experience in years.
Hiring is Up
Employment of non-OD staff by independent practice ODs increased 11 percent during the past year, ina rebound from the sluggish hiring climate during the recent recession. Thirty-eight percent of practices added one or more staff members during the past year, while just 10 percent decreased their staff. VisionWatch reports that independent ECP gross revenue increased 4.8 percent for the 12 months ending March 2013–half the growth rate of staff employment. It is likely that many independent ODs had postponed adding new staff during the recession, even as revenue continued to grow slowly, and resumed hiring during the past year as revenue growth accelerated.
Larger Practices Adding Staff
Larger practices (defined as practices with nine or more staff members with an estimated $1 million+ annual gross revenue) account for 63 percent of current non-OD staff employment and were more likely to add staff during the past year. Half of the larger practices added staff, compared to 33 percent of smaller practices. Larger practices accounted for 67 percent of the new hires for the year ending May 2013.
The median number of non-OD staff members employed per OD working in independent practice is 3.8. The average is 3.9. This is consistent with AOA survey results. Twenty-five percent of OD practices have a staff to OD ratio of five or more. MBA audits of independent ODs indicate that practices with higher gross revenue, on average, have a higher ratio of staff to ODs.
Average staff turnover in optometric practices was 20 percent over the past year, an increase from the turnover ratio experienced during the recession. Presumably, in a high unemployment economy, staff is less likely to seek new positions. Sixty-five percent of practices experienced some turnover during the past year. Turnover is lower in larger practices, in which average staff turnover is 16 percent annually. Staff turnover in OD practices is lower than that reported for all health care and social assistance workers by the US Bureau of Labor Statistics, which was 28 percent during 2012.
Thirty-two percent of staff members leaving optometric practices during the past year were involuntarily terminated. This is equivalent to the involuntary worker discharge ratio reported by the Bureau of Labor Statistics for all health care and social assistance workers.
Thirty-six percent of OD practices currently have one or more open staff positions.
Personal referrals are the leading source of new hires for optometric practices, accounting for 38 percent of people hired. Referrals are a somewhat more important source of new hires for smaller practices. The largest number of referrals that produce new hires come from current staff members. Internet listings are the second largest source of new hires, accounting for 35 percent. Over the past five years, use of the Internet to locate staff candidates has increased, as newspaper ads have declined in usage. Larger and smaller practices acquire new employees in similar ways.
The median non-OD staff salary increase during 2012-2013 was 2.6 percent; the average increase was 3.3 percent. By comparison, the Consumer Price Index, a measure of overall inflation, advanced 1.7 percent for the 12 months ending in April 2013. Thirty-five percent of practices gave average raises of less than 2 percent, and 17 percent gave no raises during the past year. The median and average salary increases for staff during the past year were comparable to those given during 2011-2012. Smaller practices gave somewhat larger salary increases than did larger practices during the past year. Note: Larger practices pay more on average per position than smaller practices.
Fifty-six percent of independent OD practices currently offer performance bonuses to staff. Fifty-nine percent of larger practices offer staff bonuses, compared to 55 percent of smaller practices. The median bonus percentage of staff salaries is expected to be 3 percent during 2013; the average bonus is expected to be 4.3 percent of salary. Larger and smaller practices offer comparable bonus levels. Typical bonus levels have not changed over the past three years, although the percentage of practices offering bonus plans appears to be declining. A majority of ODs were lukewarm in appraising the effectiveness of their bonus plan in raising staff performance, with 58 percent rating their plan “somewhat effective.”
Independent optometric practices spend a median of 20.6 percent of gross revenue for staffing (average = 20.8 percent). This is consistent with previous MBA audits of OD practice expenses. Larger practices report higher staff expense ratios on average, with more than a third of large practices spending 23 percent or more of gross revenue for staff. Just 25 percent of larger practices report spending less than 20 percent of gross revenue for staffing, compared to 46 percent of smaller practices. Other MBA surveys show that larger practices have higher ratios of staff hours to OD hours, indicative of a higher level of delegation of testing and administrative tasks.
Forty-four percent of ODs say their staffing expense ratio has increased over the past three years; 46 percent indicate the ratio is unchanged over three years. Just 10 percent of practices indicate staff spending ratio has declined. Analysis of OD practice expense data over the longer term suggests a slow, steady rise in the median staff expense percentage of gross revenue. This is likely occurring as practices consolidate, as the overall staff hour to OD hour ratio increases and as salary and benefits costs increase faster than inflation.
Offices with larger staffs are more likely than smaller offices to implement the more rigorous staff management processes that are generally regarded as “best practices.”
Sixty-seven percent of OD practices conduct staff meetings monthly or more frequently; 32 percent conduct staff meetings weekly or more often. Larger practices conduct staff meetings somewhat more frequently, on average.
The median practice indicated that their staff has an average of six years of experience working in the practice. Larger practices have somewhat more experienced staffs, presumably related to a greater average longevity of such practices.
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Carole Burns, OD, FCOVD, along with her husband, Dr. Mark Wright, built a part-time practice into multiple locations with nine doctors. She is the senior partner of this full scope optometric practice. She is also the COO of a state-wide nursing care optometry practice. Mark Wright, OD, FCOVD, the founding partner of the practice, works with practices of all sizes as CEO of Pathways to Success, a practice management consulting firm. In addition, Dr. Burns and Dr. Wright serve as professional editors for the Review of Optometric Business. To contact: email@example.com