Staff Management

Tie Staff Bonuses to Performance to Build a Sense of Ownership

By Troy Humphreys, OD, FAAO

Feb. 10, 2016

SYNOPSIS

Staff bonuses can motivate performance–and they work best when tied to bottom line profits. See how a bonus system can create a sense of “ownership.”

ACTION POINTS

MAKE ALL EMPLOYEES ELIGIBLE. Show how all positions are important by allowing all employees to profit more when overall practice net profits increase.

TIE PROFIT GOALS TO MISSION. Point out how practice profitability increases are tied to better serving and fulfilling the practice’s mission statement.

MAKE NON-MONETARY RECOGNITION. Publicly acknowledge employee achievement, and treat staff to complimentary lunches and coffees to say thank you.

Each member of your team contributes to the quality of the patient’s experience in your office, from the front desk, to the pre-testing technicians who prepare patients for your exam to the doctors and the opticians who provide patients with the products you prescribe. My office has created a bonus system that acknowledges the importance of every employee to overall practice profitability.

Family Eyecare Associates

Sparks, Nev.
www.familyeyecareassociates.com

Number of locations: 1

Number of doctors: 6

Number of support staff: 24

Number of annual comprehensive exams: 9,400

Make All Employees Eligible for Bonuses

We have a six-OD practice with 26 support staff (we call them team members). Every one of them are eligible for our new bonus structure just implemented at the beginning of this year.

We play the Great Game of Business (modeled after the Great Game of Business book by Jack Stack, which I read, applying the the principles to our practice). Bonuses, awarded to the whole staff, are entirely dependent on our bottom line net after all expenses (including all salaries and owner salaries) are paid out. In the “Great Game of Business,” the more the business nets, the more all players (doctors and staff play the same game) can take home. The sky is the limit!

We have offered bonuses for decades. In the past, it seemed like there was positive movement when a new bonus structure was implemented, and then it became an expected part of our team members’ salaries. We opted to move toward the Great Game of Business philosophy to instill a good understanding of our business to all of our team members, and allow them to move our business forward together with us, the owners.

As this is a brand new program, as of the beginning of 2016, we have not been able to see how it will change our business practice and net. We have a few colleagues across the country who have shown significant positive gains in net and patient experience by creating an “open book” management philosophy that allows team members into the workings of the business, including how much the practice is profiting each year.

The Great Game of Business is not something you have to “afford” to do because if there is no net, the practice will pay no bonus. I would say practices can’t afford not to play the Great Game of Business and enable their teams working knowledge of how income and expenses are doing in their business.

Our business will pay a bonus if we have at least 2 percent net after all expenses (including COGS/Staff Salaries/Dr Salaries) are met. These bonuses are awarded on a quarterly basis. For example, let’s say in the first quarter we collect $750,000. If we have a net (after everything is paid for our business) of $15,000, or 2 percent of $750,000, then every staff member and doctor gets a bonus equal to 2 percent of their pay that quarter.

We have 3.3 full-time equivalent doctors. We all work four day weeks, and two doctors work on a limited, part-time basis. In 2015, 21 percent of revenues went to doctors’ pay, and 25 percent of revenues went to support the team. Our “Dr net” is higher then 21 percent, as many of our benefits (health Insurance/401k/etc) are not in the doctor pay column in our profit and loss statement.

PRINCIPLES OF THE GREAT GAME OF BUSINESS

www.greatgame.com

• Open your financial performance records to your whole team.

• Create a sense of ownership among employees.

• Explain how their individual and collective performances affect the success of the business.

• Create incentives to improve performance, share in the profits.

Tie Bonuses to Practice Mission

After discussing our philosophy and mission with our team members of how “we provide the highest level of eyecare and service to our patients,” we explain that in order to do this, we must have net profits in our corporation to improve our technologies, as well as our patient experience, reinvesting in our business and our teams.

Our team members are awarded if our practice has a net of 2 percent or more (of our gross receipts) after all expenses are paid. Everyone in our practice is eligible. The higher the net over 2 percent, the higher their bonus. At 6 percent net, they also get to share in 401k profit sharing at the end of each year.

We have a 401k, but as owners, can opt to put extra into it on the profit sharing side. If we hit 6 percent, or more, net, everyone in the organization then shares in profit sharing for the year. Here is the system: 2% net = 2% pay bonus (referenced above), 4% net = 4% pay bonus, 6% net = 6% pay bonus + Profit Sharing (will add 10% of the remaining net to Profit sharing for the organization), 8% net = 8% pay bonus + Profit Sharing (15% of remaining net added to profit sharing), 10% net = 10% pay bonus + Profit Sharing (25% of remaining net added to profit sharing).

The profit and loss statement is updated at the monthly office meeting and then two weeks following that. It is available for everyone in the organization to see, and we encourage each team to come together and change habits to affect either spending or receipts. We are already seeing the mentality of “business owners” being brought out by our team members!

We will see how, and if, bonuses are hit quarterly. If they are not, we can look at lowering the net threshold, but we hope our teams will continue to enhance processes and patient engagement to improve our net. As a business, we need to ensure that our net allows us to continually advance our business, and allows us to live out our mission statement.

Focus on Teamwork in Bonus Structure

We believe that team-wide bonuses are the best approach. This really allows our entire office to work toward a common goal, and enhances our morale and our ability to create changes that affect both our patient experience and our bottom line. Now, instead of having four owners of our business, we have 30+ owners of our business, because they are all engaged in making a difference for our patients while improving our net bottom line. And if we don’t create net, we do not take dollars home above and beyond our normal pay.

Increase Employee Engagement in Practice & Patients

Our team members now will be actively engaged in our profit and loss statement (with certain items, like salaries and staff expenses, grouped together), and they will be able to forecast our income and expenses in huddles as a part of this game. We try to make it fun, engage them in thought, and move them to change systems and processes to improve our efficiencies for patients and for our business. We keep it light and fun because it’s important to continually up the morale–and employee enjoyment–in the process of the game.

Couple Monetary Reward with Recognition

As a bonus is reached, we give a big thank you to our team and recap how we all did it! Doing this is important, so we can continually learn, engage one another and change systems to enhance the outcome–our practice performance.

In addition to the monetary bonuses available through our new Great Game of Business incentive program, we also treat our team every so often to lunches and coffees to say thank you.

Troy Humphreys, OD, FAAO, is the owner of Family Eye Care Associates in Sparks, Nev. To contact: drthumphreys@familyeyecareassociates.com

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