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Compensation Models That Inspire Excellence

5 bad habits and how to fix them
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Compensation is one of the most complex operational systems in your dental practice. When implemented effectively, compensation and rewards can be a catalyst for growth, motivation, high morale and enhanced performance. The way you compensate your talent sends a potent message about the vision and culture of your practice. In short, it personifies you, your goals and your focus as the leader.

A strong compensation system reflects your values and beliefs regarding individual recognition, value and support. Your choices communicate what kind of team members you want in your practice, what behaviors and results are valued and your core values.

However, compensation is also an emotionally charged topic. It magnifies your team members’ respect, self-worth, appreciation and validation. It magnifies the dentist’s future viability, respect as a leader and his or her family’s future financial health and well-being. It’s not unusual to see dental practice compensation systems powered by guilt, confusion and fear, potentially creating bad habits for team compensation programs. Here are the top 5 bad habits I see when working with dental practices:

1. Insisting on entitlement pay
Entitlement pay is giving team members a 2% to 5% cost-of-living increase no matter how the practice has improved (or not) or how the individual staff member has improved (or not). Long-term bonus plans that reward your team members equally also can be perceived as entitlement. Employees earn their original wage, incentives and benefits to do the job they were hired to do. Wage increases should only be merited by practice and personal growth. Entitlement wages produce no motivation to grow, while merit increases celebrate new levels of success and achievement, both personally and professionally.

2. Compensating by the gut (or tummy ache)
Without set expectations, benchmarks or goals to interpret success, compensation decisions can only be made subjectively. If you are motivated by fear, you may feel held hostage in salary reviews. If you are pessimistic about the state of the practice, you might never establish a precedent to celebrate success. Or if you must be liked to feel successful, no performance expectations will ever be enforced. This leads to managing by the gut, which never works for the leaders or the team.

3. Treating everyone the same, therefore celebrating mediocrity
Whether wage, bonus or benefit, if you treat all of your team members equally, you are treating most unequally. When everyone gets the same, what happens to your poor performers? Your superstars? In an effort to treat everyone fairly, it’s easy to homogenize the group or motivate them to the middle. To be effective, compensation must inspire team members to move to the right of the bell curve.

4. Pulling wage increases out of the owner’s pocket instead of increased profitability
This aligns with the bad habit of entitlement pay. For individuals in your practice to experience growth, the practice must grow. If the practice has not seen profitability improvements and incurs new expenses due to a salary increase, that increase must come directly from the owner’s share. This practice trains your team to believe their efforts do not impact the outcomes of the practice. That perception is dangerous and untrue. If a team member’s performance exceeds his or her personal job description expectations, it will directly impact your practice and that team members deserve a salary increase or an individual incentive.

5. Using little or no communication
There is nothing worse than a leader who sets unclear or no expectations, doesn’t praise progress and gives no feedback, either good or bad, and then announces — when team members least expect it — there will be no salary increases. Team members may express frustration about compensation because they don’t feel appreciated, included or respected. Do you want your team members to be motivated? Talk to them!

Don’t beat yourself up if you recognize any of these bad habits in your practice. This is your opportunity to enhance employee motivation and contribution as your practice demands new levels of excellence from you and your team.

Where to start?

  • Develop a vision and set goals for where you want your practice to be by the end of the year. Involve your team members. Make sure they know what individual and group benchmarks they need to meet to achieve these goals. Incentivize great performance by creating a potential pool for individual merit increases and incentives in the coming year that are based on the achievement of annual goals.
  • Make sure you have all the written tools needed to guide your team members to new levels of success. This includes customized job descriptions, statistical interpretation of growth, training plans and progress notes.
  • Learn the fine art of effective growth conferencing by carving out time to meet with each team member to discuss goals for growth. Make sure they can see how their efforts will result in the practice achieving success. Check in with your individual team members throughout the year to ensure they are focused and winning. End the year with a salary review to highlight strengths and opportunities and to award compensation increases when warranted.
  • Catch your team in the act of doing things very right or almost right and communicate, communicate, communicate!
  • Create a culture that demands continuous improvement and recognizes and rewards efforts big and small.
  • And finally, break the nasty, bad compensation habits that hold you and your team back.

Respect and honor your team. Compensate them based on merit and growth and watch them reach for the stars!

Ms. Morgan is vice president of Consulting Strategy at Spear Education and CEO of Pride Institute. Her teams have revitalized thousands of dental practices using management systems designed to help dentists become more secure, efficient and profitable. Watch her webinar, Reward, Recognition and Compensation Models That Work, at the ADA Center for Professional Success.