THINKING BUSINESS
a blog by Chris Barrow

Its bonus time

“Dear Chris,

I’ve been running my bonus scheme as you suggested, but I am considering a change for 2010. There are pros and cons and I welcome your thoughts.

I remember a long time back you asked dentists for questions and I sent you in one “how can you make staff feel the same way about the practice as the owner?” I realise now that this is impossible, but certainly running the target scheme for the bonus encourages the team to be concerned about fee collection, profitability, keeping the appointment books well managed and full, and good use of time. I’ve linked it to sickness and absence so that team members with significant absence get a reduced percentage of the bonus.

The downside is that the last two years we have run below target and then have been playing “catch-up” all year which puts a lot of pressure on us all to finally make the target in the last few months. We have made it this year, which is simply brilliant for my financial planning and peace of mind and staff morale. However I feel that team performance was uneven – i.e. they “coast” for the first 9 months and then pull out all the stops for the last 3 months once they see their bonus maybe slipping away. Personally I felt quite pressured during November.

I am thinking of changing to the profit sharing scheme. I listened to the methods used by other dentist on your conference call. I am thinking of still paying it as a lump sum to those team members still in employment with us in December, but showing team members how their bonus accrues confidentially and individually on a month-by-month basis as the year progresses. The upside is that I hope it will result in a more even performance throughout the year. The downside is that without a cut-off target figure it is possible we could fall short of our annual target. I think the dentist who used this did not pay the bonus for any team member for any month if they were off sick. Maybe this is a little too harsh?

As always I am grateful for your thoughts on this.“

This debate has gurgled along for the 15 years I have worked in dentistry – with no clear winner between:

  1. no bonus

  2. 100% discretionary

  3. monthly profit share

  4. annual payment (the 13th month)

and probably some varieties that I’ve seen along the years – including all sorts of complicated systems from the USA.

The fact is that the advocates of all the systems (except perhaps the first) tell me good and bad stories about individual performance and behaviour.

After all these years, my preferences are either the 13th month or the monthly profit share – I couldn’t choose between the two.

The important lesson is to add to any of these systems:

  1. regular team meetings

  2. leadership

  3. a clear vision

  4. appreciation

  5. fun

  6. a lovely working environment

  7. zero tolerance of inappropriate behaviour by clinicians, team and patients.

The money on its own doesn’t make the difference.

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