Episode 602: Bonuses ... Are They a Good Idea?

This episode is about a question that is often emailed in: Are bonuses a good idea?

If you’ve been around this podcast, you’ll know Kiera isn’t the biggest fan of bonuses. Here, she shares why that is, alternative ideas to reward your employees, and more.

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Transcript:

0:00:05.9 Kiera Dent: Hey everyone, welcome to the Dental A Team Podcast. I'm your host, Kiera Dent, and I had this crazy idea that maybe I could combine a doctor and a team member's perspective, because let's face it, dentistry can be a challenging profession with those two perspectives. I've been a dental assistant, treatment coordinator, scheduler, filler, office manager, regional manager, practice owner, and I have a team of traveling consultants where we have traveled over 165 different offices coaching teams. Yep, we don't just understand you, we are you. Our mission is to positively impact the world of dental, and I believe that this podcast is the greatest way I can help elevate teams, grow VIP experiences, reduce stress, and create A teams. Welcome to the Dental A Team Podcast.

0:00:51.1 KD: Hello, Dental A Team listeners. This is Kiera and you guys. Alright, let's chit chat today. Let's talk bonuses. All things bonuses. Not really. I'm just going to answer the question that is written in and asked all the time of bonuses. "Are they a good idea?" Oh, gosh. I knew this podcast was gonna be one for the books. Okay, let's talk about it. Before I get into this, guys, if the podcast has been serving you, if you glean any pearl of wisdom, please leave us a review. The only way that this podcast grows is through you guys. And as much as I love doing it, I only do it for you guys to truly positively impact the world of dentistry in the greatest way possible. Share it, guys. Right now, there is so much noise in the world that being able to share wisdom, being able to share truth, I think is the greatest gift we can share with each other. So guys, leave a review. Share this podcast with a friend. I'm asking you to one, leave a five star review and two, share it with a friend today. Do it. If you haven't done it, please do so now. It helps us. It makes me feel good and it also shares with your entire dental community.

0:02:05.6 KD: So give back, serve. You are a contributing member and it's up to you guys. So please leave a five star review and share with a friend today. That would help us and it's going to make you feel good. So it's a double whammy. All right. Let's talk bonuses. I hate bonuses. I'm just gonna come out and say it. I feel like bonuses have such a unique perspective. So first of all, most offices implement it for two reasons. One, they want to pay for and help their teams who have gone above and beyond and helped get to where we are. So it's profit sharing, right? So as the practice grows and is profitable, fantastic. The second reason is usually for motivation. I want them to hit a certain goal. So let's throw on a bonus thing. I have heard from some people that said, "Kiera, if you don't implement bonuses, your practice will never grow," which I can a hundred percent rationalise, understand and empathise with that mode of thinking. What I will tell you though is long term bonuses don't work because what happens is bonuses become entitled and people think that it's not a bonus, right?

0:03:15.6 KD: Like truly guys, the definition of a bonus, I am literally looking it up for you right now is, a bonus is, all right this is coming from investopedia.com, it says a bonus is a financial compensation that is above and beyond the normal payment expectations of its recipient. Bonuses may be awarded by a company as an incentive or to reward good performance. Typical incentive bonuses a company can give employees include signing, referral and retention bonuses. Then there's another little cartoon graphic here that says, What is a bonus? Extra money the employee receives from the employer. And it says there's a Christmas bonus. Nice big bonus for me because a worker did well, well done. It's going above and beyond. Okay, so above and beyond for the employee going above and beyond. Now that's what a bonus is. However, I feel like when we get a bonus all the time, we forget that this is something that is special, right? Like a holiday bonus only comes around holiday time. It's not all the time. Whereas bonuses that are monthly bonuses oftentimes are perceived as an entitlement. And so many offices I've heard they're like, "Kiera, I couldn't live without my bonus," because they've gotten so used to it that they think that's actually my normal wages.

0:04:40.6 KD: No, no, no. Your normal wages are X and bonuses are for going above and beyond. So that's where I kind of feel is, they don't tend to work long term. So I really feel guys like I just... I think it's something where we need to figure out what is going to motivate our teams. So let me give you a few ideas. If you have a burning desire to not include bonuses. Bonuses can get hairy scary. They can turn into termination of employees. They can turn into resignations because people are frustrated. If you ever change the bonus structure is there. So here are some that I have implemented that have worked well. Hygiene bonuses, as long as they're over three times their pay, they get 10% that day of anything above and beyond what is required of them. If you're a fee for service practice, four times their pay. You can do bonuses for every portion of the practice. So like your scheduling coordinator, making sure that the schedule is full, gets X dollars of a bonus. You're billing if our collections and they are at a certain amount, they could have a bonus. But again, standard is 98% for collections.

0:05:53.5 KD: So if we get to a 99% collections for the year, 'cause guys you can skew that real fast on months. You have a big month and then a low month. I'm up to 120% collections. Not 'cause I did anything extra, just by how the cards fell. So if my year to date is at a 99% collection ratio, then they can bonus because 98% are standard. Schedule is that we are full 90% of all of our spots. If they get me to a 95% full, then I can bonus.

0:06:25.9 KD: Hey, Dental A Team listeners, this is Kiera and you guys, I am beyond giddy about the fact that we are having a way for you guys to kick off your 2023 in the most epic way. That's right. I want you guys to go into 2023 with direction, with a plan, and to actually get something done, done and done. If you've been looking at that operations manual, it is time guys. For three months, every single week, I'm going to be doing a workshop with you and your team in January to get that operations manual done in three months. Guys, this is a value of over $10,000 that I know you're going to freaking love because you're actually going to get it done.

0:07:04.6 KD: So if you want to get your ops manual done in three months and kick off your January ultra strong, head on over to thedentalateam.comopsmanual and I will see you January 5th for our kickoff.

0:07:20.5 KD: Our overhead, our standard is that we're at 50% overhead. If we get it to a 49, 48, 47, then they can bonus. So again, make sure that the bonuses are not just what they're expected to do for their job. So many people bonus of what... Guys that's what you pay an hourly wage for. So bonuses I feel just really have the potential to hurt you long term if not done appropriately. Now, let me tell you about a bonus system that I really, really, really love. An office had bonuses. They did like a 50 cent per hour bonus if we hit productivity. So our production, our collections and our payroll was where it needed to be. Then every employee in there got a 50 cent per hour raise, which I actually loved hearing that or 50 cent per hour bonus, which I actually like 'cause a lot of people, I mean, shoot, are making 50 cents more an hour.

0:08:17.6 KD: That feels really good. And I think that's a good way to actually spin it rather than you get $200 'cause guess what? It's about the same. If you figure it out on somebody who works 40 hours, a 50 cent per hour raise is right in that realm. But it feels a lot better to say you get a 50 cent per hour raise rather than a $200 bonus. Guys, 50 cents on a 40-hour work week is 20 bucks. So you take that, you times it by four, that's an $80 bonus for going above and beyond. But yeah, it feels way better 80 bucks, people will scoff at you. 50 cents an hour more, they will love you. So I thought it was really great. However, this office was getting so toxic. People weren't helping each other out. They were skewing their numbers. The bonuses weren't right. People were getting frustrated. So they switched it. Oh, my gosh, I was terrified. This doctor went for it. I was like, "Oh, gosh, like, let's see what happens." Mutiny. We did lose. I wanna say, I think we lost three team members in a practice of 35 people.

0:09:17.3 KD: We had that many people leave, but they changed it to the shoutout bonus. So what it is, is you actually... The whole team is responsible for putting shoutouts of good deeds, good tasks, good things that are going on into a jar. And every single month, the office manager actually pulls the somebody's name out of the jar and that person gets a $200 Amazon gift card. The other person, they'll do one other person and they just get a custom gift that whatever the office manager wants to go get. I'm sure the budget is probably 20 bucks or less based on the gifts that I've seen this practice do, but they're all personal and very like thoughtful for each team member. And then each person is given at the end of that month, all of the shoutouts that they received. So if I only got two shoutouts. I know I probably need to step up my A game and help more people 'cause I'll see people who have like 20 shoutouts. So it was really awesome to watch this practice. So everybody has an opportunity for it, but it's more focused around not the production.

0:10:19.7 KD: The production is just our standard guys. Like if you want to keep your jobs, we need to hit our production, our collections and our productivity. Going above and beyond and really changing it to focus more on culture. Still doing it. Guys, you think about it, it's 2,400 bucks. This office pays not including the $20 gift, but we're talking 20... We'll just put it up to under $3,000 for the year of 'bonuses' that this practice is paying out. But what they're doing is they're having it all around morale, around looking out for each other, of helping each other and truly being a team. So that's where I feel like bonuses are short term motivation. It's just like, if you tell yourself you're going to go run, guys, my short term motivation is already to get back into running in Cabo. And my motivation was that there was this amazing croissant about a mile away. So if I ran, I would get the croissant at the end of my run. Well, guys, I came back to Reno, Nevada, which does not have this amazing croissant place at the end of my mile run. And while yes, I still do it, I don't do it every day 'cause my motivation was short term and short lived and therefore fizzled out quickly.

0:11:30.7 KD: It's just like why fad diets don't work. We jump on board for a little while. And I feel like that's what a bonus is, it's a short term fad diet for a practice. It will work right away, but long term the results you're looking for most likely won't stay. That does not mean that that is always the case for every practice. I have seen a lot of offices do well with bonuses, but I have seen more bonus systems fail than I have seen succeed. So with that, guys, I would recommend doing bonuses that are truly for people going above and beyond. The shoutout jar, I think is my favorite one that I've heard so far. But I have given you guys a few others if you do desire to implement those. For a lot of offices, I actually have quite a few offices that reach out for consulting for bonuses and they will say, "Kiera, can you help me implement a bonus system?" And I'm like, "Oh, mercy. Well, let's look at number one, your overhead." So bonuses number one can never come in unless you are profitable as a business. If you are not, don't even think about it.

0:12:30.6 KD: You're like, "But I'm going to pay to get as profitable." Again, short term fad diet. That's fine, but just realise that this is something attached to it long term that might not actually get the results you want. Look for other ways to bonus your team to do things for going above and beyond. Think about that, of different ways you can do it. And if you want help, let us know. I'm happy to help you. I'm happy to talk about it. Come up with other ways that we could motivate your team. Some offices will even do a day off for a practice. If we hit all of our things, they get a day off. We add that in. So we have to think about how much does it cost to give everybody PTO that day plus the lost revenue of the production we'd have for that day. We take that. So let's say your office does on average $10,000 a day. It costs us $5000, which I hope not. That'd be an expensive day. $5000 a day to run our team. That would be $15,000 is how much it'll cost us to close down the day, pay everybody for that day, and for the loss of production.

0:13:29.1 KD: So I would take that $15,000, put that $15,000 cost on our month, and we've got to produce that amount in that month. So again, if I'm used to working 20 days, we're only going to work 19 days. Well, I lost that 20th day, so that one day. So I take that and I would put that 15,000 into the rest of it. So right, we're at 10,000 a day. Normally we would be... That office would be doing 200,000, right? 20 days a month times 10,000 is 200,000. Well, if I only work 19 days, I am at 190,000 of production that I would have. But we can't forget it's not just that $10,000 of production 'cause we are also paying team members when they're not producing. So then I would have to take the 200,000 plus the additional 5000, right, for the team. So that month's goal would be 205. Divide that by 19 days. That would make our daily goal 10,789. So I would bump that to 11,000. And now our daily goal for 19 days is $11,000. If we hit that and we produce 205 and collect that, rock on, we get a day off because we know we can actually afford that.

0:14:41.2 KD: So that's another way the offices have spun this. Totally fine guys. Shoot, let's work 19 days. If I can make the same amount and we can pay for people and people are happier, do it. But make sure that it makes sense and that people see that you've got to add that in and you count all your dollars before you roll it out. So again, if you need help, you want some help with it, reach out, hello at thedentalanteam.com. Try it out. Email me. Let me know what your bonus system is. If you have an awesome one that you are loving, I would love to actually bring you on as a podcast guest and talk about it. So email me hello at thedentalanteam.com. And as always, thanks for listening and I'll catch you next time on The Dental A Team Podcast.

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0:15:19.5 KD: And that wraps it up for another episode of The Dental A Team Podcast. Thank you so much for listening and we'll talk to you next time.

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