Giving raises doesn’t have to wreck your budget or your peace of mind. But too many practice owners make raise decisions based on emotion, guilt, or desperation rather than strategy. Done well, raises can boost retention, morale, and culture. Done wrong, they can destroy profitability and create confusion across the team.
Here’s a strategic, 3-step model to help you give raises the right way.
Step 1: Know Your Numbers Before You Say Yes
Your payroll should sit at 30% or less of your total collections, and that includes benefits like 401k, health insurance, bonuses, and PTO. When we aim for a total overhead of 50%, we break it down like this:
- 30% for payroll
- 30% for doctor pay
- 20% for profit
To plan raises accurately, we recommend running 3 different monthly projections:
- Conservative: Covers the most essential costs with minimal staff
- Mid-range: Reflects your current team and expenses
- High-end: Includes potential raises and new hires
Use these ranges to determine how much additional production or collection is needed to support any raise decisions. This way, you’re not reacting, you’re planning.
Step 2: Tie Raises to Performance and Value
Raises shouldn’t be automatic or purely based on tenure. They should reflect the value your team member adds to the practice. We recommend using tiered expectations for every role in your office. For example:
A dental assistant at the entry level might handle basic clinical support. As they grow, they could take on sterilization responsibilities, manage lab cases, assist in ordering, or even train new team members. Each additional responsibility corresponds to a higher pay tier.
The same applies to hygienists, treatment coordinators, and front office staff. Define what added value looks like at each level, so your team knows what’s expected to earn more.
This model promotes professional growth, aligns compensation with contribution, and removes the guesswork from pay increases.
Step 3: Communicate Raises with Clarity and Boundaries
Raises should be discussed during scheduled reviews, not in hallway ambushes. If one team member gets a raise and others don’t understand why, you risk damaging culture and trust.
Set expectations by clearly communicating:
- When raises are evaluated (e.g., annually in Q3)
- What each team member needs to achieve to qualify
- How performance is measured and documented
Hold structured one-on-ones with your team leads or department heads to assess performance and discuss what’s needed to move to the next tier. Make your process known and consistent.
Remove Emotion, Build Structure
Raises should never be given out of fear that someone might quit. That sets a dangerous precedent for your entire team. Instead, implement a raise structure based on:
- Clear financial metrics
- Tiered job responsibilities
- Transparent review cycles
This strategy empowers your office managers and team leads, builds a culture of trust, and gives your entire team clarity around how compensation works.
If you need help building role-based tiers or forecasting raise impacts on your financials, Dental A Team can support you with proven tools and coaching. Our goal is to help you grow profitably, without guessing.
When owners lead with data and strategy, raises become a tool to retain talent and grow the business, not a source of stress. Need our help? Schedule A Free Call today!
For more tips, check out our podcast.
Last updated: August 2025
Written by Jacintha Ham, Dental A Team