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To Bonus or Not to Bonus? by Rhonda R. Savage, DDS

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by Rhonda R. Savage, DDS

A bonus is "extra pay for extra effort" In a recent LinkedIn discussion on bonus, the topic was a hot one! Some professionals are strongly in favor, while others are not, preferring instead to increase pay or benefits.

Parameters

  • Well-done bonus plans are simple and easy for the team to understand. If not, gossip goes up and trust goes down.
  • A bonus paid monthly is more motivational than quarterly or annually. Frequent rewards for current efforts are appreciated when more timely. If monthly, give the bonus in the first week of the following month.
  • Pay bonus in a separate check so the team member can "see" the bonus.
  • The doctor needs to be the most enthusiastic about bonus. When the team member says thank you the doctor should say: "No! Thank you"
  • I believe bonus is best given to the entire team, because it takes a team to make the result happen.

Individual Bonus

Individual bonus can set up the perception of favoritism. Unfortunately, favoritism drives the morale of the practice down. When morale goes down, productivity goes down. Even if you say, "Don't tell anyone about this bonus," the word has a way of getting out and gossip ensues.

Departmental Bonus

With departmental bonus, a division of the team can result. As an example, if you have a separate hygiene department bonus, assistants can become resentful because they help the hygiene department stay on time, sterilize hygiene instruments and order their supplies. The front desk is responsible for filling the hygiene schedule and working on the recare system.

Team Bonus

Team bonus should be something that can be discussed by the team. At Miles Global, we believe that bonus and benefits should be equal, so they can be talked about at team meetings. Pay should be personal and private.

There's a lot of discussion about paying the front desk a bonus on new patients scheduling, reactivation of patients, production, collections, and hygienists on hygiene production etc. The question you'll need to ask yourself is: “Is my bonus plan motivational or does gossip or negativity exist?”

If you have an outstanding person in any department, I recommend you give them a raise rather than a personal bonus. Merit increases should be earned, not expected, just as bonus should be earned. Criteria to consider for a merit increase should include attitude, willingness to grow personally and help the practice grow, overall performance review and health of the practice.

The health of the practice is critical when considering a pay increase or bonus. Bonus should not be considered at all if the practice isn't healthy. Health is a topic that has a lot of variables involved. Can the practice produce more or are there limiting factors, such as the facility or staffing?

Other health criteria include:
  • Overhead (what you can claim as deductions to the IRS)
  • The principle payment on your loans
  • Your IRS taxes
  • Your bare minimum production in order to keep afloat
  • Your collections
  • The health of your business systems: recare, patient follow up, AR and past due insurance
  • Pay and benefits
With bonus, it's also important to remember what you "once giveth" you cannot easily "taketh away" If you take it away because the practice isn't healthy, morale will go down and the team will forever talk about how the practice used to have bonus but they took it away. This talk never goes away unless you hire an entirely new team, which would only (hopefully) happen in the event of a start-up practice.

One doctor mentioned on the LinkedIn series: "I routinely gave high bonuses in relation to production. In the downturn in 2009, we had a difficult year. The team said, ‘No more bonus, we just want a dependable check.' I altered their hourly rate to the market level and discontinued the bonus. Then the revenues jumped in 2010. The team then said: ‘We want the big bonus again, but don't reduce our wage. Just give us more.'"

I understand the staff 's concern here with regard to pay. Bonus shouldn't be in place of pay or benefits. It's extra pay for extra effort. Team members need to depend on their pay. Bonuses can fluctuate on a monthly basis. I also understand doctors feeling unappreciated and frustrated by this comment. But even more importantly here, I feel this team needs to have some understanding of the overhead of the practice. Without overwhelming or burdening the team, they still need some sense of where the money goes or they think it goes directly in the doctor's pocket. With my team, I gave them an overhead ballpark.

I said: "There's a lot of money that comes into this office and turns right back around and goes out. On top of all the money it takes to run this office, your staff salaries and bonuses make up 24 percent of the revenues and you earn every penny. I appreciate you all so much! On top of your salaries, your benefits add $4-6 dollars an hour to your pay. I also have to pay for the lights, phones, supplies, rent, lab costs and taxes. My personal taxes are on top of the business expenses; I can't write them off. I can write off the interest of my loan, but the principle payment comes right out of my pocket and I have to pay IRS tax on this money too. And lastly, I need to pay for my house and my car. So, to ‘float our boat' we cannot even consider starting bonus unless our office produces $115,000 (our bare minimum) for the month"

This was my bare minimum based upon the minimum adjusted production for a single doctor, two fulltime hygienists, three dental assistants and six chairs. I delegated and utilized talented team members. Your bare minimum will vary depending on your overhead, willingness to delegate, state laws, your facility, geographic conditions and competition.

In summary, there are many important considerations if you're going to offer bonus. With all this said, a well-done bonus system can be very motivational. Bonus should increase incrementally as the production goes up.

After three months of consecutive bonus, raise the daily rate as noted and reset the bonus amount. If they don't reach the bonus, don't step down to the lower level. Keep in mind, however, that the bonus must be attainable. It's best to step up in increments. If you're not reaching bonus, evaluate the reasons why. If bonus isn't attainable, it becomes a staff joke and morale goes down.

Clear, strong, fair, consistent leadership is an element of a well-done bonus structure. Getting your team on the same page, fostering a sense of giving and enthusiasm puts bonus in a proper perspective. If you have "takers" on your team and not givers, bonus will not be motivational. Bonus is about people working together, accomplishing more and benefiting together.

I believe a happy, productive team is the result of people working hard and being stretched reasonably. Many practices function at 50-60 percent of their capacity. Ask your team to look at the practice with a different set of eyes and answer the question: "If this was your practice, what would you do to increase production and decrease overhead? And you can't copy someone else's answer" If you have a person who isn't carrying his or her weight, be clear about your expectations and build in more accountability. If the behavior is allowed to exist, morale will go down instead of up.

In no way do I intend, within the content of the article, to promote unethical care. In most practices we consult in, we actually see under-treatment. Doctors, do look at your adjustment report monthly and at how much dentistry you give away. I love that you give away dentistry, but you might consider choosing needy families and otherwise limiting your write-offs. If the staff members haven't had a raise or haven't reached the goal and the doctor is giving away a lot of dentistry, resentment builds and morale goes down.

One last thought: Women love to have something to look forward to. You could consider a motivational trip goal - setting aside funds for a trip. I did a cosmetic whitening bonus. For every whitening case (which is a low-cost item in most practices), I set aside half the net, after staff and material costs, into a trip fund. It was amazing how many whitening cases we did, which increased discussion from the patients regarding cosmetic options. For a copy of our trip kitty visit www.milesglobal.net/trip-kitty/.

Pay and benefits are important. Whether you're a proponent of bonus or not, look at the criteria for a merit increase and evaluate each team member. You'll also need to look at the healthy practice criteria and say, "How can I stretch my team to do more?" I guarantee there is growth potential in your practice. Be clear about your expectations, lead your practice by example and have an open discussion about your practice potential.

Author's Bio
Dr. Rhonda Savage, a former dental assistant and front office staff, graduated with a B.S. in Biology, Cum Laude, Seattle University in 1985. She then graduated from the University of Washington, School of Dentistry in 1989, with numerous honors. She served on active duty as a dental officer in the U.S. Navy during Desert Shield/Desert Storm; awarded the Navy Achievement Medal, the National Defense Medal and an Expert Pistol Medal. Dr. Savage was in private practice for 16 years. She has authored many peer-reviewed articles and has lectured internationally. She is a past president of the Washington State Dental Association and is an affiliate faculty member of the University of Washington, School of Dentistry. Dr. Savage is the CEO for Miles Global, an internationally known consulting business. A member of the National Speakers Association and the Institute of Management Consultants, Dr. Savage is a noted speaker on practice management, women's health issues and zoo dentistry. To speak with Dr. Savage about your practice concerns or to schedule her to speak at your dental society or study club, please e-mail rhonda@milesglobal.net, or call 877-343-0909.
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September 2025
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