3 strategies for offering raises to team members

Your team members strive to make your veterinary practice the best it can be. And what do they receive in return? Offering a pat on the back or verbal praise for a job well done is nice, but nothing says "thanks for the hard work" like cold, hard cash.

But knowing when and how to offer raises to your team members requires a delicate balance. Fail to give a raise—or offer one that's too meager—and your staff will feel underpaid and underappreciated. They may even jump to a practice that offers better pay. But overdo it and you'll spend too much of your hard-earned revenue on staff wages. So how do you find the perfect middle ground? First, you need to decide how you'll establish criteria for raises. Here are several options for rewarding employees.

MERIT-BASED RAISES

How you compensate your employees sends a strong message about the culture of your practice, says Amy Morgan, CEO of the Pride Institute, a dental consulting firm in Novato, Calif. "If you never give raises, even if your productivity keeps rising, you'll convey the message that it's futile for the staff to work harder because their efforts go unrewarded and they have no control over their compensation," she says. But if you give raises annually just because a year has passed, you'll send the message that employees are rewarded without having to work toward new levels of excellence.

Both of these approaches encourage substandard performance and a lack of accountability from team members, Morgan says. Instead, try using a compensation model that expects, recognizes, and rewards achievement, making a statement that you want employees who work hard and strive for excellence.

To use the merit-based pay model, identify team members who've made specific contributions to the practice, such as improving collections, increasing compliance with recheck visits, going the extra mile by staying late to care for emergencies, or inventing ways to improve efficiency or revenue.

Keep in mind that offering merit-based pay raises could mean that no two raises will be the same, says Mark Kropiewnicki, president of Health Care Law Associates in Plymouth Meeting, Pa. So if the average raise is 3 percent, a "good" employee will merit a raise greater than 3 percent, an "average" employee will receive 3 percent, and a "poor" employee will receive less than 3 percent—or perhaps no raise at all.

SKILLS-BASED RAISES

Skills-based compensation is an effort to pay employees for the number of skills they possess, rather than for performing well at a particular job. Raises are offered when team members add or improve their skill sets rather than when they've achieved a certain level of seniority. This gives them a tangible incentive to acquire new skills, such as attaining certification or attending CE courses.

But this type of compensation works only if both you and the team member agree in advance on what you want to accomplish and by when, says management consultant Dr. Jerry Hayes in Vicksburg, Miss. "Put it in writing," he says. "When team members successfully master new skills to your satisfaction, congratulate them on their achievements and then follow through on the promised raise. Otherwise, you're going to have some less-than-motivated employees on your hands." Team members who fail to acquire the agreed-upon skills must be denied the raise.

How you define the skills you'd like your employees to gain is up to you. Perhaps you'd like a technician to memorize the ins and outs of your wellness care program and the preventive products that go along with it. Or maybe you'd like her to become proficient with digital dental radiology or gain experience monitoring pets when you administer anesthesia. The possibilities are endless.

As you might expect, you must make training opportunities available to your team members for a skills-based pay system to work. But only offer raises for skills that bring value to your practice, says management consultant Kurt Oster in Haverhill, Mass. Doing this ensures that as training increases, so will the quality and efficiency of work output.

According to Dr. Sandy Seamans, owner of Lexington Boulevard Animal Hospital in Sugar Land, Texas, skills-based pay raises offer three benefits. First, empowered employees possess higher skills for patient care. Next, cross training means less downtime, because team members can fill in for each other and perform at the same level. Finally, employees with goals are more motivated and happier, which translates into a more rewarding work environment.

AN ALTERNATIVE: NO RAISES AT ALL

With the economy still lagging, you might not be able to offer raises to your team members right now. That's just the reality of running a business. But to soften the blow, make sure they're aware that their compensation isn't restricted to take-home pay—they must also consider the fringe benefits they receive.

To help them understand this, share the total value of their compensation and benefits package, as well as other costs associated with their employment. (For a handy Excel spreadsheet to help with this, go to dvm360.com/compensation.) Knowing all the facts can make them realize how much they're actually paid and can have an immediate and positive impact on morale, motivation, and staff retention.

In addition, take a look at other industries to get a more broad view of fair compensation. Find out what receptionists at local law firms and insurance offices make and do your best to keep your team's salaries consistent. To do this, ask for data from employment agencies in your area or human resources professionals in local associations to which you belong (like the chamber of commerce). "This approach helps keep pay competitive and ensure that team members feel more satisfied with their work," says Dr. Karen Felsted, CPA, MS, CVPM, chief executive of the National Commission on Veterinary Economic Issues.

You can't offer employees the world, but you can help them become more motivated and happier with their jobs. Whether you achieve this by handing out raises or by filling them in on other aspects of their salary, you'll strengthen your team and earn their respect. And you can't put a price on that.

More ways to reward your team

If you can't compensate your team members with more cash, how do you reward good performance? There's plenty you can do, according to Price Pritchett and Ron Pound, co-authors of Team Construction: Building a High-Performance Group During Change. (Pritchett, 1992). Offer words of encouragement or a note of appreciation. Stop to share a cup of coffee or take the team member to lunch. Award more meaningful titles or give team members special assignments or more authority. Ask about family and solicit opinions and suggestions from your employees. Even asking for help is gratifying because it validates the team member's worth. These psychological paychecks have an intrinsic value that hard currency can never touch, the authors say.

Veterinary Economics Editorial Advisory Board member Bob Levoy is the author of 222 Secrets of Hiring, Managing, and Retaining Great Employees in Healthcare Practices (Jones and Bartlett, 2007).