Create a strategy for effective employee compensation

Practice owners need to strategize on employee compensation. The first strategy is to make it work based on the practice's finances. Keep in mind that all staff taxable income (including the clinical wages of doctors) needs to be less than 43 percent of gross sales to make the budget balance in most practices. Many specialty and emergency hospitals can approach 50 percent for W-2 compensation, since they have a higher service fee basis for their fee schedule and caseload.

o Unskilled staff start the orientation at $.75/hour above McDonald's for the non-productive phases of employment (about two to three weeks), then receive a $.75-$1 an hour raise when they enter productive time during orientation. At 90 days, based on team fit, competency and productivity, the decision to hire is made, and the annual wage is set based on skills exhibited. At the end of the first year of employment, we want the keepers to be at the assistant manager level of Sears or JC Penny.

o Doctors deserve 20 percent of their personal production in a general practice, 23 percent if they are owners, 23-25 percent if they are doing specialty work, 25-27 percent if they are board qualified, and 28-30 percent if they are boarded specialists. Base salary, or base-plus productivity, still must be in these parameters (except new graduates who need $50,000-plus while they are learning primary healthcare delivery).

The second element to accept is that benefits (about 3.5 to 4 percent of gross in addition to the W-2 target) are an important part of any compensation package, especially for Generation X staff. Personal business cards, health insurance, vacation pay, CE per diem, pet health insurance, uniforms and even retirement programs are increasing. This new generation is usually excited by the opportunity to learn new things, and want individual time with their managers/leaders to negotiate these learning stimulations, as well as establish more schedule flexibility and free-time away from the practice. These are great motivators.

Workplace ideals include outcome taskings with the flexibility and authority to achieve those outcomes. Funds for outside training are important. So are short training/in-service opportunities. These employees want to be used and recognized for the skills and contributions they bring to the practice.

The Hay Group, in 2001, addressed the retention dilemma, with seven suggestions for keeping productive workers (the chart is listed in descending order of the "gap" between those planning to stay for two or more years and those planning to leave within two years):

TOTAL PERCENT SATISFIED   SATISFACTION ELEMENT Staff Planning to Stay Staff Planning to Go   Use abilities & skills 83% 49%   Owner's leadership 74% 41%   Workplace Core Values 57% 27%   Advancement 50% 22%   Learning new skills 66% 38%   In-house Coaching 54% 26%   Pay 51% 25%   In-service Training 54% 36%  

In light of this data, we have adjusted our thinking to allow for personal time off (PTO) to be earned by all staff, full-time, part-time or job-shared.

Our formula starts at one PTO hour for every 20 scheduled hours worked, accrued from the start, but not vested or available until after the 90-day orientation period. At each anniversary of employment, eight additional PTO hours are awarded for every year of tenure (e.g., at first anniversary, eight hours are added into their PTO account; at second anniversary, 16 hours are added into their PTO account, etc.); this gives them a form of "reward" for practice loyalty.

After about seven years, the additional annual tenure reward is shifted into a personal CE per diem account, which then allows the staff member to pick continuing education locations further from the practice. Concurrent with a tenure reward of personal CE, three-day weekends are established for doctors, and therefore are also available for staff (one or two a month per person are not that hard to orchestrate).

These rewards are motivators, not incentives. Remember that incentive pay is a misnomer in veterinary medicine. Most veterinary staff members are working in the practice as a "calling," therefore recognition is needed on a regular basis to keep them happy. We do use a "dinner bell chart" to allow the team to earn a party each month by exceeding the budget target (VPC Signature Series monograph, Profit Center Management), but our savvy consulting partners use "programs" to keep the income line above the projection - not clubs nor fee gouging.