Incentive programs: The good, bad and ugly

Incentive programs are important to motivate and retain staff. Like the title of the classic Clint Eastwood flick intimates, incentive programs can be good, bad and ugly.

The good is that motivated staff likes to be rewarded.

The bad is there is a dark side to virtually all incentive programs.

The ugly is that we see questionable services being pushed unto unsuspecting clients.

Incentive programs show us that even veterinarians are human after all. Human nature is, human nature. The carrot and the stick do work; and therefore you need to address the positive and negative consequences of including incentive programs.

Looking at results

Certainly it is a known fact that productivity when rewarded - happens. Without any incentives in the workplace, activity levels drag. While motivated leaders in the practice are clearly excellent role models, many times incentive programs can help fill voids or augment management styles.

We must also consider the unintended consequences of intended actions. If we reward taking X-rays, more films will be taken - even if "clearly not indicated."

If we reward more stool specimens, more will be collected.

It has been written that when an incentive program exceeds 25 percent of the total salary, human behavior will be affected.

We also know that with incentive programs we often get more than we have bargained for, specifically the dark side.

When teamwork is rewarded, we get teamwork.

When individual work is rewarded, we get more productive individuals.

So, in team concept practices, rewards must be to the team.

When we provide incentives to "upsell" specific services, we get upsold services. When we reward growth, we get growth.

Some additional thoughts

A typical practice that is growing can put up to 10 percent of growth into incentive programs.

Consider programs based on:

• Transactions: The number of transactions per month can be identified.

• Tiered pool: The gross income can be divided up into levels - the first 10,000 per month say at 1 percent, the second 10,000 at 2 percent and on up.

• New patients: Offer an incentive for each new client. The new client can come from multiple sources - individual staff finding and referring in friends and acquaintances, or new clients generated by good front office telephone skills.

• Special projects such as paying out 2 percent of the revenues collected by accounts receivable.

• A doctor's discretionary fund can be earmarked based upon the gross income and doled out to the team.

• Christmas in July. Set an annual budget for Christmas, and then split the Christmas pool into 12 months. On the 25th of each month have a Christmas party for all. The items offered might be gift certificates, cash, toys or computer software.

• Strange hour bonus. Evening hours, holiday hours, weekend hours or late night checks can be rewarded to encourage and reward staff for coming in. If Saturdays are an issue - give them, say $10, just to show up on Saturdays.

• Overtime bonus. Some employees love overtime, others hate it. Keep track of the staff that love it, and use it as an incentive.

• Employee of the month: Many businesses have a variety of "Employee of the Month" programs. Sometimes the clients select the employee, sometimes the staff selects the person, and other times the practice managers/owners might select the employee.

• Beware bonus. Targeting preventive healthcare issues is a reasonable tact. But, if you offer a bonus based on the numbers of endoscopic procedures, cardiac ultrasounds or abdominal exploratories, then you may get these procedures recommended with limited consideration to a patient's need.

• Negative incentives can also be enforced, like subtractions for tardiness, consumer complaints and incomplete worksheets.

• Smorgasbord pool. One might elect to use some or all of the incentive programs at one time. When this is desired, a pool of money is generated that can de divided.

Share the wealth

The distribution of bonus funds can also be flexible. Consider these methods.

• Divide by hours. Bonus funds can be divided by the number of hours worked per month.

• Divide by full time only. Bonus funds can be divided by the number of full-time employees. And one might select a full share for anyone working more than 32 hours per week.

• Divide by full time and part time. One might select to divide up the pool by shares. Time splits might be 32 and over equal one full share, and 12 to 32 hours per week equal a half share.

• Time delay into the pool. It is reasonable to install a delay to the benefit of bonuses. Some make it three months, others a year to be fully vested in the bonus.

• Kill the system or it becomes an expectation. To keep the incentive program fresh, a recommendation is to kill off the bonus program each year and start again.

• Pool or individual rewards. The creation of a bonus brings to focus team and individual rewards. The creation of a pool to be divided creates a nice way to reward team work. Individual rewards create individual effort.

Compensation adjustments

Salaried staff with 10 to 25 percent of their salary coming from bonus pools or performance are going to be more productive than the same staff without any bonus.

Hourly staff members are somewhat less affected by incentive programs, but clearly productivity does rise with the incentive pressure.

Commissioned staff can really test human nature. And while "professionalism" is to reign, reality is that we see clear differences between salaried workers and commissioned workers. So, make sure the support staff gets a significant bonus each month to deal with the pressures of working alongside the commissioned.

A blended program can work nicely. Consider mixing an hourly wage and incentive; a base salary plus hourly fee; an hourly wage with bonus; or all of these options: base, hourly and incentives. This program is the most difficult to administer, but the rewards can be very nice for the practice.

When implementing a bonus program, one also must consider the practice. Wellness practices have different needs than specialty practices. Spay/neuter clinics attract different clients (and staff) than a referral-only practice.

Pay monthly. Pavlov's concepts of behavior control operate on the concept of the "instant reward." If a practice is going to spend the time and the resources to set up a bonus system, then it must have the effect on the target. Thus, incentives work nicely when paid out monthly.