Dental Practice Heroes
Where dentists learn how to cut clinical days while increasing profits - without sacrificing patient care, cutting corners, or cranking volume. We teach you how to grow a scalable practice through communication, leadership, and effective management.
Hosted by Dr. Paul Etchison, author of two books on dental practice management, dental coach, and owner of a $6M collections group practice in the south suburbs of Chicago, we provide actionable advice for practice owners who want to intentionally create more time to enjoy their families, wealth, and deep personal fulfillment.
If you want to build a scalable practice framework that no longer stresses, drains, or relies on you for every little thing, we will teach you how and share stories of other dentists who have done it!
Dental Practice Heroes
Building Bonus Systems You Can Afford
How do you make bonuses work without the headaches? In this episode, you’ll learn how to leverage bonuses to boost team performance and calculate bonuses that drive growth without straining your bottom line. We explore the benefits of weekly versus monthly bonus systems, different performance-based incentives, and more.
Plus, find out how to address common challenges like ensuring fairness across roles and changing or eliminating bonus systems that no longer work. Listen now to discover how to build an effective bonus system that motivates, rather than distracts, your team!
Topics discussed in this episode:
- Why dental practices need a bonus system
- What makes an effective bonus system
- Aligning bonus systems with overhead costs
- Bonus system methods
- Managing team morale during bonus changes
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Take Control of Your Practice and Your Life
I help dentists create thriving practices that make more money, require less of their time, and empower their teams to run the office seamlessly—so they can focus on what matters most.
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- Comprehensive Training: Boost profit, efficiency, and team engagement.
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How do you handle money conversations with your team? Are you prepared to face them head on or do you try to avoid them altogether? Sometimes, if you're like me, you get completely blindsided. One time I had an employee come in and reach into her purse and whip out a big stack of papers and she wanted to share with me the data on inflation over the past 20 years, how the cost of living increases and how the dental industry, as far as wages, hasn't really kept up, to which I didn't reply. The best I just said you know you can just put that away. I don't really care to see that.
Speaker 1:Not my best moment. So today I am joined by my DPH coaches, dr Steve and Dr Henry, and we're going to discuss how you can confidently navigate, raise requests and avoid awkward conversations, especially when you need to say no. These insights will make your one-on-ones more productive and turn them into opportunities for growth for both your practice and for your employees. It's time to step up and take control of these conversations. So stick around and find out how you are listening to Dental Practice Heroes, where we help you create and scale your dental practice so that you are no longer tied to the chair. I'm Dr Paul Etcheson, author of two books on dental practice management, dental coach and owner of a $6 million group practice in the suburbs of Chicago. I want to teach you how to grow and systematize your dental practice so you can spend less time practicing and more time enjoying a life that you love. Let's get started. Hey, what's up everybody? Welcome back to Dental Practice Heroes.
Speaker 1:I am joined with my DPH coaches, dr Henry Ernst and Dr Steve Markowitz. We're picking apart topics. Our last episode if you go back two weeks we talked about how to implement a lead and how do you give them those role expectations so that they know what to do so that they can be successful. But today we're going to take apart bonus systems and I think this is something that a lot of offices have bonus systems and a lot of them that don't are like.
Speaker 1:I want one, but I'm not sure what to do and I don't want to do the wrong thing, because it's hard to take away and it's just this analysis, paralysis and we never move forward. Me personally, I feel like every office should have a bonus system because I feel like it motivates, it gets people to band together and do things together and to gives them another category, another box they can check. I won today, but you know I'll pass it to you, henry Like what does that look like in your office and what recommendations would you have for a listener that's, you know thinking about either revamping their bonus system or implementing one?
Speaker 2:Sure. So when we first started bonus systems, I mean the first thing is you have to know your numbers. You have to be a successful dentist, know their numbers. So when we first started we were I mean, I was really fortunate. Maybe a few months in we were making profit and so you want to share, you want to share in the success For us.
Speaker 2:I feel like a weekly bonus works really well for our office. Why? Because you're looking at like the fourth quarter is like always, like Wednesday, thursday and Friday of every week. You're looking at it. I feel like when it's monthly you tend not to look at it. Near the end You're not so concerned about it. So I always feel like a weekly bonus is important. We actually use our bonus systems to police bad activities too. So everybody signs a form that basically says hey, here's our bonus program. To be eligible for bonus you have to be a full-time employee. You have to be on time every day that week that you're supposed to work. So if you're one minute late, if you're supposed to be 7.15 and you're there at 7.16, well, guess what? Now you're not eligible for the bonus that week. You know it's strict, but it's fair. Police is bad activities no bonus. No bonus for that person. Hey, I'm a big believer in being on time.
Speaker 1:But I got stopped by a train, but it wasn't my fault.
Speaker 2:That's the policy of the office. That's the policy. Sorry, I'm the bad person, but also, like I was saying in the beginning, you need your numbers. So first of all, you have to know your break-even point. What's our break-even point in this office?
Speaker 2:And there are certain calculations you can do so that you can make it. So the bonus is still going to work for you. And here's the part that I always teach clients that's important. They get nervous I'm going to add this bonus, oh my God, it's going to throw off all my numbers. You can leverage the bonus system so that if you hire an additional person, if somebody happens to get a raise now, it takes that playing field and it raises the bar a little bit, because the bonus is based on what it costs to run the office.
Speaker 2:And then you can even double check it. If you want to double check it, you can say hey, what's my payroll plus taxes that I pay for all my employees? Take that amount. You can leverage your bonus system so that you can keep your payroll at 25%. So you take your payroll plus taxes and then you multiply it times four. That gets you a collection goal so that anything above that you can start to be bonus. So if you kind of double check both of those two things, your numbers will always be sweet yeah.
Speaker 3:I love that man. How about you, Steve? I think it's important to have bonuses. Incentivizing people will change behavior. It doesn't necessarily need to be this giant amount of money, but it gives them a direction and something to focus on. So I would love to create an incentive for every single person in the office somehow. So in our office we do have production and collection goals Monthly. We do it. I do agree with Henry. There should be some rules to behaviors, to how to achieve bonus, and if being on time and showing up is something that's really important, then that should be part of the way that someone achieves bonus. I'm all for that. And to answer your question about the train being late or the train running by, or whatever, that was Paul.
Speaker 1:We get that a lot. We had a lot of trains that happens the first or the second.
Speaker 3:Yes, there's trains running all the time that that happens, the first or the second. There's trains running all the time.
Speaker 3:That happens maybe the first or the second time, and once the rules are clear, the trains don't matter anymore. They just know, and I think if we're consistent enough with what is right and what is wrong and the consequences or the rewards associated with it, then it won't be an issue anymore. It's just, that's just how we do things, and they'll be more either more apologetic because they know they're letting their team down, or they'll figure out a way to run through the train. I've thought people finding ways to run through trains.
Speaker 1:Well, see around my practice there's nowhere that goes under or over the train tracks, like for very like for a few miles down the road. So it's like this happens. A lot of my practice and this is something that comes up quite a bit, but you know, it's funny is I want to share is that we used to have a daily bonus system and then we, as we got too big, it became difficult to do, we stopped paying attention and just like you said, henry and I think you mentioned this too, steve is that we would always set it based on payroll. So when the team says, hey, we're short staffed, we need more people, it would be like, okay, I understand, but you know that that's going to raise our bonus, that's going to be less bonus for everybody. If, as long as you think, we can bring somebody in there, there's going to be a return and we're going to increase our numbers. That will work.
Speaker 1:But when we went to monthly, nobody was paying attention to it. It didn't feel like the fourth quarter, like you said, henry, and it was always an afterthought. So then we had to go back to a daily bonus again because we felt like it wasn't motivating enough Now when we had just an amount. What sucked is that when we weren't hitting it, when we went down an associate for a period of time and as the new associate got going, we weren't hitting bonus at all, and then I had no means of tying anything to behavior. So then we started seeing like people showing up late people maybe oh you know, I'm gonna miss this meeting. I got this thing I gotta go to, because that's another thing you gotta be at the meeting to get your bonus at my office.
Speaker 1:So we went to a daily bonus where there's a goal and it's a little complicated. I don't want to go too deep into it, but essentially there's a daily goal and for every day that we hit, they get an extra 15 cents per hour for that pay period, and if they hit two days in a row, they get an extra 30 cents per hour for that pay period. So, no matter what, there's always going to be some bonus, at least unless they don't hit the daily goal for a whole two-week period. But the thing that I think the listeners should listen to is that there's no right way to do it, but it needs to be like what is the reason? Motivating camaraderie and holding people to behavior are the three things that I can think of.
Speaker 2:I would say what's important too I left this out also is you have to get, as a business owner, you have to get credit for what you're giving to them. So just a simple example. Let's say we have an employee I don't know, we're all in different parts of the country let's say a dental assistant, entry level. That's making $20 an hour, right? So if they work 40 hours, they're going to make $800. Let's say that you give them $150 bonus that week it's a weekly bonus they get $150 bonus. That week it's a weekly bonus they get 150. Well, now they're making $950 for those 40 hours.
Speaker 2:So their average hourly rate is not $20 an hour, it's $23.75. So why is that important? Right, you're going to get these. Hey, I'd like to have a raise. How much do you make an hour? I make 20. The records here show you make $ 23.75 an hour, first of all. So I think that's really important when you start a bonus system is get credit for what you're doing, have some sort of metric or something your office manager can set up, or they can actually get a little form every week, right? Hey, this is what I worked last week. This was my bonus, this was my average hourly rate.
Speaker 1:Yeah, that's why we've always done the whole. We do a per hour bonus and that was the original reason why we started doing. That is because we wanted to reward the people that worked more than our part-time people. You do get bonus at my office if you are part-time, but it's a per hour thing. But yeah, totally. How about you? Steve, what do you think of?
Speaker 3:that it has to be simple. The bonus has to be simple enough for the person who's benefiting from it to know why they're getting the money. And then, to reiterate what Henry said, they need to know and have value to what they're getting. So being able to say this is what you did, this is what you got and this is the result of how it all looks together from your hourly or however you're discussing compensation with that employee. So I do love the production or collection part, but I also love incentivizing activity.
Speaker 3:So for our lead assistants, I'll give an example. Like they get bonused on meeting budgets for lab and supply ordering. Our office managers get bonused if we hit a certain number of visits in a month or a certain number of new patients in a month, because I want us to be able to focus on things that they can control. A lot of times, especially in our larger offices, there's so much going on. One of the treatment coordinators may not think that they can directly impact production, but if she's responsible for the periodontist's schedule and making sure that they hit a certain productivity, she can influence that. We want to incentivize behaviors that I know she can influence. That benefit the practice as a whole. So I think there are many ways to take this bonus from. Most people start with a practice-wide bonus, which I think is awesome. It needs to be simple, it needs to be understood and it needs to create value and changes in behavior.
Speaker 1:But there are other ways that we can take the bonus system that may incentivize behaviors that we want our teams to focus on bonuses. So I love to hear what some other areas Steve, you mentioned bonus on supply budget and bonus on per visits for your office manager what are some other ones if you guys could share, some other ones that you guys use that are just position specific for certain people, not for everybody.
Speaker 3:So if a hygienist is paid hourly, they are incentivized to not do more. They will get paid the same whether they do a lot in appointment or they just coast and clean and do a prophy. So for us we want to incentivize for them to take the best care of the patient. The more services they can provide to that patient, the more revenue they produce. So it's easily trackable. All of our hygienists have a base pay. It is fair market value for outside Boston Massachusetts. But for those that work harder they will get a certain percentage 20% of anything greater than 2.6, 2.7 times their pay, and that could be the equivalent of $60, $63 an hour and we calculate that monthly. So they're not. Our hygiene team is not losing by working how they want to work, but they are incentivized to create more value in their appointments.
Speaker 2:Yeah, Darn Steve, why do you have to share numbers on the podcast? Come on, you're going to make some of us look bad here. Yeah, not everyone's in Massachusetts.
Speaker 3:Because I do 2.6 times.
Speaker 1:Massachusetts.
Speaker 3:Get out of here. It's because I do 2.6. You told us like two weeks ago whatever it was that you have hygienists that are doing like 11 times pay. So I don't know. Steven lives in Martha's Vineyard. Get out of here, isn't that in Massachusetts? I don't know what to say. I thought I was-.
Speaker 1:When he said 63, he meant like a hypothetical, like monopoly kind of 63.
Speaker 3:Ah, okay, sorry, I'm going to push back on being made fun of here. What that actually does to our profitability is it decreases it. It decreases the amount of cost the hygiene team is on the overall expenses of the practice. No, it's hygienist, because every single dollar they produce over that 2.7 times it actually shrinks their percentage of what they're paid. So it could go from 40% down to 30% of overall what that individual hygienist is being paid and they make more. The practice makes more, so everybody wins. I don't think there's a practice owner in the world that would say I would want to pay my team less and make less, like everyone can win.
Speaker 1:if no, I think a lot of practice team owners would like to say that, but I don't necessarily agree with it. Wait, what did I say? I would like to pay my team less and I don't know what.
Speaker 3:No, my words are wrong. No one wants to pay their team less and also make F? F it.
Speaker 1:No, they do want to make more and pay their team less.
Speaker 3:That's what I'm saying, what I'm saying in my everyone can win. The practice can make more, the hygienist can make more. There you go, it's better services. And now I'm going to leave it on that, you guys continue to go back and make the patients win.
Speaker 2:The reason why I was busting your chops with numbers. So we talked before about having, you know, like an office wide bonus. This is what I was mentioning before. Ours is weekly. We also have the hygienists are also on top of that. The hygienists participate in the whole office bonus but they also have a separate bonus which is very similar to yours and the whole office bonus, but they also have a separate bonus which is very similar to yours, steve. Ours is 3.5. So 3.5 of you take your salary, you multiply it by 3.5. Any dollar that you make above that you get 10% of. So it's the same thing. It's a win-win. It's good for the patients, it's good for them, it promotes, you know, doing stuff, not just getting an hourly rate. Then we also have and I developed this after a couple of years of practice because I'm like you know what we've had some team members that have been here for a long time. Maybe they need something extra and maybe we should reward longevity for being here longer.
Speaker 2:So we actually have a quarterly bonus program, or I even call it a profit sharing program, where there's two tranches there's admin staff and then there is clinical team and they have to hit certain parameters during the quarter on top of the other ones.
Speaker 2:Right, you have to always like you can't call out, your group has to hit certain metrics. So if you're a clinical team member, the dental office supplies have to be a certain amount or lower. So it's making them be like an owner, like, hey, let's not waste our dental supplies and also our team staff rate can't go over a certain amount. And then everybody on that group there gets shares a half a percentage point of all the collections for the whole quarter. Same thing goes with the admin team. The admin team has to have a certain collection rate. The staff cost total have to be a certain amount and you share. But you only get to do that once you've been here for three years. So again, it's why we mentioned it in a previous podcast is it's like an Ascension model? Right? There's always something more that you can get. There's always incentive to stay in our practice umbrella.
Speaker 1:I think the whole thing with bonus systems is what are we incentivizing? I think that's what's illustrated here is that there are so many different things you can incentivize. Like I'm thinking about my front team. We've bonused on signing people up for the membership plan and we actually kept it going because we noticed when we took it away they stopped signing people up and I wish you know like, hey, just sign up everybody. But I think people will give a little bit more effort to sign up everyone if they do get a little something on the side on it. And we also we bonus our hygiene team on laser procedures and just like we mentioned like you mentioned, steve, it's like I'm comfortable doing that because it's revenue and hygiene revenue.
Speaker 1:Our last month in October was 35% of our office. It has never been a bigger part of our office and it wasn't like we had a bad month. We had a good month in October. So it wasn't just some like outlier because the doctors did so bad that hygiene did better. So I love these ideas and I think there's no right or wrong way to do it. You know, what I think would be interesting just to close us out we're coming up on time is if you could just talk about either of you guys what to do when you don't like the bonus system and how do you take it away or change it?
Speaker 3:I thought you were going to ask where should someone start?
Speaker 1:That's a great question Okay, well, where should we start?
Speaker 3:I think that's a fear that many dentists have. I don't want to implement this, because what if it doesn't work? It might not and I think if you have a close enough relationship with your team and you're transparent enough of why it's not working, you can be honest and say guys, this was built for you. It's not working the way I thought it was. I'm going to tweak it, I'm going to change it. I need to do something that actually benefits you guys, benefits our patients, benefits the practice, and let's tweak it.
Speaker 3:When I first started, we had a different hygiene bonus and we were trying to incentivize scaling a root. This was years ago, trying to incentivize perio and scaling a root plantings. I walked into a practice and there was a hygienist doing a scaling a roof planning on a 14 year old and I was like holy S, like no, no, mass, we're not doing this. So I just got rid of it Like I had to and I said guys, I thought this was going to be. For this reasons, it ended up being this I want to make sure we're doing this for the right reasons and taking care of people the way that this was intended. I got to go back to the drawing board. I'm so sorry, let me figure this out.
Speaker 1:And that's because you thought the 14-year-old should have had Osseous.
Speaker 3:No, I was actually a hybrid.
Speaker 2:I think you said it perfectly, steve. I mean it was just you need the transparency. Yeah, that's good. I think you said it perfectly, steve. I mean it was just you need the transparency. And it starts on the front end too is like listen, I want to share the success. All of you work really hard here and I want to share the success. So it also works the other way, like if this isn't working, I need it to be successful for the office and for yourself. And it's not working, I mean, knock on wood. I've never had to do that. I've been very, very lucky. But I could see that if you take away something, you need to tell them why and let them know you're going to tweak it into something new.
