Dental bonus plans

An optimal dental office bonus plan depends on the objective of the bonus plan. Possible objectives include:

1) Share the financial success of the practice with staff members
2) Motivate general performance
3) Motivate specific performance

Consider how three different dental practices with different bonus systems accomplish and the objectives above with varying success.

In Practice #1, the staff has a general sense they get paid more when the practice does better, but they do not know how their bonus is calculated. The office manager states, “It’s a complicated formula and the doc just tells us our bonus every quarter.” In Practice #1, the bonus system serves to share the financial success of the practice with staff members and indirectly motivate staff to contribute to the success of the practice. The bonus system does not, however, motivate staff performance in any specific areas because the staff does not understand the link between their performance and their pay.

In Practice #2, staff members know exactly how their bonus is calculated -- it happens to be based on collections -- and the bonus gives staff members a clear stake in the game. The doctor states, “Sometimes my staff seems obsessed with the collections number.” In Practice B, the bonus serves both to share the financial success of the practice and to motivate staff to increase collections -- a relatively general measure of practice success. Although the bonus system for Practice #1 and Practice #2 do not differ greatly, the staff’s clear understanding of the link between performance and the bonus in Practice #2 provides additional motivation for the staff.

Practice #3 uses the bonus system to motivate very specific performance. For example, all staff members receive a bonus for new patient referrals. At one point, the doc wanted his hygienist to provide more patient education before he entered the room and offered a bonus based on improvement in this area. While Practice #2 and Practice #3 both use a bonus system to motivate performance, Practice #3 uses the bonus system to target more specific aspects performance.

Outcome: Different practices employ different bonus systems with different outcomes.

Caveat: Bonuses can be powerful. A bonus can motivate targeted behavior at the expense of behavior that does not affect the bonus.