Due to an overwhelming response to last weeks post: 14 Proven Ways To Keep Your Staff Happy & Motivated, I have written an addendum of sorts to answer your most pressing questions. The vast majority of you asked questions on Employee Incentive Plans (EIPs), to include:
- Percentage of growth vs. Flat dollar amount which is best?
- What is the recommended percentage for each employee?
- What are the recommended procedures to incentivize?
- Our practice has reached our revenue goal for the last 3 years, but I feel like we are spinning our wheels to reach the “magic number.” We are working 6 days/week some months, staying late many evenings, and rarely have time for lunch. Will an EIP help with this?
- Do you incentivize by the growth of specific procedures or by overall revenue growth?
- Are incentive checks distributed monthly? Quarterly? Annually?
- I have a surgical practice with an adjacent medical spa. Would the EIP be the same for both entities?
Since this is the season (i.e. beginning of the calendar year) for creating an annual EIP, I feel it important to talk a bit more about EIPs and which version might be best for different practice needs.
Unfortunately, there is not a set-in-stone answer for these questions, as an EIP should be customized to each practice or medical spa based on practice & staff goals, as well as areas of opportunity for revenue growth. I see many practices led by consultants to use a cookie cutter ‘one-size-fits-all plan,’ only to be disappointed when the EIP does not drive practice growth or employee buy-in.
Also, we must consider that not all practices have the same goals. A goal for many practices may be revenue growth, while a goal for many other practices may be to see fewer patients while retaining incoming revenue at status quo.
For practices with low efficiency rates (i.e. having to see a ton of pts to reach revenue goals only because they aren’t converting the majority of their patients), I will usually recommend a plan to include overall conversion rate goals.
For practices with low conversion rates in only 1 or 2 procedures, with all other procedures converting at goal, I may suggest a plan focusing on each of the procedures requiring attention.
The majority of my surgical practices incentivize on the surgeon’s portion of surgical procedures only (i.e. not injectables, fillers, or other non-invasive procedures). However, (see, I told you there was no clear answer! :0), if a surgical practice is wanting to grow their injectable patient base, then it would be a no-brainer to work injectables into an EIP.
For practices (or medspas) that do not perform invasive surgical procedures, the emphasis would be placed on procedures requiring attention (whether the goal is increased conversions by procedure, revenue growth by procedure, or both), or overall practice or medspa revenue growth and efficiency.
The question of, “Which is best: percentage of revenue or a flat monetary bonus once a goal is met?” is also not always black & white. Some practices may not want to share an overall percentage of their profit, so in this case we could incentivize staff with a pre-determined, or flat, amount of revenue to be shared upon reaching a pre-determined goal (for example: “X” dollars to be split, %’s vary by staff member, each quarter the practice or medspa revenue meets or exceeds “X” amount/goal).
Staff percentages also vary, regardless of whether the EIP is a percentage of revenue or a flat rate based plan, depending on several factors. These could include the amount of “selling” each staff member is contributing to the mix, staff inclusion in patient-facing activities, or the practice’s annual budget.
When is the best time to provide staff their bonuses? This also varies based on the type of plan. I generally prefer to pay bonuses on a monthly basis as this tends to keep staff more engaged due to a higher frequency of reward. That said, there are very legitimate reasons for quarterly bonuses to include the perception of the payout amount (a $200 quarterly bonus may prove to be a better incentive than $66 per month to some, even though it is ultimately the same amount), or when implementing a tiered-based EIP.
A tiered-based EIP is simply designing the plan with additional goal levels (or tiers), with opportunity for additional bonuses as each level is reached (monthly), or as an aggregated sum for the additional levels reached to be paid quarterly.
At the end of the day, an incentive plan will not work if it does not motivate staff toward practice success. In order to create the best incentive for your practice or medspa, it is important to “work the numbers” against all scenarios, and be flexible to change should the need arise (i.e. circumstances outside of staff control). You must also consider seasonality and set-up your EIP accordingly.
If you have additional questions not addressed in this article, or would like assistance putting your practice EIP in place, feel free to give our team a call: 720-515-0262, or click hereand write “EIP” in the Contact box. We will be in touch within 24 business hours.
Cheers to your practice success!