Creating the Right Compensation Plan For You and Your Employees

Are you an employer of choice? One telltale sign is a compensation plan that aligns the interests of your business with those of your employees.

But our industry is competitive, especially now — so how’s your plan looking?

Cement your place as the go-to employer (and boost your bottom line) with these tips on crafting a plan that makes sense for both you and your staff.

Why Compensation Plans Matter

At their core, compensation plans are mutually beneficial. Your staff commit to certain actions that help the business succeed, and you reward employees who achieve certain outcomes.

The plans also allow you to:

• Understand what motivates your employees
• Align employee motivations with monetary rewards
• Provide regular coaching and feedback
• Develop a positive professional relationship
• Manage performance overall

Types of Compensation Plans

The plan possibilities are endless. There are individual compensation plans, team compensation plans, and combinations of both, along with spot bonuses, profit sharing, and more.

For individual plans, tie compensation to a specific key performance indicator. Examples include inbound- or outbound-call conversion, patient-experience scores, return rates, and effectiveness ratio.

An example of a team compensation plan would be to use a unit or net-revenue target. If the practice hits it, a certain percentage pool is paid out to each staff member.

How often should you pay out? If your practice experiences a lot of seasonality, a quarterly approach allows you time to even out your numbers. If not, a monthly approach is better.

Factors to Consider When Creating a Plan

Remember: Compensation plans are more than just a tool to attract top talent to your practice. The following are key components of any effective plan.

• Self-funded: The plan should stand on its own financial feet, able to cover all expenses before it pays out.
• Mutually beneficial: Both you and your employees should directly benefit — their success is your practice’s success.
• Targeted: The core activities should increase your bottom line — if they don’t directly support your business goals, don’t invest time and money in them.
• Linked to self-interests: Your employees’ personal, professional, and financial goals should be aligned with the goals of the business.
• Transparent: Regularly communicate expectations, secure a commitment from everyone involved, and solicit periodic feedback to tweak the plan as necessary.

Determining Rewards

The best way to determine compensation rewards is to speak with each staff member individually. Focus on their personal, professional, and financial goals for the year.

Ideally, their goals will be realistic and aligned with yours, and their plan can be developed accordingly.

But most cases require some give and take. You might have to work with each employee to develop alignment. Restate the practice’s goals for the year, and discuss how the employee can contribute to them.

Sometimes an employee’s goals aren’t possible or can’t be aligned with your practice’s goals. It’s still important to determine what rewards would motivate them. This helps ensure employee buy-in and appropriate effort toward achieving the reward.

Three Steps to Help Ensure Success 

Check in often

Hold frequent check-in meetings and solicit feedback regularly. If an employee isn’t meeting their goals, coach, counsel, and motivate. If they are meeting their goals, celebrate, congratulate, and continue to motivate.

Ensure accountability

Hold people accountable for their work. When an employee falls short of success, ask open-ended questions such as “What happened?” “What challenges are you facing?” “What will you do differently next time around?” “What did you learn?”

Rally the team

Use the goals and targets to motivate staff, reminding them, “We’re only two appointments away, and the reward is so close — you can do it!” or “We had a rough go last week, but if we really push it this week, we can get back on track and closer to the reward!”