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Employee Incentive Plans and Bonus Structures for Your Dental Practice

Employee Incentive Plans and Bonus Structures for Your Dental Practice

Bonus plans can be an effective way to incentivize staff to help your dental practice meet its goals. The bonus structure must be attainable and flexible enough to keep the reward motivating for employees.

Know what your goals are, and the financial impact, before you set a plan in motion.

Why Should Your Practice Consider Employee Bonus and Incentive Plans?

One of the main drivers for implementing bonus and incentive plans is employee recruitment and retention.

Nationwide, dental practices have had a difficult time finding new talent and even retaining the employees already on staff. As offices need to hire, they are increasing wages, implementing bonus structures, and adding sign-on bonuses as part of the overall compensation package to try and attract staff to join their practices.


Historically, bonus and incentive plans have been a powerful tool to motivate staff and they drive the desired behaviors that owners want in their practices. If you want something to improve in your practice, a dependable way to do that is to reward the behavior that will result in the improvement.

For example, if you want to improve production, increase receipts, decrease expenses, or reduce accounts receivable, implement an incentive plan that will inspire staff to take part in those behaviors that will help achieve these goals.

These plans can also improve results in the practice for the owner as well. These programs aren't just a win for the employees. If you design and establish them correctly, both the employees and the practice owner can benefit so that everyone comes out better.

Advantages of Bonus and Incentive Plans

Motivates Staff

The primary advantage is the motivation for staff to work towards a goal. In general, incentive plans were created for the purpose of urging and motivating employees to exhibit specific behaviors to achieve high results. These plans reward employees for reaching pre-established goals and provide encouragement to the staff to keep working towards those goals. The practice owner will benefit from increased production, receipts, and profitability.

Strengthens Work Relationships

Bonus and incentive plans can strengthen work relationships on all staff levels. If designed and implemented correctly, a bonus plan can help your team work together towards one common goal. Whether it's increased production or increased receipts, the team knows what they're working towards and each understands what their role is in getting there.

Improves Efficiency, Productivity, and Collections

Depending on the goal you're striving to achieve for your practice, a bonus plan can also help you improve efficiency, productivity, and collections. If the plan is designed well and if everyone is working in that direction, you will see improvement in your practice.

Disadvantages of Bonus and Incentive Plans

Unintended Consequences and Side Effects

Staff will want to work towards the pre-determined goal, but you might have an employee who will find a way to work towards it in a manner that isn’t beneficial to the practice overall. There will be a benefit to them in achieving that goal, but it might have some overall issues that harm the practice in the long term. For example, if output is the goal, staff might prioritize that output and let quality suffer.

Employee Resentment

Depending on how the plan is structured, there may be star performers who do everything they can to achieve the goal, while other employees don’t work as hard. Those star performers can start to resent the other employees for not doing their part to help the team succeed.

Guidelines for Effective Bonus Structures

Implementing a successful employee bonus plan should follow the following recommendations:

    • Simple and Easy to Understand

Your team should be able to understand the goals to be able to do their part to help achieve them. The more complicated the structure gets, the more complicated the goals get. In the end, staff are confused which demotivates them from working towards and achieving that goal.

    • Realistic

Your bonus structure should be set up in a way where your team sees the goals as achievable. Your employees need to believe in the goal and believe it can be reached. If not, they will think it’s unreasonable and they won’t even try to accomplish it.

    • Involve the Whole Team

Your entire team should be involved in the bonus program. Treat employees fairly and consistently. There will be hard feelings if you have some employees who are working towards the goal (and thus potentially receiving increased earnings) if not all your people are part of the bonus program.

    • Measurable and Specific

Make sure your goals are set so that they are measurable and specific. Once you determine a goal, add a number or an increment to it so it’s measurable (for example, add 25 new patients per month).

Also important is that your employees need to see the connection between what they do every day and how the goal is achieved – essentially the cause and effect. If an employee can't make any decisions or choices within their role in the practice to be a part of the goal, they won’t have a vested interest in achieving the goal because they think they can’t affect it.

    • Monitoring and Transparency

Your team will not only need to know what the goal is, but they will also need regular status updates on the progress towards the goal. You will also need to be transparent with your team to inform them on the information used to calculate the bonuses.

It's important for them to have confidence in the accuracy of the numbers or metrics so they can be sure they have earned the bonus and they're getting their share of what was promised.

    • Pay Frequency

To maximize the impact and motivation for your employees, you should promptly pay the bonus after the goal is achieved. The recommendation is a monthly incentive structure where the employee receives the reward soon after the goal is met at the end of the month.

    • Reward Preference

What might the reward look like? Typically, the bonus is paid in cash through payroll but there are many other options that can be used in your practice. Think about what your employees want and what they might value.

Other possibilities might be additional paid time off, recognition at a new restaurant in town, increased uniform allowance, or a larger retirement plan contribution.

    • Importance of Leadership

Establishing an effective bonus structure has a lot to do with you as a leader and your ability to command your team. You as the practice owner are key in the implementation. Bonus plans won’t be successful without a great leader to bring the team together to share the vision and goals.

Create excitement and share encouragement around the goals and the progress towards them. When the goal is achieved, make sure to celebrate and acknowledge your employees for a job well done.

Establishing Bonus Plans

There are 5 steps in establishing and implementing a bonus plan structure for your dental practice:

1. Set the Goal

Think about you and your practice and what it is that you want to achieve. Is it reducing cancellations or holes in your schedule? Do you want to improve your treatment acceptance rates? Do you need to better manage your drugs and supplies inventory? Or perhaps increasing collections is what you want to aim for? Regardless of what your goal is, remember to keep it simple, achievable, and measurable.

2. Determine the Reward

The reward must be meaningful in order for your employees to commit to and be fully engaged in working towards the goal. This is a situation where you need to know your staff and what might motivate them.

3. Communicate the Goal and the Rewards

Here's where your leadership comes into play. Get your team together and share your vision and goals with them. Be their coach and their cheerleader, and help them become successful in achieving the goal.

4. Monitor and Report

Share the necessary information with your staff and give them regular status updates so they know where they are at in terms of achieving the goal. When setting monthly goals, you will want to consider breaking down the monthly goal into shorter or smaller increments. Typically, if staff can see the goals in shorter timeframes, it's easier to work towards them.

5. Evaluate and Adjust (if necessary)

Sometimes there are unforeseen circumstances and sometimes the thresholds or goals might not be met on a consistent basis. If you're not seeing the results you want, as the leader you have the ability to reevaluate and make adjustments or improvements where needed. Just remember to communicate this with your staff.

Bonus and incentive plans are a great tool to use for all dental practice owners to help encourage, recognize, and reward employee performance. These plans give employees a reason to do their best in the practice and feel like they are in control of their careers in the compensation they receive.

Job satisfaction tends to increase when you implement a good incentive plan which helps employees stay positive about the practice and helps the owner retain highly qualified staff.

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Biz Tip Topic Expert: Matt Vanderloo, CPA

Matt Vanderloo, CPA

Matt is the CEO of SVA, A Professional Services Company and a Principal with SVA Certified Public Accountants. Matt focuses on the healthcare, dental and veterinary industries. He assists individual and business clients by providing tax preparation and planning, as well as consulting and financial statement preparation.

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