How to choose the right employee bonus plan

How to choose the right employee bonus plan

While money is not the number one motivator for most workers, being compensated fairly is near the top of the list. Practices that are competitive in the marketplace tend to attract the best and brightest and have lower turnover rates than those that scrimp on payroll and benefits. Some forward-thinking practices also offer employee bonus plans. If you are considering setting up such a program, there are a number of ways to go about it.

Performance-based plans: Using this method, annual bonuses are tied to the results of performance evaluations. If you go this route, make sure that your evaluation process is comprehensive and applied uniformly. A performance-based bonus should not take the place of an annual salary increase if such an increase is warranted. Consider a combination approach so that, for example, someone who has an exceptionally positive evaluation receives a 3% pay rate increase and a $500 bonus to boot. An employee with an average evaluation may receive only a 1.5% increase and no bonus at all.

Revenue-based plans: For this to work, you have to be willing to be transparent about practice finances. Let’s say your office books $750,000 this year in gross charges. You might offer year-end bonuses to each employee (pro-rated based on the number of hours they work) if this figure goes up by 10% in 2014. That’s just an example. There are many formulas to consider for revenue-based bonus plans.

Expense-reduction plans: The bottom line depends not just on revenue generated, but also on keeping practice expenses in check. Consider offering cash bonuses to employees to come up with cost-saving ideas that you implement and are proven to save money. Roll out this plan at your next staff meeting and watch the fun begin. Almost everyone is accustomed to looking for ways to save money at home. Encourage that concept to spill over into the workplace and you might be happily surprised by how many new ideas are generated. And it costs the practice nothing unless it saves the practice something.

Paid-time-off bonuses: Time is precious and few of us seem to have enough of it. Consider the possibility of offering paid time off (such as a half day or a full day) for employees who accomplish certain goals specific to their departments. For example, you might offer a day off with pay for each employee in the billing department during each quarter that A/R days stay below a certain number. For clinical staff, a time off incentive could be tied to the number of days each quarter that no one stays in the office beyond 5:30 p.m. to finish seeing patients.

Whatever system you choose for employee bonuses, make sure that everyone has an opportunity to participate, that it’s applied fairly, and that it’s not mysterious. Be clear at the outset what the criteria are for earning bonuses, and then stick to those criteria. Nothing will bring down office morale faster than staff members feeling like they’ve been “slighted” when it comes to bonuses. Be sensitive to this as you implement your program.