How to Create An Incentive Program That Inspires Results
An incentive program can offer serious benefits for your practice by raising productivity, lowering turnover, improving morale, and ultimately creating a better experience for the patient. Since a well-structured incentive program gives team members a stake in the success of the practice, it can make work more fun and exciting and boost the confidence of teams whose enthusiasm might be waning by offering motivation to improve.
A well-structured incentive program aligns the goals of the team with those of the doctor, thereby fostering a growth-oriented culture.
While some doctors might feel an incentive program could hurt their bottom line, the core idea is to motivate the team to perform in ways that will ultimately help the practice grow more profitable. In time, any good incentive program will more than pay for itself.
That said, implementing a bonus or incentive system might not be as simple as it initially seems. There are numerous potential pitfalls. An improperly structured incentive program can be downright demotivating, and in fact, it can wind up causing more damage than good.
This guide will help you identify some of the most important elements of a successful incentive program, and help you avoid some of the most common pitfalls.
What Is an Incentive Program?
It’s important to remember the difference between compensation and a bonus.
Think of compensation as payment for the satisfactory execution of primary duties. If an employee is accomplishing their responsibilities, they deserve compensation. If an employee isn’t meeting the basic expectations for satisfactory performance, there should be HR consequences, such as write-ups.
On the other hand, think of a bonus as a reward for going above and beyond primary responsibilities. If someone isn’t performing well enough to receive a bonus, no big deal: that simply means they are not performing above expectations.
This distinction is important because a bonus is not a replacement for a fair, liveable, and well-deserved wage. A bonus is achieved by meeting goals outside the standard job description and should be awarded only for exemplary work.
The Golden Rule of Incentive Programs
In order to be successful, your incentive program must be win-win, meaning mutually beneficial for all parties involved.
Doctors and teams should agree that bonuses are in everyone’s best interest. When you do give out a bonus, you should feel pleased that your team is excelling, while your team should feel proud that their contributions are being valued.
If you ultimately can’t bring yourself to get 100% on board with handing out bonuses, don’t implement an incentive program. The ultimate goal is to inspire results, and an unwilling attitude will tarnish your plan immediately.
Setting Goals in An Incentive Program
Explicit goals are the crucial first step to any incentive program. In order to determine the right design for your plan, you’ll need to think very critically about your goals for the months and years to come. Goals can and should be customized for each practice, and sometimes for each team member.
However, the goals for any incentive program must be clear, achievable, measurable, and commensurate to your team’s performance.
If you’ve carefully considered the best goals for your practice, but your team cannot understand them, then your program will fail. If there is debate about whether or not a goal has been achieved, your team will become resistant to the program and it will fail. If your team can’t achieve the goals set, they will lose interest and the program will fail. If your team has to struggle to reach their goals, only for an insignificantly small reward, they’ll feel discouraged and the program will fail.
It’s important to recognize that there is a fine line between success and your team being underchallenged. If your team regularly exceeds their goals and achieves the bonus with ease, you may want to consider why that’s happening. Often, it’s for one of two reasons. First, you may have set your goals too low. Setting goals too low will likely result in your plan costing more to your profitability than not having a plan in the first place. Another disadvantage to this miscalculation is that your team will quickly become accustomed to receiving the bonus with little effort. Any attempt to adjust the goals or bonus scale will likely result in reduced employee satisfaction. The second, more optimistic reason for constantly reaching goals is that the plan is working! Your team is being properly motivated to perform exceptionally well, and in turn, the practice is prospering. At that point, you might consider raising both the goals and the rewards as acknowledgement of your team’s success.
How to Set Goals
Setting goals isn’t necessarily straightforward. Successful goals require careful consideration of the needs of your practice. To start, you’ll have to decide whether you want to set goals for the performance of the team as a whole or for individual team members for their unique needs.
There is a good case for both approaches. Individual incentive programs allow you to modulate the performance of specific team members, while team-based incentive programs can increase cooperation and cohesion. Both incentive structures have their place and can benefit your practice.
While it can be a good idea to include individual bonuses as well, team-based structures are best at motivating each role in your practice to work together. A good bonus structure will foster a spirit of cooperation and can boost morale.
Consider setting a “teamwork” bonus. For example, you could set a specific goal which the entire team can work toward, like growing the number of 5-star reviews on your Yelp and Google pages. With this approach each member of the team would receive the same bonus regardless of their current salary or hourly rate. The aim is to increase the collective effort and cohesion of your team for the sake of a positive patient experience. This is a win-win!
Another popular option for teams is a bonus based on collection or production goals. Profit sharing bonuses directly connect the bottom line of the team with that of the practice. Similar to the previous example, this type of bonus would be paid equally to all team members, though the motivation would shift from positive patient experience, to a continued patient flow and high treatment acceptance rate. Be cautious however, as this style of incentive plan can quickly fail at being a win-win. Keep a close eye on patient satisfaction surveys and make sure your bonus payouts don’t exceed the profitability of the practice.
Individual incentive programs can enhance each team member’s individual drive to contribute to the practice. Tailor the goal according to the role, their strengths, weaknesses, and your own professional targets for each team member.
For instance, a hygienists’ bonus might be based on reappointment rates, while the front desk’s bonus might be based on their ability to maintain a full schedule. Consider using this system when you want to improve the performance of a specific team member. Or you can change each team member’s goal to encourage improvement on the key performance indicators most important to you.
Individual incentive programs also offer the opportunity for personalized “thanks” in recognition of an outstanding employee’s contribution to the success of the practice. When you distribute bonuses, consider including a handwritten note or publicly recognizing team members during the morning huddle. Make the awarding of bonuses feel like a celebration! When a team member is proudly acknowledged in front of their peers, their appreciation will be evident and inspiring to the whole team.
As you consider how to structure the individual incentive programs, you’ll want to ensure that they’re fair. If you see, for instance, that the front desk staff consistently fails to receive their bonus, while the hygienists consistently do, yet both kinds of team members are performing excellently, this might be a sign that you need to reevaluate your criteria.
Timing Bonuses Properly
Once you’ve determined which models will work best for your practice, you’ll need to figure out how often to distribute payment. Bonuses are most effective when given out frequently; monthly or even weekly disbursements are far better than only yearly or quarterly.
While giving out an annual bonus is not a bad idea, it’s unlikely to affect the day-to-day performance of your team. Daily bonuses can be nice in theory, though they can become difficult to administer. While a quarterly bonus is better than an annual bonus, monthly or weekly bonuses make the rewards for outstanding performance more immediate to your team. Remember, each bonus serves as a direct reflection of the link between the success of your practice and the bottom line of the team.
Whether you award bonuses weekly or monthly, make sure payment is consistent. If payments are delayed, your team might grow resentful even if they’re making more money.
Additional Tips for Success
1. A successful bonus plan doesn’t eliminate the need for raises. While a well-structured incentive program can lower turnover, it is not a guaranteed income for your team to budget by. You still need to give your team raises to ensure high retention and morale, and that you’re staying competitive, especially in today’s tight labor market.
2. Think twice about basing goals on profitability. While profit sharing can sometimes work, it’s important to remember that your team has limited control over the profitability of the practice. For example, they have no say regarding the hiring of new staff or purchases of expensive equipment. If you are basing the bonus on factors outside of their control, you’re not creating an incentive for outstanding performance.
3. Set a consistent structure. If you’re tying bonuses to particular goals, write your plan down in a way that’s clear and concise where all team members can review it. Changing the structure can detract focus and disincentivize the high performance that you’re seeking to foster.
4. Be careful about implementing an incentive program too soon. Once you begin, it’s difficult to go back. Your team will feel disempowered if you retract the program they were profiting from, particularly if it’s your fault for its poor conception.
5. Show some enthusiasm! It might feel as if the bonuses are coming out of your own pocket, but remember, bonuses are good for the entire practice. Everyone wins! Incentivizing your team encourages them to perform at their best and make the success of the practice their personal priority. Even if you feel someinitial pain to your bottom line, a good bonus program will pay for itself in improved morale, lower turnover, increased production, and increased collections.
6. Wait 90 days before including a new hire in a bonus plan. By waiting, you’ll encourage retention among new hires. Moreover, this practice creates a feeling of unity among employees who are truly dedicated to the practice. This probationary period allows time for the team to assess whether a new hire truly fits.
A good incentive program can boost productivity, lower turnover and improve the morale of your team. But most importantly, a bonus structure should be a win-win, motivating the team to create a better experience and higher level of care for your patients. By implementing a program that fits your team’s goals, you can be confident in continued success for your practice.
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