Mark Opperman, CVPM

You are, I trust, aware of the benefits of production-based compensation for associates: Higher earning potential almost always equals better performance. And when you combine a guaranteed base salary with a percentage of production—a system I call ProSal—it's truly a win-win situation. The associate can't be paid any less than the guaranteed base but has a strong incentive to offer a full-service approach—generating more income and providing a higher level of care.

Well, why not apply this principle to your entire healthcare team? Everyone would be vested in the success of the practice, and everyone would share in the economic rewards of that success.

A reason to succeed

One of the biggest challenges facing the veterinary profession is appropriate compensation for the support team. How can we expect to recruit and retain these most-important assets when we pay them such a paltry salary? Part of the problem is the fees we charge—they're too low and often discounted—but what motivation do team members have to make sure fees get charged? None! However, if you involve employees in the financial success of the practice, you enhance their compensation as well as yours.

Most employee incentive programs I've seen over the years have some flaw. Take bonuses, for example—even bonuses based on increased gross revenue. Were all employees equally involved in achieving this increase? Probably not. So if you pay everyone the same amount, you're rewarding some team members who don't deserve it. This naturally leads to disharmony and discontentment.

To get an incentive program for the nondoctor team to work, you must:

• Establish specific evaluation criteria over which the team members have some control.
• Involve all team members in the incentive program.
• Communicate the evaluation criteria to everyone.
• Evaluate all team members for their participation in the program.
• Regularly inform team members of the practice's success in achieving financial goals.
• Base rewards on the achievement of the goal and each individual's contribution to it.

This is a tall order, but such an incentive program has been successfully incorporated in many practices. Let's take a look at it—first the financial side, then the performance side.

Determining the incentive

First, you must establish exactly what team members will receive as their bonus. I like to use a percentage of the increase in gross revenue: If the practice sees financial gain, so do team members. Normally this percentage is 10 percent of the increase in gross from one quarter compared with the same quarter of the previous year. In a mature practice, 10 percent of the increase is very fair. If a practice is growing, if a new associate is hired, or if a new building is constructed, the percentage might be reduced. Remember, this is 10 percent of the increase in gross, not the gross itself.

Why gross? Because you have to base the program on what employees can influence. They can affect gross revenue, but they can't control net. If you buy a new piece of equipment or hire a new doctor, it may decrease the net even though your team members have been working hard to offer services and provide excellent client care. So stick with gross, and you'll see employees shine.