A winning bonus program - Veterinary Economics
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A winning bonus program
Your practice is at the top of its game, thanks to the quick fingers and razor-sharp minds of your team members. Now, doctor, tell them what they've won!


VETERINARY ECONOMICS


When our practice is at its best, we want to reward the team that makes it happen. So we've implemented a bonus program—a quarterly system that takes into account practice growth, individual performance, and cost control. Here's how our plan works. Eastside Animal Hospital in Jeffersonville, Ind., come on down!

A prize for growth


The bottom line
Every quarter we set new growth goals—an increase on what we did during the same period from the previous year. For example, if our income in the second quarter of 2007 was $250,000, we might set a growth goal of 7 percent for the second quarter of 2008, which comes to $17,500 in additional income. We pay out bonuses to support staff and associate veterinarians based on that growth figure. The bonus amounts correspond to our ideal spending on compensation as a percentage of our total income.

For support staff, let's say we pay 20.8 percent of our growth goal to team members divided proportionately according to the hours they worked that quarter. So if we paid 20.8 percent of $17,500, the team would get $3,640. For associate veterinarians, we might use 8.9 percent to calculate the amount paid. If practice growth exceeds the goal, we still pay the bonus based on the goal, not the actual percentage of growth. Visit http://dvm360.com/ and search for "Eastside bonus program" to download a spreadsheet that illustrates how we calculate each team member's share of the bonus.

A reward for performance


Take the next step
With more than 30 team members on our payroll, we quickly realized that success can be very expensive. Not long after launching the program, we paid out more than $10,000 two quarters in a row. Growth had been robust, however, so the cost was worth it to see our employees satisfied. "I think the program has helped us learn to work together as a team," practice manager Julia Marlin says. "It's an incentive for us to focus on everything we do."

And the incentive played a big part in our growth. From September of 2006 to the end of 2007, our revenue increased by 11.83 percent. Compare that to January through August of 2006—just before the program began—where we saw little or no growth. Nevertheless, it was clear that we needed to consider some additional factors in case our costs rose faster than our income, or in case some team members were doing more work than others.


Tips from the trenches
In essence, team members were getting a raise of 60 to 65 cents per hour as a result of the bonus program. That's not a bad raise by most standards, but did everyone deserve it? To determine this, we created a monthly performance appraisal system that requires team members to fill out a two-page self-assessment form at the end of each quarter. To encourage team members to put some thought into the self-assessment process, we ask them on the form to cite examples of their performance. We recognize that some employees tend to overestimate or underestimate their value to the company, so if needed, a manager meets with those team members to tweak the score. But it's been our experience that the majority of the self-appraisals require a quick approval and nothing more. The final score on the appraisal affects the percentage of the share that team member receives. Visit http://dvm360.com/ and search for "Eastside bonus program" to download a sample employee self-assessment form and to see our growth bonus incentive plan.