Alternately, your bonus payout can be tied to achieving a Role KPI. In this case, make sure you only pay out a bonus, if you hit a practice revenue goal. You certainly don’t want to be losing money by paying a bonus.
I like to top out the bonus to no more than 10-15% of the net profit (after expenses).
This way, if you made a mistake with the bonus, you shouldn’t need to reduce or eliminate it. Remember, nothing is more demotivating for someone, than having money taken away.
Every team is different, and what bonus structure motivates one team, may demotivate another. You should also understand what motivates each team member.
For some, it’s having a consistent pay-check, for others it’s working Monday-Friday in a private clinic, and for others it’s the opportunity to make unlimited commission.
Once you understand the motivations of each team member, you will be in a better position to create a compensation plan that works for them all.
When paying a bonus, always communicate to the team why it is being paid out, give an example of a specific behavior or situation that created the bonus, tell them you value that behavior, and thank them all for their hard work and hitting the goal.
For example, the conversation may go something like this:
“I want to bring everyone together in the office for a quick meeting. As you all know one of our core values is providing exceptional customer service. It looks like you all smashed that value, since last month we had an increase of $5,000 in revenues!”
It looks like we had several patients refer their friends to the practice, and that resulted in the additional business to the clinic.
As you know, we all succeed, only when we work as a team, and as a small token of my appreciation, I want to give you all $100 cash bonus for taking the time to remind every patient of our referral program.
Thanks again, and I’m excited to see how this month will turn out!”
As you can see, I tried to tie in at least one of the clinics’ core values (working as a team), along with a role KPI (telling every patient about our patient referral program).
I was clear that the bonus was directly related to the additional business we received from referrals, and that this is something that they are doing correctly, and should continue to do.
Always thank them for the behavior you want to see, but don’t make it sound as though the bonus will continue for the next month.
If the following month was successful, I would pick another KPI, and focus on that (maybe on the percentage of consultations that result in bookings).
As a last point, please check with your accountant on how to properly handle any bonuses you pay your team so you don’t run afoul of the IRS.