What's fair compensation?

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Keep employees happy and engaged with competitive compensation and benefits.

There's no doubt that fair compensation is important when it comes to employee job satisfaction. However, compensation can be tricky to determine, especially when money is tight. And discussing the topic with team members can be understandably difficult. But failing to examine and discuss one of your practice's largest expenses could lead to problems down the road.

Unmotivated employees can dramatically affect productivity, turnover, and the quality of care you offer clients and patients. To help you keep employees engaged, Benchmarks 2009: A Study of Well-Managed Practices by Wutchiett Tumblin and Associates and Veterinary Economics sheds light on the latest strategies for addressing compensation.

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SO WHAT'S FAIR COMPENSATION?

Staff wages, retirement contributions, and payroll taxes represent about 25 percent of total practice revenue. While staff compensation is a significant expense—one you might be tempted to slash when money is scarce—consider what your team does for you. Staff members support doctors' production, and competitive pay helps ensure you've got the best help possible. See Figure 1 for compensation ranges in Well-Managed Practices.

Source: Benchmarks 2009: A Study of Well-Managed Practices by Wutchiett Tumblin and Associates and Veterinary Economics

When it comes to doctor compensation, 50 percent of Well-Managed Practices pay a guaranteed base plus a percent of production, and 22 percent pay straight production. The remaining 28 percent pay their doctors a straight salary. For those practices paying a blended production rate—the same percent for medical services and product sales—the average rate is 20 percent. Practices that use a split rate pay, on average, 22 percent on medical services, 8 percent on pharmacy items, and 8 percent on therapeutic diets. Figure 2 shows the average starting salary for doctors in Well-Managed Practices.

Source: Benchmarks 2009: A Study of Well-Managed Practices by Wutchiett Tumblin and Associates and Veterinary Economics

MAKE IT ABOUT MORE THAN MONEY

Many different factors contribute to employee satisfaction besides compensation: enjoyable, interesting, challenging work; a positive work environment; and competitive benefits (see Figure 3). If the economy is making you rethink your compensation and benefit packages, consider some alternatives to maintain your team's morale. For example, in lieu of a cost-of-living increase, try offering additional paid or unpaid vacation days to your employees. Your cost of employment will remain constant, but your staff will feel like they got a comparable benefit. Or consider flexible scheduling—something that costs you nothing. Flexible scheduling offers staff members the option to work around family or personal obligations.

Employee benefits

CONTINUE THE CONTENTMENT

To prevent employees from losing interest in their work, consider holding one-on-one discussions with them to find out how to make their work more engaging and fulfilling. An opportune time to hold these discussions is during your yearly performance evaluations. Performance evaluations let your team members know where they stand. They're a reality check between the staff's perspective of how their careers are progressing and the management's viewpoint of their progression. They're also one of your best tools to gauge job satisfaction. Evaluations provide a forum to follow up on performance and training goals, address areas of needed improvement, add responsibilities for the coming year, develop a continuing education plan for the year, and provide an opportunity for the employee to communicate his or her career goals and voice any concerns about his or her position. Be sure to address compensation and benefits for the coming year as part of the discussion.

Take a look at the goals for your practice and how they relate to your associates and team members. If there's a disconnect between the way your team currently operates and the way you'd like it to, scrutinize your compensation and benefits package and consider revitalizing your feedback system with performance evaluations and continuing education. You'll keep the interest and focus of your team—and improve client and patient care while you're at it.

Denise Tumblin, CPA, is a Veterinary Economics Editorial Advisory Board member and president of Wutchiett Tumblin and Associates in Columbus, Ohio. Helen Hoekstra is a financial and valuation analyst at Wutchiett Tumblin.

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