EP05: Common CRUCIAL Mistakes When Compensating Your Hygiene Team

Podcast

Are you making a crucial mistake when it comes to paying your hygiene team? Do you feel like you struggle with creating motivation for your employees day in and day out? Dr. John and Wendy explore the most common mistakes when compensating your hygiene team in todays episode, and discuss achievable solutions for these problems that could help your hygiene team to explode with productivity and leave the office (and YOU) happy.

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Episode 5 “Common Crucial Mistakes When Compensating your Hygiene Team” Transcript:

S1 00:02.293 [music] Welcome to the Double Your Production podcast with the Team Training Institute, the one place designed for dentists and their staff who want to grow their practices by following in the footsteps of those that have done it, or in the trenches, know exactly what you’re going through. And now your leaders, the stars of the podcast, Dr. John Meis and and Wendy Briggs.

S2 00:24.886 [music] Hello, everyone, again and welcome to the Double Your Production podcast. Today we’ve got a topic that Dr. John and Wendy often speak on. I know they talk about it a lot so I’m just going to turn the time right over to you guys. The question today is how to compensate or incentivize your hygienist? Wendy, go ahead and get started.

S3 00:46.985 Thanks, Katie. This topic is such an interesting question. We get this question all the time. Every time I lecture, every time we work directly with clients. So I think this will be a great conversation. [inaudible] and what’s awesome about having you on podcast with us is that you can give us the doctor, owner, or the dentist perspective as we talk about this topic today.

S4 01:10.300 It’s a place where we see practices trip up all the time. And we see people kind of fix this and get it set up just right only to go back and try to change it and mess it up again. So this is going to be a great, great discussion. I’m excited, fired up.

S3 01:28.529 Me too. So the question really is, what is the best way to compensate a hygienist? And again, as I mentioned, this is always a question that comes up. I saw a question posted just the other day on a dental practice administrator’s forum that we participate on that basically said, “What are you paying your hygienists? What hourly wage is your hygienist?” And the comments were so interesting because one of the comments said basically, “We pay a base rate plus a percentage of collections.” Another person said, “We pay a base rate plus a percentage of production.” But the majority of the comments on this forum were, “We pay our hygienists an hourly wage plus benefits.” And the general feeling amongst dentists is that they’re getting scalped by hygiene wages anyway, so why would they want to compensate anything additional to the hygienists when they are already being paid such high wages. And so while I understand that thinking, we have long held the belief that if you pay an hourly wage, what you get is an hourly-minded employee. And, as a producer, we feel like the hygienist really can contribute so much more and really do need to participate directly in their own personal production. But we’ve also seen practices try to set this up and fail miserably along the way. So there are some principles that we recognize that can make a huge impact in this area. And, again, we’re going to talk through a lot of different– there are so many different ways you can do it. I certainly could say there’s not a one size fits all way to compensate providers, but I do think Dr. John and I both would agree that some kind of production-based compensation is ideal. Wouldn’t you say?

S4 03:05.694 So the question, what are you paying your hygienist or what hourly are you paying your hygienist? The question is the wrong question. The question is how do we motivate and incent hygienists to maybe push themselves a little bit to provide more care for patients? That’s really the question, and if you don’t ask the right question you end up tripping up over the answers. So it’s absolutely true, Wendy, that if there is some compensation based on amount of care given, more care will be given.

S3 03:42.233 Yeah. Absolutely. And I think that’s one thing that’s important for us to clarify as well for those that don’t know us and don’t know much about what we teach. In our mind, production’s really never the goal. Production’s the result that comes and we serve our patient to the highest possible level the production will naturally follow. And the reality is that hygienists that are compensated on an hourly wage really don’t have the incentive to do the right thing. People like to think that they would, but unless there’s a return on the efforts that’s required to do that, we just don’t see consistency and sustainability with what I call world-class hygiene care. It takes a lot of effort to really focus on [inaudible] and all of those things.

S4 04:24.206 But one of the things that doctors, owners get tripped up on is, “Well, I’m paying them to do that already. Why aren’t they doing it already?” Again, it’s not the right question. The question is how do we incent our hygienists to provide more of the care that patients need and want? That’s a better question.

S3 04:48.474 Exactly. So I think what we probably can talk about– should we take this from the angle of common mistakes or principles that we know are necessary for success? I mean, we could go either way.

S4 04:59.451 Oh, it’s more fun to do mistakes, I think [laughter].

S3 05:03.478 Okay [laughter]. All right. So let’s talk about that. Let’s talk about mistakes. And of course, I’m bringing the hygienist perspective. So one of the key mistakes that I see is that when we do introduce an incentive it’s far too complex to the point that nobody can understand how it’s calculated. So usually those incentives are created by an accounting team or somebody with a high-level knowledge of the practice and the profitability and all of that. And what happens is, in my opinion, if the hygienist doesn’t know how to calculate the bonus or doesn’t understand or have clarity on that, then it loses the ability to be an incentive. If they don’t know how they’re going to achieve the bonus, then they quit driving to get there.

S4 05:46.906 No doubt about it. And what we see is, like you said, kind of financial-minded people putting together a complex formula to allow the doctor to feel secure in this new bonus. So they draw out all this big complex map thing and finally the doctor says, “Okay, yeah, that makes sense.” But the problem is it’s– you’re, again, asking the wrong question. What will it take to incent hygienists to do more of the care that the patients need and want? And so certainly, if it’s complex, you’re lowering the incentive. If it’s simple, everybody understands it and there’s no way to fudge it. I’m sure that will come up here as we talk. Hygienists will certainly be more incented and will provide more care.

S3 06:38.165 Absolutely. So that’s one of the mistakes is having it too complicated because, really, if we don’t know how to calculate it were not going to be driving to get that. Another mistake that I often see is we spread it out over time and we might see an incentive that’s averaged over the entire month or even over the quarter. And I understand that the practice center has very real reasons why they do this, but for the hygienist perspective it loses– the chances of them earning anything drops significantly when that occurs. So if you average it out over too long of a period, that’s a common mistake that I see. Dr. John, why might a practice owner want to do that?

S4 07:21.230 Because it’s easy to figure. If you only have to figure it once a month or once a quarter it’s much more easy to figure. It also takes into account the ups and downs and so it levels it off, but that is exactly a disincentive. What you’re trying to incent people is to make the most out of today because once today is gone you can’t get it back. So the whole thing, if it’s not based on very short time frames you just are not going to have the incentive power that you could.

S3 07:59.231 Right. Now, I’ve got a very interesting [case?] for this. So one of the large corporate entities that we worked with had a very complicated bonus. It was structured out over a quarterly base system. So at the time when we first started working with them– and I’m not going to say who they are. I will just say they have more than a thousand hygienists. So when we began looking at the incentive plan that they had in place, only 26% of their providers were earning an incentive at all. So only 26% of their hygienists earned anything extra. And when we made a few adjustments to the incentive, one of which was we shifted it from being figured or calculated over a quarterly basis into being figuring on a daily basis. So every day was a new day and every day they had an opportunity to earn that incentive. The first month under the new plan, 100% of their providers had earned something extra. So it can be a tremendously impactful shift if you can go to that. And just because it’s figured daily doesn’t mean it has to be complicated. You can still simplify the process to be able to have a daily calculation. And a lot of times we put the ownership on the hygienists. If they’ve achieved higher than the base for the day, then they’re the ones who are responsible for providing the documentation and turning that into whomever is calculating payroll. So just because we’re figuring it on a daily basis doesn’t mean it has to be particularly complex.

S4 09:22.552 And so one thing that has to be understood that this bonus comes from increased productivity. So the practice earns more and the hygienist earns more. So I think a lot of doctors get stuck in this zero-sum game that if the hygienists earn more, the practice earns less. That is faulty thinking or a faulty bonus system. So if the bonus system is set up properly, everybody wins. Particularly, the patients that are getting the care that they want and need. But if it’s not set up properly it can go backwards, which is why it’s important to have a formula that works for everybody.

S3 10:03.464 I could not agree more. So when we look at other mistakes– and what’s funny is, we’re guilty of this mistake right now and that is calling it a bonus, right? So we’ve been talking about bonuses, so that’s why we’re using that language. But when we’re talking with clients and hygienists and team members we really try to be very careful to discuss any type of change to their compensation as a shift to their salary package. So we want to language it as we are restructuring their salary from an hourly pay to maybe an hourly plus production-based compensation so that the team’s perspective isn’t that the hygienists are getting extra bonuses. That the hygienists earn a bonus and nobody else does. That’s certainly harmful to team harmony. So we want to language it in that this is a shift to their compensation. We’re instituting a production-based compensation model. And the details of which really don’t need to be shared with everyone, but these types of things tend to leak out and pretty soon the rest of the team hears about it. And if they don’t have a way to participate in some sort of incentive, then of course, it’s going to cause some hard feelings.

S4 11:16.395 And really, once the hygienists kind of understand the bonus system, they’re going to produce a lot more. And as they produce a lot more, they’re going to need help from time to time. Particularly, from dental assistants and from the front desk as well. So they’re going to require more resources from the rest of the office. And so if the rest of the office sees this as a bonus, like they’re working harder for the hygienists’ bonus, it will definitely cause hard feelings. So it is a compensation package and do not call it a bonus to anybody. And it really isn’t a bonus, this is something that is just part of how they’re paid. We can talk about bonuses and that’s a whole nother bailiwick. So that will be another episode for sure, but make sure you don’t use the word bonus when talking about the hygienists. And the other thing is it’s kind of nice if when you make this shift, if you can make this shift to a bonus structure that allows everybody to have the opportunity to earn, and I mean earn, to earn more. That’s a very, very powerful combination if you can do them at the same time.

S3 12:37.109 I could not agree more. So, Dr. John, there’s another question that we often get too, and that is dentists often approach us concerned about how, with some of the formulas we teach, we’re looking at a production number instead of a collections number. So can we talk about that for just a minute? Because I know with corporate dentistry and larger groups, they often want to compensate based on collections. And I have the hygienists perspective on why that presents some challenges, but I’d love us to talk about that for a minute. So a lot of formulas we teach are looking at production.

S4 13:15.630 Sure. So I’ll give the viewpoint of why you want to do it on collections, and here is what we hear. So we hear, “Well, how can I do it on production? It doesn’t matter what they produce. It’s what they collect. How can I pay a bonus on money that I haven’t collected?” That’s kind of number one. Number two is, “Everybody else is paid on collections. The doctor or associate doctor’s almost always on collections or adjusted production. So it’s not fair. How can I do it one way to one group and do it another way to another group?”

S3 13:52.882 Right. So those are very common questions and concerns that we get. And so, again, from the hygienist’s perspective, I’m going to share a couple of insights there. And that is, the practice owners are the ones that are making decisions about which insurance companies can participate, what kind of offers or specials we’re giving away. And so, occasionally, there was a post just a few days ago from a hygienist that had done all of this treatment on a new patient only to see it adjusted off. And because she was compensated on collections, it meant that she basically was working for free to help grow the practice. This was a hygienist that was strictly paid on collections percentage only. No daily basis, no safety net for this provider. So from the hygienist perspective, you can see how that would be patently unfair.

S4 14:42.205 Yep. And so if we’re talking about a change in compensation structure that is incenting people to do more, that doing more is production. And so, if you throw the collection angle in there– and I understand the thought process of why that would be safer for the practice, but the way you create that same safety is in how you structure the bonus. You know you’re going to collect X percent of what you produce. And so, great. So just build that into the bonus structure so that practice has the security of knowing that they’re not really paying on dollars that aren’t collected because you’ve built that into the structure of the bonus. But the number that’s calculated by the hygienist is their production because their productivity they can directly, and really, almost completely control, whereas collections, not so much.

S3 15:47.838 Exactly. And a lot of practices are putting in adjusted production numbers anyhow. So we rarely see a grossly overinflated production number in today’s world because the technology and the capabilities we have with our software. So most practices are looking at a more realistic number anyhow. So you’re exactly right, Dr. John, we just build that into the base. The most comfortable methods that we teach usually all are related to a daily base plus a percentage or profit sharing once the hygienist becomes profitable. Like Dr. John said, when the practice makes more, the provider makes more, and everybody wins. And as I said before, we don’t want to get into too much specifics today because it certainly is not a one-size-fits-all formula, and this is something that, really, you’ve got to be very cautious with. So we have multiple formulas that we teach that are effective. One last mistake. We’re almost out of time, but one last mistake, Dr. John, that we see time, and time, and time, and time again is the hygienists are incentivized. They start really focusing on patient care. They start killing it, and then the doctor immediately says, “Whoa, whoa, whoa. I’m paying my hygienist way too much,” and they pull it back. So let’s talk about that for a minute because we’ve talked about this so many times. We’ve seen this so many times, and this is just a really dangerous area for dentists to focus on. And I think you talked so beautifully about how it’s very common that we see dentists focusing on the wrong numbers?

S4 17:19.702 Yeah. So again, if this is set up properly, every dollar extra that the hygienist makes, the practice is making even more, right? So if you focus on the dollar amount that hygienists are– you should be focusing on how high you can get it. Not on how low you can get it, but how high you can get it. And after Wendy came into my office and our hygiene productivity just absolutely soared just like everybody’s does once they understand the concepts, and understand how to do it, and have the right support, and have the right resources to be able to do it, our hygienist productivity soared. The state organization that helps people find jobs, and looks at wages, and things like that, had a website that allowed you to look and compare wages that you’re paying compared to everybody else in the state, basically. And our hygiene team, they were making more money than any other hygienists in the entire state. I was so proud of that. I was so happy because I knew the way the bonus was structured, the better they did, the better I did. But here’s the place where we get tripped up. And it is, “Well the average hygienist is making $34 an hour, or whatever it is in your area, making $34 an hour and mine are making $60.” To me, the right response– you have the bonus structure set up properly, the right response to that is, “Okay, you’re making 60 now. How can we help you to make 70?” But that’s not the natural way dentists think because they’re not– they don’t understand the power of the bonus structure. Every dollar that the hygienist makes the practice makes even more. Does that make sense, Wendy? Did I say it properly?

S3 19:15.382 Yes, I love that. And I remember one time at a meeting the dentist came up and was talking with you and you handled this so beautifully. They said, “My hygienist is just way overpaid. Some days they make $450 a day with the incentives that we have built in.” And you said, “Okay. Well what’s their average?” He said, “Well they’re averaging about $2,600 a day now and they were averaging about 800 before.” And I remember you looked at him and said, “So they’re producing $2,600 a day for you and you’re paying them 450?” And he said, “Yeah.” And you said, “Well, that sounds like a really good deal to me [laughter].”

S4 19:46.801 The math works out, right [laughter]?

S3 19:47.228 Exactly.

S4 19:49.391 Yep, the math works out.

S3 19:49.684 The math works. Yeah, it’s beautiful. So I loved that. So I think that really what we talked about here today is compensation for hygienists certainly can be complex. It’s a little minefield full of common mistakes, but if you have it structured the right way, everybody wins. As you said, Dr. John, the patient wins, the provider wins, and the practice most certainly wins. So it’s such an important element and this is why we devoted quite a bit of time in our book speaking more specifically to this issue. So if this is something that you’re struggling with right now or you’re wanting to learn more about what’s working in dental practice, a great place for you to go would be to our website, to the podcast page, and there you have a chance to request our book. That’s www.theteamtraininginstitute/podcast, right?

S4 20:39.123 Yep. It sure is and we’ll actually send you the book for free. You just got to pay the postage, and it’s a minimal postage fee. And we’ll send you the book for free and there’s a lot more information on there. I think you’ll enjoy it.

S3 20:52.043 Fantastic. Well, what a great conversation. Our very next podcast really should be about incentives for the whole team because we want to, obviously, point out how important it is that the entire team has the opportunity for a greater future. You mentioned that earlier, but this is just a great conversation on hygiene compensation. So thanks for that, Dr. John.

S4 21:12.245 You bet. Way to go, Wendy.

S2 21:14.016 Well thanks so much, you guys. I really think we got a lot out of that conversation like they said. So find out more on www.theteamtraininginstitute/podcast where you can get a free road-map call to talk about your hygienist, or get a free copy of our book and read more about it. Like they said, we’ll send you that copy for free. So just find that on our website as well as a transcript if you want to download and share this. So thanks so much for tuning in and look out for our next episode of The Double Your Production Podcast. [music]

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