In his book, Hardwiring Excellence, author Quint Studer says that those who work in healthcare desire to feel a part of something worthwhile.
As a leader of your business, you have the ability to foster an environment and culture that provides your team with a sense of purpose. Spending time to determine the right salary for your employees is a function of defining this purpose.
While compensation isn’t the only factor in enhancing job satisfaction, employees do place importance on the financial features of a job such as pay and benefits.
Here are three steps to consider as you determine the appropriate employee salaries.
1. Write good job descriptions
Good job descriptions are the cornerstone of managing your employee’s salaries. They are the basis for fair evaluations, compensation reviews, and establishing an equitable wage and salary structure within your office.
Read More: 4 Reasons Why You Need Better Job Descriptions
An employee’s job description should communicate your baseline expectations for performance. It also clarifies the skills and training necessary to perform well. Good job descriptions allow you to compare levels of responsibility across your staff and set pay ranges for each level within your organization.
Job descriptions are living documents. Frequently reviewing and rewriting your job descriptions will help you identify if an employee has taken on additional responsibility, or if they are not meeting your expectations.
If you’re unsure what level of compensation is appropriate, you can use a well-written job description to compare across other similar job descriptions within the industry.
2. Set pay scales
After you have organized your staff with job descriptions, the next step is to set specific pay scales.
The minimum pay should reflect on how you plan to compensate a new hire. And the maximum is how you might compensate an employee who has demonstrated repeated excellence in that role over a number of years.
Pay scales should be specific to each job description. This means that an employee cannot exceed the maximum of their pay range without increasing the scope of their responsibilities and changing their job description.
Specific pay scales help you standardize the compensation throughout your organization and help you avoid over-paying or under-paying based on the market rate.
There are many resources that you can use to help determine fair pay scales for specific job descriptions. The first place you should try is your local dental or medical society. They likely have pay range or salary resources specific to your job descriptions.
There are some good online resources as well. Payscale.com provides a very nice report reflecting local wage and benefit ranges based upon experience levels for specific job descriptions. The Bureau of Labor Statistics has a Consumer Price Index Inflation Calculator can also help you determine fair compensation today if you only have access to old data.
3. Use a budget
Total personnel costs are a major factor in the general overhead of any healthcare business.
For example, according to the most recent report produced by the joint efforts of the National Society of Certified Healthcare Business Consultants and the Academy of Dental CPA’s, total personnel costs are averaging 28% of collections for general dental practices, and 32% for primary care medical practices.
Every practice is unique and you will have to determine what budget makes sense for you. Comparing your staffing budget to the industry average is a good place to start. Just keep the following points in mind as you evaluate your budget:
- If you are just starting out in business your percentages may not compare to your industry standard.
- If your percentage is higher than your industry standard, it may be that your receipts are lower than your industry standard. To fix this issue, more emphasis may need to be put on growing top-line collections.
- If your percentage is lower than typical, this could indicate that your pay rates and benefits may be lower than what others in your specialty are paying.
Conclusion
Your employees are a key component to having a successful healthcare business. Spending time to determine the appropriate salary and providing the right benefits is crucial to showing your team that you care about them and wish to treat them fairly.
Investing in them in this manner will create a sense of purpose and lead to results that will help you achieve your goals and practice your specialty with purpose.
Great post!