As an optometric practice owner, do you find the amount of compensation you are paying out is pushing the high end of absurd?
In his book Good Profits, billionaire businessman Charles Koch writes that incentives should be solely centered on the value an individual adds to the company as a whole. He critiques companies that give increases for non-value added reasons, like Cost-of-Living Adjustment (COLA) raises, automatic bonuses for production increases, and annual beginning-of-the-year wage increases.
If you’re like most optometry practice owners, you give yearly raises based on a staff member or associate OD being with the practice another year. What if you would implement a value-based approach?
Here are some ideas for considering:
- Associate Optometrist – An associate optometrist creates a clinical protocol that when executed allows for each doctor to see two more patients per day without compromising care. This results in a more profitable office. However, associate ODs are typically unmotivated to do more than the bare minimum because they don’t have ownership in the business. But what if they are stimulated to invest in positive profitable change because they benefit financially from it?
- Office managers – If an office manager reduces frame costs by $1,000 dollars per month, it would be reasonable to reward him or her financially with 10 percent of the savings. Instead of paying office managers a flat salary that continues to increase whether or not they create value, pay them a flat rate and give them 10 percent of the optical profits that they are responsible for implementing. What you will find are highly creative and highly motivated office managers.
- Staff – When staff members make mistakes, it costs the business financially and harms patients’ perceptions. What if incentives were based on value that staff added to patient care?. I see many benefits to having a fully trained and competent staff member stay in the position long-term. So if value is based on length of time at the practice, then reward that with built-in incentives. Many offices will award bonuses or give special incentives for sales, which encourages staff to put sales above patient care.
How does your team of doctors and staff create lasting value for your optometry office? What gets rewarded will get repeated and what is repeated is what builds a culture or destroys a culture. Do you give your team members incentives based on the value they create? Or do you base your rewards on the fact that they survived another year or sold an extra pair of frames?
