4 steps to adjust staff salaries

“How do you give raises to your staff?” This is a common question among ODs. I have learned after several years of working with eyecare practices that we are all over the place in how we compensate our staffs. Hiring and agreeing on a starting salary doesn't seem to be the big problem, but knowing how to continue to adjust the salaries seems to be the challenge.

It seems there are two basic schools of thought on adjusting staff salaries:

1. The grid method is very objective and ranks each area of the office into various levels of expertise. As an employee earns increasing levels of expertise in different areas of the office, she becomes more and more valuable to the company. Therefore, her pay rate increases.

Related: Finding and incorporating the right office manager

2. The merit method is more subjective because it ranks the staff member on levels of performance and rewards him for going above and beyond expected levels of service. Performance can be graded and evaluated in a number of ways, but it must be defined beforehand.

Which is better? It depends. Performance-based practices gravitate toward the grid method, and relationship-based practices lean toward the merit method. In our practice, we have merged the methods to fit our practice personality.

We schedule salary adjustments for the summer of every year, and this is the four-step process we use.

Look at the budget (Don’t skip this step)

We budget 24.3 percent of our income on staff salaries. This is on the high side of most recommendations. Relationships are important to us. Having adequate, well-trained staff members who feel a sense of responsibility to the patient is a priority. Two percent of this budget is dedicated to staff training and staff development. We make up for the increased budget item with savings in other areas, mostly cost of goods sold.

Determine if staff salaries can increase and by how much

All too often, practices realize they are already over budget on staff salaries. It is better to find this out early rather than later. If we are over budget or at budget, a tough decision must be made. We have to increase income or decrease salary. Salaries can be reduced by decreasing staff size, cutting benefits, decreasing hours, or decreasing salaries.

My advice? Just make more money. In the past, we have been unable to increase staff salaries when scheduled. We told the staff and gave them a choice-no raises or let’s delay the process a few months and make more money. Guess what happened?

More from Dr. Rothschild: Getting your staff off to a great start

Next: Step 3

 Complete a staff adjustment form for every employee

The beauty of this form is in its simplicity. It simply contains employee’s name and current rate of pay. Then company performance-this forces us to look at it and share it with every employee. Company performance is simply a comparison of income to last year. Up, down, or flat and by how much (percentage). It is the same for everybody.

Then each employee is ranked in all of the areas we have deemed most important in our staff.

• Longevity/loyalty. This can be calculated with a formula, but we keep it simple. Being new is a negative in this area, and being loyal is a plus.

More from Dr. Rothschild: How patients perceive your practice

• Performance. If you are doing a good job in general, we give a plus. I have never given a negative in this category. This also can have a number put on it with a standardized evaluation. 

• Dependability. We do standardize this process with a dependability grid. We count how many days in a year each employee called in sick or left early. One or less is exceptional and rewarded. Two to four days is “flat” and is not rewarded or punished, and more than five “dependability days” in one year counts against the employee. (More than nine days results in termination.)

• Responsibility. This is the influence from the grid method. As an employee learns more aspects of the practice or takes on more leadership roles, this score increases. And likewise, if someone gives up leadership roles for personal reasons or job satisfaction, a negative score can result.

• Availability. Staff people who can be here whenever we need them are more valuable than those who have to leave at 3 p.m. or whose school schedule changes every semester. Availability is therefore factored into the equation.

Related: 7 financial challenges ODs will face in 2015 

 Determine each adjustment

Based on the availability of funds for salary adjustments and the scores from each employee, everyone receives a new pay rate. The results are reviewed with each employee individually.