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 By Neil B. Gailmard, OD, MBA, FAAO, Editor November 30, 2005 - Tip #202 
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Staff Incentives: How to drop an ineffective program

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Last week's tip focused on staff incentive programs and my feelings that they often become ineffective and may be taken for granted by employees. This week I'll cover how to dump a program that's not performing the way you want it to. Even if you like the concept of incentive programs, it's pretty easy to end up with one that's not working as well as you hoped. But ending any type of compensation will receive a chilly reception from employees and can cause a serious morale problem.

Changing the rules

It's understandable that employees will look at any change in their total compensation with some worry. This is one of the reasons I don't like the programs in the first place. If you simply want to change the rules of the incentive or bonus system, staff will worry that they won't be able to earn as much. They'll worry it will be more difficult to track or more difficult to reach the goals. Employees will often have to wait until they receive a few bonus checks before they can really determine if a change in the incentive rules was good for them. In reality, it's hard for the practice CEO to predict if a change will result in more or less bonus money.

The irony is that if you don't continually change the program, the enthusiasm and motivation wanes and it becomes less effective. It's common to see a program produce great sales for a few months and then things slide back to normal levels as people do what is comfortable.

That's why I prefer to just pay good wages and benefits and offer raises for good performance. Giving an unexpected and undefined cash bonus also works well as a reward for great work.

Buy out a bad plan

If you're ready to move away from an incentive program, the fair way out is to calculate the average dollar amount that was actually paid to employees in bonuses over the past six months (or whatever period is appropriate), convert that to an hourly amount and give everyone a raise. Effectively, you will buy everyone out of the plan. That may sound drastic, but it really is simply keeping everyone even. You should not see an increase in your costs, since you're just continuing with the average you're already paying. Depending on your bonus system, you might figure each person's average bonus buyout individually, or if you divide a pool equally, you could give everyone the same increase in wages. I'd do whatever is most fair to the employees.

A buyout of a poor bonus program should be pretty well accepted by staff if they can confirm that the hourly increase they receive was accurately determined. It may even boost morale since they got a raise that removes some uncertainty in their pay, and they can just focus on good patient care and patient education.

Best wishes for continued success,

Read Past Tips Neil B. Gailmard, OD, MBA, FAAO
Editor, Optometric Management Tip of the Week

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Send questions and comments to neil@gailmard.com.

Dr. Gailmard offers consulting services to eye care professionals through Prima Eye Group; information is available at www.primaeyegroup.com.

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