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 By Neil B. Gailmard, OD, MBA, FAAO, Editor April 4, 2007 - Tip #272 
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Annual Employment Reviews

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Continuing with my expansion of the top ten misconceptions in practice management in the order of reader interest, this article will cover the idea of annual employment reviews. I realize that this is a very standard business tool and I believe that reviews are valuable in many organizations, but I'm not so sure they actually help the typical eye care practice.

The importance of staff management

I want to stress how important human resource management is to the success of any practice. Practice owners and managers must continually strive to improve their skills and knowledge in this area. To maximize job satisfaction among employees, we must create an office culture where doctors and staff members have mutual respect for each other. This fosters the pleasant attitude, strong work ethic and good morale that we value so much. This reminds me of the classic joke about a sign that hangs in the employee break room that reads:

The beatings will continue
until morale improves.

-- The Management

Taking an interest in staff members lives, being the first to extend a pleasant greeting, and praising a job well-done are gestures that go a long way to creating a positive work environment. Additionally, paying better wages, providing good benefits and having policies that stress fairness to all employees are important factors in attracting and maintaining the excellent staff we all want.

Rather than holding a formal annual review either at the beginning of each calendar year or at the annual anniversary of the start of employment, I prefer to provide feedback on a more frequent basis. This may be with just the employee and me in a private setting or it may be more general at our weekly staff meetings. The discussion might be positive feedback about things we are doing well or it might be the correction of a deficiency. I often ask for staff opinions and input about how to handle situations.

Formal reviews and raises

I used to perform an annual evaluation of each employee's performance. I found the exercise resulted in one of two things:

  • The review would result in an automatic raise in wages, even though I was often not really wishing to give one. I realized that I was prompting raises that might not have occurred at that point in time.
  • If I felt I did not want to grant a raise, I had to present a negative review to the employee to convince him or her that a raise was not deserved. This would hurt the morale of an employee that was doing average work and was really quite acceptable.

Because of this no win situation, I let the regular reviews drop away. Instead, I gave feedback informally and more often without any connection to the thought of a raise. I still give unexpected raises or bonuses when I see excellent work performance. But overall, I now rely on employees to ask to be reviewed for a raise when they feel it is appropriate. These requests are made to our office manager, who brings the request for a review to me (and my wife who is an OD/partner). Some employees request a review on an annual basis, but many will go several years before asking for a raise.

It often works out that employees who are in that middle range of performance, not bad but not stellar either, are the ones who sense that and remain content with their current salary. These are employees I do not want to dismiss, but I also do not feel a raise is warranted. I am quite content to let these people drift along without rocking the boat.

Additionally, the formal reviews took a great deal of time and seemed to always be looming ahead for someone. They just did not help foster the culture and teamwork I wanted.

Granting raises and how much?

When I receive a request for a review, it is considered informally with the office manager. Our practice is managed so closely that it only takes a few minutes for me to decide to grant a raise or not. Usually the answer is yes, but if there are factors such as poor attendance or punctuality, the answer could be no with that explanation given. If the negative factor can be improved and sustained, the raise may be granted at a later date.

A cost of living raise is really not a raise at all, it is simply staying even. For most of our employees, that would result in a 50 cent per hour raise. So even with mediocre performance, that amount of raise can be offered and morale is maintained. If performance has been good, then a $1 per hour raise is common.

Our office manager generally meets with the employee who requested the review and gives a short verbal summary of the person's work performance and indicates the amount of any raise.

While I want to maintain an excellent staff, I'm also interested in keeping operating costs at a minimum. That is the balance that is required in managing a business. I am willing to accept a payroll percentage of gross in the 22% range, but if allowed to go unchecked, it could quickly rise much higher than that.

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.

Please Note: The views expressed in Management Tip of the Week do not necessarily reflect those of the sponsor.

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