I have long advocated that OD/practice owners appoint an office manager. It represents a major step forward in building a practice that does not depend on the doctor for everything. It can free the practice owner to focus on other tasks, be it patient care or higher level management. Many ODs have an employee with the manager job title, but struggle with how much financial information should be shared.
This article will give you some direction on how to delegate more to your manager, but preserve the privacy of some data.
There are many degrees of information-sharing in a business, with traditional management at one end of the spectrum and open-book management at the other. How much you share depends on your business philosophy; it is really up to you. But even advocates of an open-book system may want to keep some data private, such as wages of certain employees or personal income of the owner.
Here is a list of some of the items you might like to delegate to a manager, but you may not be sure how much to reveal.
Associate doctor salaries
Owner’s personal salary or draw amounts
Practice check register
Manager’s ability to sign checks or use credit cards
Letting the manager be aware of the wages of most employees offers a big benefit to the practice owner. Once you get past that hurdle, the manager can truly take over most of the hiring process and employment review process, with your guidance. Managing the staff is a huge drain on time for the OD/owner and it is one of the most important tasks a manager can do. You can still hold back some salary information and I’ll show you how below, but consider meeting with your manager and delegating the wage and review process.
When you first break through with this procedure, it is possible that you will upset some people, so develop a plan first, but realize that once you get past the initial change, your practice will be much more efficient. First consider what salaries you don’t want to share. Maybe you will not share the doctors’ salary information. Second, consider if the manager will likely be unhappy if he or she learns that another employee is earning more. In general though, it may be best to try to share as much information as you are comfortable with. After all, there are no rules that say a valuable optician should not earn more than a manager.
A nice side benefit of getting your manager involved in staff wages is that the other employees begin to truly see the manager as their boss, which will make the manager more effective. After all, the person who makes your initial job offer, and the person who does your review and tells you the amount of your raise is a person you consider to be your boss.
To be clear, we consider wages a private and personal matter and while the manager may learn the wages of others, you must make it clear that this is highly confidential and may not be shared with anyone.
I highly recommend that you use a payroll service, which could be a national company or some local CPA firms also offer this. By using a service, the payroll reports can be separated by employee category and can be delivered only to the owner, if desired. Or some categories are delivered to the owner and some to the manager. Also, payroll services can deliver paychecks (for those who do not use direct deposit) in sealed envelopes. The manager can simply receive the envelopes and distribute them.
Your office manager can still track the hours of all employees, preferably with virtual time clock software, and submit the hours worked, sick days, vacation days and any other payroll information to the payroll service.
The actual record of employee wages and dates of raises can be kept on a spreadsheet or in a ledger book that only the manager and owner have access to. The owner may leave key employees out of this record and handle them personally.
Separate bank accounts
Another factor in keeping wage information private is the practice bank account the payments are drawn from. Ideally, the manager will also have access to the checking account register in order to assist with accounts payable. A payroll service can print and issue checks on this account and provide a grand total for the entire pay period, without showing the actual names on the checks and the individual amounts. A large total is deducted from the bank balance and just labeled as payroll, so the manager can’t tell who received what.
Additionally, it is helpful for the practice to have a checking account and a separate money market (savings) account, and the manager may only have access to the former. The practice owner can move funds from one account to the other. These accounts are both still corporate and moving money does not change the income tax situation as it does when money is taken by the owner personally. If cash flow is strong and profits are good, the owner can move some money from checking into savings. Also, if money is tight, the owner may need to move some money from the savings account into the checking account in order to pay bills. Be sure to code this type of deposit as a fund transfer and not as practice income. A payment of profit distribution to the owner personally can occur from the money market account and need not be visible to the manager.
More next week on other sensitive issues for managers.