Practice Strategies

Improving Employee Performance with the Right Incentives

Retaining key employees is central to the success of any practice. Keeping qualified and hardworking staff on board will result in greater patient satisfaction, more efficient administration, and improved profitability. Offering incentives above and beyond basic compensation is among the most effective strategies for building employee loyalty and motivating employees to perform well.

For any organization, high rates of turnover can be costly and disruptive. A steady stream of exiting employees can take its toll on morale, as well as on the bottom line. When an employee leaves, knowledge and experience walk out the door. Resignation and apathy may set in as staff see their friends and colleagues leave for greener pastures, and those remaining face the need to train yet another new hire.

Paying market-rate salaries is, of course, essential to recruiting and retaining staff, as is providing employees with a basic package of health and retirement benefits. But offering top-of-the-line wages and benefit packages to employees is often not possible for smaller practices. Lacking the economies of scale that allow larger organizations to offer a wide range of benefits and other perks, such as subsidized cafeterias or on-site fitness centers, you may be concerned that your practice will be unable to compete for the best staff.

Bigger Isn’t Better

Instead of thinking about the incentives you can-not afford to provide, consider how your practice can leverage its strengths. Compared with larger organizations, smaller employers can offer staff a much more intimate atmosphere, in which even low-level employees have direct contact with physician owners. This shorter chain of command between employer and staff can foster greater loyalty and a stronger sense of mission. It is easier for employees to appreciate the impact of their contributions when they are felt immediately throughout the organization.

Flatter hierarchies alone do not, however, automatically engender employee loyalty. It is important for physician owners and practice managers to communicate regularly with staff about financial and management issues. If your practice does not have a formal system for passing on information to all staff members—such as regular e-mails, newsletters, or meetings—some employees may fall out of the loop and become disconnected. Employees who understand the practice’s short- and long-term goals and challenges tend to be more engaged.

Performance Incentives and Flexibility

Performance-related bonuses, even if they are not large, can go far in motivating employees. These may be offered individually, by department, or across the organization. Bonuses may be tied to specific targets or to overall profitability. Targets should always be set at attainable levels, or they will serve to discourage, rather than motivate, employees. The knowledge that better organizational performance will result in concrete financial rewards provides a substantial incentive to work harder and more efficiently.

Your practice can also compete in the labor marketplace by helping employees manage their responsibilities at work and at home. For many employees, especially those caring for children or other family members, the opportunity to work flexible hours or telecommute can be a major factor in their choice of employers.

Because opportunities for career advancement are usually more limited in smaller practices, ambitious employees may choose to leave rather than remain stuck at the same level. Practices can tackle this problem by providing staff members with training opportunities and progressively greater job responsibilities. Your practice may, for example, offer an administrator additional compensation for acquiring new skills that can be applied on the job.

Relatively inexpensive morale boosters can make a big difference in how an employee feels about his or her employer. Staff outings, office parties, free coffee and snacks, or occasional unscheduled breaks in the day can break up the monotony of the workplace routine. Wellness initiatives can also be highly motivating, yet relatively inexpensive.

Offering employees incentives is important, but so is avoiding disincentives. While guidelines and structure are necessary in any organization, too many petty rules and penalties for minor infractions will frustrate employees and cause them to resent management. Praising good performance is much more effective than policing staff.

For more information about our services to the healthcare industry, contact:
Maxine Lawyer, CPA, Partner - Dallas/Fort Worth at 972.448.6905 or
Philip Fox, CPA, Partner - Houston at 713.297.6914.

The articles in this newsletter are general in nature and are not a substitute for accounting, legal, or other professional services. We assume no liability for the reader's reliance on this information. Before implementing any of the ideas contained in this publication, consult a professional advisor to determine whether they apply to your unique circumstances.
© 2007