Compensation and Incentives

First a brief note that I'm back in the office after taking a couple of weeks away with international travel. As always, a different culture stimulated lots of new ideas and opportunities to innovate in both clinical and business matters.

Next, a few thoughts on a discussion I had with a client today about opening a new practice location and his desire to incentivize an employee in the management of that operation. The discussion essentially came down to business options to optimize profitability, reward performance, and retain talent. This is a discussion that has come up frequently over the past couple of years and may be on your mind. Here are a few things to consider...

The potential for creativity is of course infinite, but at the core there are a handful of options that provide a starting point for finding just the right solution. The core range of options looks something like this:

1. Fixed compensation including wage and benefits - not the best option for either employee or employer but perhaps the most common solution chosen due to a lack of appreciation for alternatives.
2. Variable compensation including base wage, benefits, and a performance based bonus - this is an option that employers should seriously consider for all clinical staff.
3. Either of the two options above plus a deferred income plan - a particularly useful option to simulate ownership asset accumulation benefits in a non-profit environment or a non ownership position.
4. Phantom stock plan to simulate ownership without capital investment by the employee and without loss of control or certain tax penalties for the employer. An arrangement too often overlooked.
5. Equity ownership - perhaps the ultimate tool to align interests but not without significant drawbacks pertaining to minority interests and employee readiness to assume the responsibilities and obligations that come with ownership. Too often existing owners lose out.

Business performance is highly dependant upon compensation structures, yet too few Practices fully understand the consequences or alternatives. Understanding them and making the best selection have significant impact on Practice innovation, productivity, reward, and recruitment and retention of talent.

All The Best!

Bob

Performance Builders