PRACTICE ADVISORS
Balancing the Scorecard
Here’s what to consider if you incentivize staff with bonus payments… and you should!
Q: DO YOU USE BONUS PAYMENTS AS AN INCENTIVE FOR YOUR STAFF? IF SO, HOW?
A: Much has been written about bonus structures. Some articles conclude that bonuses can de-motivate employees and harm a practice. Others, however, say that bonuses are a perfect way to motivate staff to sell more products, which is, of course, beneficial to your office.
Though we completely understand both sides of the bonus story, we believe that, if structured properly, a bonus can not only bring in more money but also be the driving force for creating an office that runs smoothly and is poised for growth.
BAD BONUS SYSTEM
Here’s how a practice can be harmed by an ill-conceived bonus system. An eyecare professional can bonus staff to sell more AR coatings or polarized lenses, for example, and later learn that patients are upset with the practice for being too forceful in the optical department. Worse yet, they may post something online about the “worst experience ever and all the office cared about was selling overpriced eyeglasses.” This patient, along with their family and other prospective patients reading the post, could be lost for life.
Many times practices have staff incentives to sell second pairs, only to find out the staff has discounted the second pair to the point that the practice is actually losing money on the transaction. In this situation, employees care only if they are paid a bonus, not whether a profit is made for the practice. Unfortunately, such narrow-focused bonus systems are sometimes seen in practices.
SAMPLE STRUCTURE
Here’s how The Balanced Score Card (see chart, below) might work if staff receives a bonus when each objective you have selected is met.
• OBJECTIVES. Let’s say you decided to use customer satisfaction as one objective and revenue growth as another.
• PROBLEM. If an increase in AR coating sales was one way to increase revenue, but staff pushed a patient into buying the product even though they didn’t want it, this ultimately could affect your patient satisfaction objective, not to mention your patient return rate.
• SOLUTION. The Balanced Score Card approach makes staff and office managers aware of how one decision affects other parts of the practice. Its all-encompassing philosophy can be a part of a successful bonus program in your practice.
THE BALANCED SCORE CARD…
Tying Bonuses to Objectives
| FINANCIAL GOALS | CUSTOMER GOALS | LEARNING/GROWTH GOALS | INTERNAL PROCESS GOALS |
|---|---|---|---|
| $ Revenue growth | $ Patient satisfaction | $ Staff training | $ Waiting time for glasses |
| $ Patient receivables | $ New patient growth | $ Educational certifications | $ Remake percentages |
| $ Insurance receivables | $ Patient return rates | $ Average waiting times | |
| $ Patient check-in time |
A BALANCED APPROACH
Conversely, many well-run businesses use what is called a Balanced Score Card approach, which was designed by two Harvard professors, Robert Kaplan, Ph.D., and David Norton, Ph.D., to help align a business’ activities to its vision and strategies. Basically, it gives management a balanced view of performance.
There are four main perspectives of the Score Card: financial, customer, learning and growth, and internal business processes. It is important to find several measurable objectives that fall into each perspective and, at the same time, are in line with the vision and strategy of the business.
Most ECPs share similar visions and strategies for their business: To provide excellent customer service and patient care, grow financially, earn higher net revenue, run a smooth and efficient office, and create a happy employee environment. The Balanced Score Card approach can help achieve these.
For each of the following perspective, think of key measurable objectives that are in line with the goals of your office.
• FINANCIAL. What are three or four things (objectives) that are important in your practice financially and that are measurable? Examples would be revenue growth, patient receivables, and insurance receivables.
• CUSTOMER. Here patient satisfaction, along with new patient growth and patient return rates, are key.
• LEARNING/GROWTH. What do you need to do to train staff to enhance the patient experience? Also, how important is it for staff to obtain educational certifications like COA or ABO? Such non-monetary goals are critical for a motivated, happy staff.
• INTERNAL PROCESSES. What is the wait time for delivery of glasses? What about remakes? How long does it take a patient to check in at the front desk?
When you take these four perspectives—each with several measurable objectives—you can see why this is called a Balanced Score Card. If you start to focus on these objectives and incentivize staff when all or a portion of the objectives are met, this helps keep your business in line with your vision and strategy.
It is not a simple concept, however, and it takes years to master. However, a basic understanding will help answer the question of staff bonus payments.
Motivating staff is complex. Thinking it is all about trading money for sales can cause more harm than good. It is better to look at where you want your practice to be and then structure your bonus system around those multiple measurable goals.
— Allan Barker, O.D., and Greg Stockbridge, O.D., MBA
SEND US YOUR QUESTIONS
Drs. Barker and Stockbridge will answer your questions about practice growth, business management, as well as other issues. Please email your questions to eyecarebusinesseditor@broadcastmed.com.
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