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Employee Compensation

By: Bryan Durocher
Posted: May 3, 2010, from the May 2010 issue of
Money falling into a stack

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Retention percentage. This refers to the number of patients seen in a pay period who return and request a specific service provider. If the service provider saw 40 patients during a pay period and 20 of them were return requests, the provider’s retention percentage would be 50%, because half of the scheduled patients were repeat business.

Premium service percentage. This percentage is determined by identifying service categories such as medical-grade peels, eyelash tinting and microdermabrasion that have higher ticket prices and require patients to come in frequently in order to maintain the service, making them more likely to be loyal to a service provider and a practice. Suppose a practice had $4,000 in gross service sales for a two-week pay period, and $2,000 of that total came from chemical peels and microdermabrasion. Divide $4,000 in gross service totals by the $2,000 in premium totals, and your premium percentage would be 50%.

Retail percentage. This percentage is derived by dividing the service provider’s retail product sales during the pay period by service sales. For example, if a service provider generates $2,000 in service sales during the pay period and in addition sells $300 worth of retail product to a client, divide $2,000 by $300 and you get a 15% retail percentage to service dollar sales.

Productivity = compensation

The important factor when making compensation changes is coming up with a step-by-step plan that outlines the process of what the change needs to be and how it is going to be implemented. There has to be a focus on what the win is going to be for the practice owner and what it is going to be for the people who work for the practice. Typically, strong marketing pieces, referral programs, a coaching program, business-building tools and creative incentives are not in place before implementing such a compensation system, but these are all definite wins for a team in regard to what new benefits they will be receiving when a change has to be made.

Paying commissions and holding people accountable are well-established methods in other industries and can work very effectively in a medical aesthetic business as well, especially when training is provided. However, while it is true that many times employees perform better with incentives, it is essential to remember that money doesn’t always have to be the primary objective. Sometimes additional paid time off, office recognition or even job promotions are seen as equal to or greater than an increase in pay. Whatever the compensation though, it’s important for a practice’s employees to know that the harder they work, the more they can earn. And that is a win-win situation for all involved.