Practice Management Alert

Question: I know that employee incentives can be a good way to motivate my practice staff, but I don’t know where to start. What kinds of incentives get better results? And can I afford to pay these incentives?

Minnesota subscriber

Answer: You can’t afford not to incentivize your staff! Practice owners and managers often worry that adding the expense of incentives will erode revenues, but instead of thinking of them as an expense, start thinking of them as an investment in your business.

What can really erode revenues is staff turnover. Replacing an employee can cost several times their salary, between the demands on other staff members and the expense of hiring and training the new employee. Turnover is an epidemic in healthcare: consulting firm CompData Surveys polled more than 30,000 organizations across different industries and found that health care had the second highest turnover rate.

The key to keeping employees around isn’t offering the highest salary. Research indicates that being appreciated, recognized and rewarded for work well done matters most to staff. Particularly now, when quality practice staffers are in high demand and short supply, a good incentive strategy can be vital for saving your practice effort and money. A 2010 University of Central Florida study found that the right incentives could boost staff performance by an average of 22 percent. The Work Foundation at Lancaster University in England found that increasing your incentive investment by just 10 percent grew annual profits by $2,400 per employee.

In short, employee incentive programs almost always pay for themselves. The gain in revenues that comes from employees hitting goals is more than the cost of the rewards, and if those goals aren’t met, you don’t owe any reward. There’s nothing to lose, and plenty to gain!

Effective incentive programs require:

• Consistency: Set clear goals, keep track of whether employees have achieved those goals, and award incentives accordingly.
• Simplicity: Don’t change your incentives too often, and don’t make the system too complicated.
• Input: Ask staff to suggest goals and the incentives they’ll receive for reaching those goals. They may aim higher than you would!
• Basic incentives: You don’t have to break the bank to get results. Even a reward of $5 per patient signed up for a service can motivate staff.
• Reinforcing: At your daily, weekly, or monthly meetings, review how much progress has been made toward goals, and talk about strategies for achieving them.

One size doesn’t fit all. It would be unfair to expect nurses to aim for the same goals as front desk staff — that’s comparing apples and oranges. In order to create a fair and effective program, consider setting up different incentive systems with different goals for each department within your practice.

Money isn’t everything. Although most employees would say they prefer cash incentives, recent research has shown that they actually enjoy and value noncash incentives more than an equivalent amount of cash. Why?

• Cash feels transactional rather than relational. Noncash incentives feel like a present, bringing with them all the goodwill that gift-giving implies.
• Cash incentives are hard to distinguish from salaries. (Especially when they’re included in a paycheck. Employees get used to a higher salary, rather than working to reach bonus goals.)
• Cash is quickly spent, but a gift-like incentive dispels any spending-related guilt.
• Noncash rewards get the whole staff excited; everyone talks about the cool item they received, and those who didn’t make their goals now have an extra motivation to push to achieve them.
• Noncash rewards stick in employees’ minds. Nobody remembers cash, but a movie ticket or free lunch feels tangible and fun. The memory of a fun experience will keep staff motivated to reach the next goal too.

What noncash rewards should you choose? Consider these tips:

• A personal reward is best. If you know an employee’s favorite restaurant, purchase a gift card.
• Trade with another local business for rewards. Swap services or advertising for a gift certificate to incentivize your staff.
• Emphasize experiences over things.