Pay for Performance – Is It Right for You?

When would it make sense to consider a pay-for-performance system for your dental team?  Can you depend on this type of compensation system to motivate your team and reduce staff turnover?  The best answer, of course, is “it depends.”


First we must start with definitions.  Pay for performance rewards individual team members for specific job performance and not necessarily the performance of the practice as a whole.  Incentive based pay is the type of system that focuses on practice performance, often giving bonuses when the practice reaches a certain level of production.

Pay for performance, by contrast, rewards individuals for reaching specific goals, such as when an office coordinator exceeds 99% for her collection rate or when a hygienist completes more than ten quads of perio therapy in a month.  Pay for performance requires you to outline specific expectations and goals for each team member.


Secondly, the system fails if the employee’s base pay is not set appropriately.  You must pay a competitive wage before you can add this system.  To pay competitive wages and offer additional incentives, you must also have adequate cash flow.

Next, since you are giving some type of reward based on performance—the reward may be a bonus or an extra raise, for example—you must meet regularly to review progress with each team member.  Not only does the team member need coaching and feedback, but you also need to accurately assess job performance.  Otherwise, you will end up rewarding sub-par performance, which will undermine productivity and morale of high performers.  This is the biggest landmine with a pay for performance system.


If you are an effective leader and coach, and if you want to incentivize high performers in your practice, consider a pay for performance system.  When implemented correctly, this type of compensation system can help get the most from your team.

Learn more about how our dental practice consulting can help you implement an effective compensation system.

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