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Revamp your Bonus Plan in 2019


It’s that time of year – practices are evaluating what went right – and wrong – in 2018 and setting goals for 2019.  And with goals comes the age-old question: what should you do about a bonus plan next year?

First the theory of bonuses: people respond to incentives, and if you offer them more pay for achieving goals, they will work harder and smarter because of the bonus.  But is this really the case?

Well, sometimes.  But our experience is that the results have been decidedly mixed. Some staff really respond to a bonus; others just ‘do what they do’ regardless of a bonus.

Dan Pink, in his book Drive, writes that once most employees are paid enough to meet their month-to-month financial needs, they are more likely to be motivated to autonomy in their work, the opportunity to master new skills, and a sense of purpose in their work.

Consider that often it’s just the fact of having goals that spurs higher levels of performance, especially when the owner and manager are

Still, many practices find that a bonus helps sharpen their team’s focus on goals and key result areas.  If you’re thinking about a bonus, here are five things to keep in mind:

  1. Collected gross revenue the best measure of staff performance, especially for a group incentive plan. Revenues encompass everything the practice does and everyone on your team can impact revenues.
  1. If you’re going to have ‘operational benchmarks’, like capture rate, second pair sales, or keeping the schedule full, use them as short-term ‘contests’, one quarter at a time. While useful to track, bonusing on these things can lead to counter-productive behaviors.

For instance, a permanent bonus on second-pair sales might lead opticians to ‘under-sell’ the first pair, so they can get paid on the second.

  1. For most staff, frequent, smaller rewards work better than large, year-end rewards. Even bonusing quarterly can be too infrequent.  Consider having monthly goals with smaller bonus payouts when the bonus is met, to keep everyone engaged.
  1. Count the cost ahead of time. Calculate your expected payout if the team or team members hit their goal.  And then calculate it if they blow the goal out of the water.  Make sure that – after you pay the bonus – you’re still making more as the owner.
  1. Map the path. Don’t assume your staff know how to do a better job or how to improve their performance.  It’s the owner’s and manager’s jobs to either coach team members on concrete ways they can improve or to find outside resources to help team members grow.

Heading into the new year, be sure you have concrete goals for revenue growth.  And have a plan for how you’re going to increase your revenue per exam and grow your patient base in order to achieve that goal.  Done right, bonuses can sharpen your staffs focus on that goal.  And as always, I’m happy to review your current plan or suggest the best plan for your practice.




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Nathan Hayes

Nathan Hayes

Nathan serves as IDOC’s Practice Finance Consultant and developed the unique 3-Year Growth Plan, as a benchmarking, planning and decision-making tool for ODs. He also writes and lectures on various practice management topics. Nathan graduated from Vanderbilt University in three years, with a degree in Spanish and a minor in mathematics. After graduating, he spent a year working abroad. During that time, he worked for two firms in San Jose, Costa Rica. He interned with Grupo Juridico de San Jose, working in environmental policy to protect a threatened parcel of land, then he worked as a project manager for a US-owned precision machining shop, Olympic Precision Machining. Nathan then spent 6 months working with street children and orphans in Mexico. Before getting into the healthcare industry, he was an Assistant Store Manager and completed the Corporate Training Program with Haverty's Furniture Company in Atlanta, GA. Nathan serves on the advisory board for the Hayes Center for Practice Excellence at the Southern College of Optometry.