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A Humanistic Approach to Team Member Motivation

Course Number: 525

How Partnership Pay Works

There are many types of bonus formulas in dentistry, and an individual practice may have to experiment with different plans before settling on a plan fitting the practice's style and size. Additionally, bonus formulas are not static and should be evaluated and updated as the needs, size, and influence on team motivation change. To establish an effective incentive program, you need to follow specific steps. Make sure to link incentives to desired goals, keep incentives from becoming entitlements, link incentives to employee desires, make plans easy to administer and understand and link individual and group performance. The following example is used in practice and may be adapted to the reader's practice.11

All team members receive a share of the practice's net profits each quarter year. (New team members are not part of the bonus plan for the first 90 days of hire.) Net profit is calculated by subtracting all paid bills from practice earnings, including team member and dentist wages. (It is assumed the dentist takes a set salary at regular pay periods). All team members, excluding the dentists, receive a share of 10%-20% of net profits each quarter. Of the 20% share of the quarterly profit, half (10%) is distributed quarterly to the team members, and half (10%) is deposited into an interest-bearing account distributed to the team members at the end of the fiscal year. Retaining 50% of the team member's share of net profits allows for quarters when there is a loss or negative profit. Twenty percent of the negative profit is removed from the interest-bearing account, and the team members do not receive partnership pay for that quarter. A team member who leaves the practice before the end of the quarter is excluded from the profit sharing.

For example:


  • Net profit from the quarter = $10,000 x 20% = $2,000 partnership pay.

  • Half of $2,000 ($1,000) is placed in an interest-bearing account for distribution at the end of the year.

  • Half of $2,000 ($1,000) is distributed at the end of the quarter.


There are four eligible team members:


  • Marge (receptionist) worked 468 hours during the quarter at a salary of $28/hour for a total of $13,104 wages for the quarter.

  • Lisa (dental assistant) worked 425 hours during the quarter at a salary of $24/hour for a total of $10,200 wages for the quarter.

  • Eileen (dental hygienist) worked 160 hours during the quarter at a salary of $35/hour for a total of $5,600 wages for the quarter.

  • Danielle (lab assistant) worked 325 hours during the quarter at a salary of $15/hour for a total of $4,875.


NOTE: The listed rates/hour is for illustration purposes only, and they should not be construed as recommended rates, which will vary by practice location.


Total employee wages for the quarter are $33,779.


  • Marge earned 39% of the total wages paid.

  • Lisa earned 30% of the total wages paid.

  • Eileen earned 17% of the total wages paid.

  • Danielle earned 14% of the total pages paid.

  • $1000 is available for partnership pay.


*Marge* receives 39% of $1,000$390
*Lisa* receives 30% of $1,000$300
*Eileen* receives 17% of $1,000 $170
*Danielle* receives 14% of $1,000$140
Total  $1,000

Using wages earned is a simple and fair way to determine a team member's value to the practice. Team member wages consider the team member's training, professional degrees, experience, and hours worked during the quarter. As illustrated, Eileen, the hygienist, is paid more per hour than Marge. However, Marge works significantly more hours than Eileen and thus receives a more significant share of partnership pay.

If, in a subsequent quarter, the practice shows a loss or no profit, the team members do not receive quarterly partnership pay. Twenty percent of the loss is deducted from the profit deposited in the interest-bearing account to be distributed at the end of the year.

For example:


In the first quarter, the practice profit is $10,000. The team members share $2,000 (20% of $10,000). $1,000 is disbursed at the end of the quarter, and $1,000 is deposited in the interest-bearing account.


In the second quarter, the practice profit is $12,000. The team members share $2,400 (20% of $12,000). $1,200 is disbursed at the end of the quarter, and $1,200 is deposited in the interest-bearing account.


In the third quarter, the practice experiences a $4,000 loss. The team members are subjected to an $800 loss, (20% of $4,000), that is deducted from the funds in the interest-bearing account.


In the fourth quarter, the practice profit is $10,000. The team members receive $2,000. $1,000 is disbursed at the end of the quarter, and $1,000 is deposited in the interest-bearing account.


The proceeds from the four quarters are totaled:


First quarter+$1,000
Second quarter+$1,200
Third quarter-$800
Fourth quarter+$1,000
Subtotal+$2,400
Interest+$50
Total  +$2,450

At the end of the year (end of the fourth quarter), the team members share $3,450: $1,000 of fourth-quarter profit +$2450 annual profit.

Partnership remuneration benefits everyone in practice. The team members benefit by earning additional money beyond their regular salary. By seeing that they can influence how much they earn, team members are motivated to provide superior service to patients and control costs. The employer dentist benefits by having motivated team members, satisfied patients, and the freedom from the worry of providing incentives to team members the practice cannot afford.

Dr. Mark Costes from the Dental Success Institute proposes an alternative incentive pay system.12 Team members other than hygienists, office managers, and dentist associates are eligible for incentive payments only if the practice's overhead reaches 60% or less. Once that goal is achieved, profit-sharing incentives are provided to team members when three key performance indicators are met in practice monthly: an established dollar amount of net production (the amount that can be billed after adjusting for any reduced fees from dental insurance or government programs); a set dollar amount for actual collections; and an ongoing goal for overhead percentage at or below 60%. Team members share practice profit similar to what was described ONLY if the practice achieves all three targets. Higher incentives are offered when overhead levels decrease to 55% and 50%. In Dr. Costes' approach, hygienists are offered incentive profit-sharing when their generated revenue meets a goal of 3.3 times their monthly compensation.