Physiological Needs

In dental practice the dentist does not provide food and shelter to team members, but does provide the income to purchase them. Applying Maslow’s theory, the most productive way to compensate team members is to provide an income that is at least competitive, if not more than other practices in the market area. The competitive compensation includes not only a higher base salary but also the addition of profit sharing or “partnership” pay. Most team members need the security of a regular salary. They do not want the insecurity of wages based on commission based on profit, which in profitable times may provide the team member with higher wages but in less profitable times with lower wages. A compromise is to compensate team members with a base salary and motivate them by allowing them to share in the profits, just as if they were partners in the practice.

Partnership pay is based on the belief that individuals would like the benefits of owning a business, but not the responsibility. Some reasons people give for wanting to be their own boss includes:

“The need to make my own decisions.”

“The need of not having someone look over my shoulders.”

“The need to have rewards related to my results.”

Providing team members with opportunities to satisfy these needs motivates them to perform at higher levels. Although team members understand the employer is the leader of the practice, they are the boss or CEO of their job. They want to be empowered to perform their jobs in their own ways and be rewarded for successful performance. That means the dentist gives authority to team members to manage their area of responsibility that is doing well and share the rewards of superior performance with them.

In essence, the team members are treated as minor partners because they don’t undertake the overall responsibility or risk as the dentist. Besides allowing them to perform their jobs with minimal interference, they share in the profits, albeit in a minor way.

The dentist and team member compensation is based on the amount of net profit the practice generates. Periodically team members are rewarded for their positive efforts on behalf of the practice by receiving a share of practice profits (typically 10% to 20%). Through partnership pay the team members experience tangible correlations between the quantity and quality of work they perform and the wages they earn. By seeing the bottom line each month, they are likely to be more efficient, less wasteful and more patient service oriented.

Unlike traditional incentive plans that are based on production or collection while ignoring practice overhead, partnership pay is based on profit. Profit is the amount of money left in the practice after all expenses are paid. Profit occurs by increasing the earnings of the practice and reducing expenses. Increased production and increased collection of fees generated by production, results in increased earnings. Reduced expenses are accomplished by spending less money on supplies, salaries and other needs.

For example, the practitioner may decide to increase production and earnings by increasing the number of new patients attracted to the practice. This could be accomplished through increased advertising on the radio and TV, in local newspapers, on billboards and through social media campaigns. While the number of new patients and earnings may increase, contributing to increased profit, the increased advertising expenses could actually reduce profit. If instead the practitioner team members increase efforts to provide superior service and increase patient satisfaction, patients are more likely to refer others to the practice and provide positive comments on social media. If successful, the number of new patients and earnings increase without the increased costs of external advertising. With increased earnings and fewer expenses, profits increase. If the team members know they will share in the profits, they are more motivated to provide superior service to patients, increasing patient satisfaction. They will strive to increase efficiency, i.e., avoiding hiring additional team members resulting in additional team member expenses, leading to less profit sharing.