It’s time to change our dialog.  We’ve been asking these questions for way too long.

During the process of learning to understand the needs and desires of a new client, I will often hear “I’m concerned about my payroll, my salaries are extremely high, and my profits seem to be getting lower.”

One of the first questions I ask is, “How do you determine salaries and what are the guidelines you use in assigning these salaries to each team member?”

I used to be shocked by the responses, but not so much anymore after years of hearing one of the three common responses. The methods used by the vast majority of the dentists that reach out for my help, and from the job applicants that I interview almost always hear one of the three a combination of the three or even every one of the three following questions. I MUST change this dialog that has gone on way too long and I will break it down as to why.

The salary is initially determined based upon: 1) what the job candidate asked for, 2) what they said that they needed, or 3) what they made in their last position.

Think about this.  Does it make sense?  Let me walk you through a conundrum.  So let’s start with what they needed:

Some people work for the love of it.  They are totally supported financially by their partner, significant other or spouse and are not necessarily working because they “need” the money. They enjoy what they do and simply want to be paid fairly so that they can stay with what they enjoy. They certainly need to be paid minimum wage to keep things legal within government guidelines.

So does this mean that even if they are awesome, prove to be an exemplary employee, keep your bottom line up based on their personal contributions, etc., that you can pay them minimum wage? How long do you think this person will work below their value? What if they are clearly a very valued, hardworking team member who proves themselves every day?  You probably know they are underpaid, but if they don’t bring it up, neither do you. Sound familiar?

What if they ask for a number that’s either fair or slightly over the market because they have a lot of expenses, bought a new car, drive a long way, are a single parent, etc.? Granted, we are all caregivers and want to help however we can, but what if they turn out to be a less than adequate employee, one who takes off often, doesn’t pull their weight, and proves to be an ineffective employee?  You’ve paid them based on their personal needs; and as a result they are not delivering anywhere near the value that would justify their compensation. This team member can be a huge drain on the team and your budget.

What about basing it on what they made in their last job?

So their last job was a complicated one with lots of responsibilities and more than would be expected of them in your practice.  They did an amazing job and were appreciated by their last employer.  They were with the practice for 15 years and subsequently received earned increases based on performance and worth. They came from a market that had a high cost of living, so salaries were considerably higher than they are in your market and their salary reflected this as well.

So, you asked them what they made previously and they told you, so you hired them at the wage they quoted you.  After a few days you notice you can’t sleep or eat worrying about the high dollars that this one employee is being paid, so within a week or so you have to dismiss them.

Now this individual could have been a great employee for you in every way, but you suffered from buyer’s remorse and never gave them the time to learn your office systems, etc., and prove themselves.  They could very well have been as great for you and your practice as they were for their previous employer, but they never had the opportunity or guidance to meet the goals of the position in your practice. They also could have been happy with the salary that made sense for your market, the position they applied for, etc.  Nonetheless, the dollar signs swirling around in your head cause you to dismiss her and seek her replacement.

Not only are you back to your (costly) search again, but the employee is back in the job market wasting time and possibly putting an unnecessary “blemish” on her resume.

What good was this investment of time and energy for either of you, simply because you asked the stunningly insignificant question, “What did you make in your last job”?

What about what they want to make?

This is obviously a loaded question, and by rights, is an opportunity to throw out a number that they would like to make and not necessarily deserve to make based on their skill sets, experience, temperament, and ability to contribute to the success of the practice.

Here again, you asked them and they told you.  What I see here really troubles me.  You hire them at a rate based on what they “wanted”, which you find over time is not what they deserve.  Soon enough, you figure this out and so does your team.

Another example of the futility of asking this question is that often a job candidate will come up with a number that they know is quite low based on their talent and experience, but they desperately want the job, and throw out a number well below your market.  So you hire them at a rate that is well below their ability level.

The outcome here would be somewhat similar to the applicant that was paid what they made in their last position, except that the new team member will eventually become disenchanted and demotivated since they are truly underpaid.

I do hope that you keep all salary assignments totally private. No one on the team should know what anyone else is earning, and yes, I believe the only person aware of team salaries should be the doctor(s).  I know this is a rare occurrence for most, but nonetheless I feel strongly for many reasons that this should always be the case.

Have I piqued your interest in this subject? There are a number of things that can be done to change the way we assign compensation and safeguard the possibility of being confronted with the situations I discussed in this post.  Over the many years of encountering these scenarios, I have figured out a number of things that will reverse the way this area of dental hire has been handled since the beginning of time.

I’ve had amazing success with job candidates, doctors and team members utilizing protocols that make sense and are fair for all. Watch for part two where I will offer some road-tested solutions.