Choosing a Pay Structure That Works for Your Practice

  • It can inflate the pay system’s operating costs. After implementing a traditional base-pay system, a practice may need to hire a consulting firm to provide ongoing compensation audits and survey data. In addition, the traditional model is a high producer of records and administrative overhead because it requires that each job be evaluated (with supporting documentation) and that the pay grades be revised annually.

  • It encourages point grabbing and inefficiency. Staff members become quite sophisticated in how to get their jobs scored highly in compensation reviews. The traditional model rewards people for creating overhead and higher costs because overseeing larger budgets and more subordinates leads to higher pay.

  • It compromises honesty in job descriptions. People quickly realize that the way to beat the system is to create flamboyant and overly inclusive job descriptions. Over time, the practice can end up paying everyone excessively.

  • It rewards the wrong behavior. Giving a person more money simply for taking on new responsibilities rewards job changes rather than outstanding performance or development of needed skills.

  • It doesn’t accurately reward the performance of talented staff. Because compensation is determined by an employee’s level and the job’s rating, the model limits your flexibility to reward people based on their individual performance. For example, no matter how well a first-year billing clerk performs, he or she will earn less than someone who has been doing an average job for the last four years. This can hurt the motivation of your best performers and encourage them to look for jobs elsewhere.

  • It reinforces a vertical career orientation. More responsibilities, especially supervisory and managerial, lead to more money. This drives your best technical and clinical staff into roles where they may not be as effective, and it does little to encourage the development of technical and clinical skills. This is especially counterproductive in practices that are implementing total quality management (TQM), continuous quality improvement (CQI) or other team approaches to improving problem solving, operational efficiency and clinical outcomes.

  • It reinforces hierarchy and bureaucracy. By assigning value to jobs in terms of their hierarchical position and level of control, the traditional model fosters unnecessary and undesirable pecking orders and power relationships.

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