How to Properly Correct Employees

It would be wonderful if employees never make mistakes and always do a perfect job. But we’re all human; on-the-job errors are part and parcel of working in a practice. That begs this question: What do you do when a staff member messes up and how do you correct him?

Here are some suggestions on how to properly correct your staff:

As part of this overall process, you must have written job descriptions and office policies that clearly delineate which tasks a person is responsible for on his/her job and the overall working guidelines for the office, respectively. The reason that proper, written job descriptions and office policies are so important is that you should use them as part of your correction procedure. Unfortunately, very few practice owners have them in place.

For starters, if you need to correct a staff member, make sure you review any specific disciplinary policies that you have issued, so that your actions are consistent with them. For example, if your policy states that proven theft results in an automatic discharge, you would not utilize a gradient approach to termination by merely reprimanding someone guilty of stealing.

Typically, the first step in correcting a staff member is to direct his attention to the specific item he violated, as delineated in his job description or in your written policies, indicating the appropriate action that he failed to take or the inappropriate action that he did take. Direct the staff member to reread the policy and/or job description. Ensure that he understands it and clear up any confusions or misunderstandings. This corrective action is usually sufficient to handle the first offense.

If the staff member commits a second offense involving the same issue, the office manager or practice owner should review the situation with the staff member and have him sign a copy of the policy or procedure that covers what was violated, as an attestation that he understands it and agrees to abide by it. We then recommend that you put a copy of the signed document in the staff member’s personnel file and give him a copy to put in his staff binder. One may consider that this constitutes a warning.

To learn how to apply these policies in specific situations, such as;  How many warnings should be issued? What if the employee is an excellent producer? Read the final half of this article by filling out this form.

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Cutting down Costs vs. Increasing Production

Pretty much every owner wishes to increase their net income. Factually, there are only two ways to accomplish that: (1) cut back on expenses and (2) increase production. Now, while it is wise to do both, you might be surprised as to which one generates the most profit. Let’s take a look.

We’ll examine a single-doctor practice that is grossing $600,000 per year and we’ll set the following two parameters:

  1. If the practice runs efficiently, it could generate $1,000,000 per year.
  2. In this particular profession, the staff salary is supposed to be 22% of the gross, but is currently running at 26% – 4 percentage points above the conventional norm.

If the executive pared their staff salary expenses down to the norm (i.e., reducing it from 26% to 22%), that would increase profit by $24,000. Not bad.

But what would the profit be if the executive were to focus on expanding the practice up to the $1,000,000 mark? At that higher level, there would be an additional $400,000. Obviously, not all of that is profit. But how much of it is?

To sort this out, you would need to look at the difference between fixed costs and variable costs. Fixed costs are those that remain constant, regardless of the production level. Rent, certain insurances, license fees, etc., are expenses that are the same amount whether the practice produces $1 or $1,000,000 per year.

Variable costs, on the other hand, are costs that vary with production. Depending on the type of practice, the two greatest variable costs are 1) payroll and 2) either inventory or lab/clinical supplies. Combined, they represent anywhere from 40% to 50% of income, depending on the profession. There are a few other variable costs that will increase the percentage slightly; but for the sake of ease of explanation, we’ll focus on just those two costs.

Let’s factor in the fixed and variable costs to this $400,000 increase and see what our profit is. First, the fixed costs have already been paid from the original $600,000 income; you obviously don’t have to pay more rent because you earned an additional $400,000. The same is true of the costs of the annual license fees and probably accounting, legal and other such fixed expenses. Those bills have already been paid.

The only additional expense you incur when you produce an extra $400,000 are the variable costs. We’ve already calculated that the combined fixed and variable costs will be as much as 50% of production; so, producing an additional $400,000 will cost $200,000. The remaining $200,000 is profit.

While the choice may be abundantly clear, let’s take a look at the ramifications of the direction you decide to take and the effect that it could have on both you and your practice. Read the final half of this article by filling out this form.

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Fill out the form to read the rest of this article (Highly Recommended).