Lawyers PI Program


 From the Desk of:



Holiday Bonuses:

The Formula”


This consultation was written on December 11, 2009, so if you are first joining the program months later and reading this, you will understand the time frame of why this was written now.


I have been receiving calls and e-mails on how to provide bonuses for your staff. First, understand that a holiday bonus is a big deal for a worker and many rely on that for buying gifts for their families. In the past, I have employed many strategies and there is a hard rule…There is no rule!


Your first step is to check the solvency of your company. Yes, I said company and not your practice. This is not an emotional issue, although most you of you choose to incorrectly run your practice emotionally and not via statistical analysis. The first step is to analyze your year. Take the total collections for the year and subtract your total expenses for the year. This should be an easy process, as you all should be using QuickBooks or some equivalent program. If you are not, then you are in the dark ages and will be taken advantage of by both an accountant and the IRS.


As a side note, I have already suggested at the highest level to use Maurice Mauner (631-661-5252) as your accountant. He works nationally and will save you $1,000’s per year in a legal format by paying very close attention to you on a monthly basis, in a way most accountants DO NOT. If your accountant does not review your books with you monthly and make recommendations, you are getting screwed! We have numerous doctors nationally using him and are all very, very happy.


Once you have determined your total expenses for the year, remove all of the personal expenses that you run through the business, including your salary. That is the true cost of running your company. If you do not show a profit, then there are no bonuses…PERIOD. You are not subsidizing a staff member’s lifestyle with your savings. Apologetically, let your staff members know that the office lost money this past year and there is no money for bonuses. Enlist their help in making next year better so you both can have extra holiday money.


If there is a profit that is more than nominal, the question is how much to provide in the form of a bonus. I have historically given 1 week’s salary as a bonus. I thought about if one of my daughters was working in an office, what would I feel was appropriate? That is the amount that came to me through the years.


A colleague who had 11 offices felt differently. He gave part time staff members $50 and full time staff members $100. You have to make that decision. The decision should be based on the attitude of the staff member and the production of that staff member. If a staff member had a great attitude, showed up on time and produced, then I felt great about going the extra mile.


Here is another way of doing holiday bonuses that I would employ if I practiced now. I would have every staff member be responsible for a statistic. For instance, look at the front desk. If the staff member handling that area got at least 85% of patients to make up their missed appointments, I would give that person a $25 or $50 weekly bonus. If I was capturing 10-15 visits per week because of that person's efforts, I would make 10 times that amount. In the insurance department, if they collected 90% of the receivables, I would provide them a bonus of an extra $200-$300 per month and because of their efforts, I would make 10 times that amount.


Upon instituting the weekly or monthly bonus system, I would inform the staff that in lieu of a holiday bonus, I would be giving them an opportunity to make a bonus on a weekly or monthly basis and not just providing an obligatory holiday bonus. This way, every month could be a holiday for them and they could create their own wealth through hard work. If you do not have your staff on a statistical bonus, decide what you want to do this year, but in the future, give them the opportunity to make more through their hard work because in the end, everyone wins!