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Keeping staff morale high when pay raises are low

A column about keeping your practice in good health

By Victoria Stagg Elliott is a longtime staff member. She covered practice management issues and wrote the "Practice Management" column from 2009 to 2013. She also covered public health and science from 2000 to 2009. Posted Nov. 1, 2010.

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Many medical practices are running the numbers and realizing that staffers can be given only extremely small raises, if any at all. Communicating this effectively and providing low-cost perks may remove some of the sting, keep employees engaged and prevent them from jumping ship when the economy improves.

"There's real downward pressure on physician reimbursement," said Marty Rosenberg, managing director of the health care division of EthosPartners in Suwanee, Ga., which recently became part of Chicago-based Navigant Consulting. "But many practices are trying to retain good employees and looking for alternatives that employees consider valuable either economically or emotionally."

Employees should be kept apprised of their practice's financial health and told why no raises or only a small one will be given. Many medical practices have seen a decline in patient volume, and a 23% cut in Medicare rates is scheduled for Dec. 1 -- with more cuts coming later -- unless Congress takes action.

"The more you can educate your staff, the more understanding they will be that you are truly trying to provide something to them even though times are tough," Rosenberg said.

They also may be given data about how raises are becoming less common in many job sectors.

Weekly earnings have barely budged during the past year, according to Bureau of Labor Statistics data released Oct. 19. Data for the medical setting are not available, but the average wage and salary worker received $745 a week in the third quarter of 2010, an increase of only 0.5% from the third quarter of 2009. Average wages grew by 2% to 3% in the previous year.

The next step is to continue to provide performance reviews. This is particularly key because incentives should be given fairly. Feedback is another way to maintain morale.

"It's important to continue to evaluate performance and give people feedback in a systematic way," said Marsha Cameron, a senior partner at Paradox Compensation Advisors in Dallas. "And you want to make sure that everyone is being treated the same, not only in terms of money, but also in terms of recognition. It's still important to make your decisions performance-based."

Those who run medical practices need to consider how alternative perks could work. Many companies offer additional time off, flexible time arrangements, educational opportunities and improvements in benefits, experts said.

Times might be tight, but many dissatisfied employees may look to change jobs when they can. A survey by CareerBuilder, an online job search and recruitment company, released May 13 found that 33% of workers plan to look for a new job when the economy picks up, and that 32% of employers are concerned about losing top performers.

Strategies used by other companies may be challenging to implement in the medical practice setting. For example, flexible time can be particularly difficult.

Robin Lacine, executive director for business development at MedHQ in Westchester, Ill., has worked with practices that have adjusted patient schedules or shortened lunch periods to allow staffers to leave earlier or start later.

Other practices have provided educational and career development opportunities that allow a staffer to grow into a higher position. This can take the form of "lunch and learn" events led by a staffer or an outside expert. Employees may also be sent to external seminars.

Experts caution that any activity meant to substitute for a significant raise be handled effectively. Some practices hold additional celebrations to show their appreciation to the staff, but experts say the events should not be lavish.

"If you spend $20,000 or $5,000, employees may say that they could have gotten raises with that," Rosenberg said.

Informing employees about the value of their benefits and how some have become more expensive may ease disgruntlement about not receiving raises.

"Employees often undervalue benefits, so we sent them a statement letting them know exactly what we are providing for them," Lacine said.

Experts say, however, that any alternative to raises is more likely to have the desired effect if employees' priorities are taken into account.

"You do have to know your employees. You have to find out what is important to them," said Deborah Hill, a manager with the Coker Group in Alpharetta, Ga.

Practices may want to let employees voice their opinions about alternatives to pay raises. Experts advise against making this an open-ended question. Staffers should be given a multiple-choice list, which prevents them from asking for something that can never materialize.

Victoria Stagg Elliott is a longtime staff member. She covered practice management issues and wrote the "Practice Management" column from 2009 to 2013. She also covered public health and science from 2000 to 2009.

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