Build Incentive Structures That Work for Your Team and Medical Spa

Posted By Mike Meyer, Friday, April 16, 2021

By CEDR HR Solutions

During a recent Q&A with HR compliance expert and CEDR HR Solutions CEO and founder, Paul Edwards, AmSpa had the opportunity to ask and get answers to specific HR and team management questions that came directly from members of the AmSpa Community.

Of particular interest to Members was the topic of team incentives. Medical spa owners wanted to know what sort of incentives were most effective at motivating employees to improve their performance in certain areas, how best to structure and offer those incentives, and what considerations to keep in mind to make sure the overall interests of the business remained a priority when incentive programs were implemented.

In case you don't have time to watch the full video (or if you just prefer to read the answers as opposed to watching them in video form), we're providing a few highlights from that conversation below.

Find out more about how to open a successful and profitable medical spa practice.

What Is the Best Way to Implement a Tiered Incentive Program for my Med Spa?

How you structure your incentive program is going to depend on your specific business needs and goals, which will naturally be different for every business and every team. One thing that applies to all businesses equally, however, is the need to think of your incentive plan as two independent components: the policy and the program.

It is important to always keep these two items separate and, although they are interrelated, to resist the temptation to combine them. The policy portion of your incentive structure should remain the same more or less indefinitely, whereas the program might be changed regularly, depending on your goals and how well it is (or isn't) working.

Here's a little bit more on what each component should do:

The policy: The policy portion of your incentive plan will live in your employee handbook, which employees should read in full and sign on the first day of their employment with your business.

The policy should outline important bonus criteria, including:

  • Who is eligible for the bonus (e.g., full-time employees);
  • When they become eligible (e.g., after 90 days of employment);
  • How employees might lose eligibility for future bonuses (e.g., as a result of documented behavioral or performance issues);
  • A statement that employees must be employed during the full bonus term to receive a bonus (i.e., if they resign or are terminated during a bonus period, they are not entitled to that bonus); and
  • A disclaimer that the bonus program can be changed, revoked or discontinued at any time at the manager's or business owner's discretion.

The program: The program portion of your incentive plan is the nuts and bolts of how the incentive structure will work. Essentially, it's the part that says, "If you do 'x,' we will give you 'y,' as long as 'z' criteria are met."

Your bonus program is always going to be subject to change. If, for example, the program proves ineffective, it may need to be altered to sweeten the deal for your team. Or, on the flip side, perhaps it works so well that you ultimately decide you need to dial it back. This is the reason why you'll want to keep your incentive program separate from the bonus policy in your employee handbook.

When instituting or changing your incentive program, you will want to issue a memo to your team outlining the expectations of that program and get your team members to sign it to signal their understanding of how the program will work.

Also, be aware that any incentives you provide that are based on performance, including commissions and bonuses, are subject to overtime calculations. This is something you'll want to keep in mind when issuing these incentives as part of payroll.

Many employers are under the impression that their payroll provider will sort out the necessary overtime corrections on their behalf. More often than not, however, they won't, nor are they required to make sure your payroll is compliant with wage and hour laws before issuing paychecks to your employees.

To make sure you'e got your legal ducks in a row, we highly recommend that you work with a qualified, knowledgeable HR professional before launching a new incentive program.

Is It Better to Incentivize with a Combined Bonus or Offer Incentives to Employees Individually?

There is, unfortunately, no easy answer to this question that will work for each and every medical spa equally.

The specific shape that your bonus structure ultimately takes will depend on the makeup of your team, how they are paid and your business goals. Providing a lower base rate of pay in combination with commission is effectively an incentive program, but while this may work well for some employees, such as your front desk person, it will not for others, such as your clinical personnel.

Keep in mind, though, that selling is a talent—some people have a natural knack for it and others don't, and no amount of incentive is going to change that. Sales-based incentives for individuals will, therefore, work for some employees, but not for others.

Incentives are a form of gamification: When setting up your incentive program, it helps to think about it as a process of "gamifying" production for your team. You give them a goal, and they work to achieve that goal in order to receive some form of reward.

That said, involving your team in setting the goals for the incentive program (read: defining the terms of the "game") could really help to get the program off the ground. Your employees know best what will motivate them to compete and/or perform for the incentive being offered, as well as what constitutes reasonable and achievable goals. By giving them say in how that program is structured, you are more likely to have buy-in and higher participation rates for the program you ultimately put in place.

That reward, by the way, doesn't have to be financial remuneration. You could also incentivize your team via non-monetary means, such as by offering an extra day off for reaching a certain milestone, providing a catered lunch for the entire team, providing a premium parking space, giving out an award or any other motivational tool you can think of—your imagination is your only limit here.

Make sure to cover your assets: When setting up an incentive "game" for your employees, make sure you are protecting your own interests in the process. You don't want to incentivize performance in one area at the expense of another important production metric—by putting a "spiff" bonus on retail products that might make sales opportunities take precedence over scheduling future appointments, for instance, or by encouraging increased production without setting a limit on labor costs during the bonus period.

The point here is that, once the game is on, your employees will look for and likely find ways to leverage their advantage in that game, whether it's good for your business or not. Make sure to bake caveats that protect your interests into the program before setting your team loose with a single-minded focus on securing the bonus for themselves.

What Does an Effective Staff Benefit Structure Look Like?

Again, the "what" behind your incentive program should be based on your business' offerings and needs and could vary between a flat discount on specific products and services to free access to products and services under certain circumstances.

There are some important distinctions to keep in mind when it comes to the difference between incentives attached to products and those attached to services—especially if those services can be seen as medical treatments.

Make sure access is provided equally to everyone: No matter the shape of your incentive program, it's important to make sure that all your employees are given equal access to those benefits. A discount or freebie offered to one employee should be available to all of your employees under the same terms.

Failure to ensure equal access to employee benefits could very well result in a discrimination claim against your business, should things ever take a turn for the worse with one of your team members.

Be sure that your incentive policy is also clear about who is eligible for certain benefits and how long they need to work for your business before they can start using those benefits. Also, set limits on the benefits to ensure your employees don't take advantage of the program.

Participation should be voluntary: Employee benefits are perks that make working for your medical spa a more exciting prospect. Requiring participation may well take the "benefit" portion of the program out of the equation for some employees.

Employees should never be required to utilize a certain "benefit" as a condition of employment, especially when it comes to medical treatments. Some employees may have perfectly viable reasons to avoid certain treatments, and many of those reasons will likely be protected under the law. Requiring a toxin treatment for an employee who has a religious or medical reason to avoid it, for example, isn't just bad for employee morale—it could very well land your business in real legal trouble.

Employee or patient? If you are providing medical treatments to your employees as benefits of their employment, be aware that HIPAA laws apply to those treatments, just as they do with your other patients. Don't discuss an employee's treatment in front of other team members, patients or customers, and make sure that their medical files are stored in a secure place.

Make Incentives Work for You

Incentive programs are highly dependent on your business's unique goals, its needs and the makeup of your team. Still, there are a handful of housekeeping items you'll want to keep in mind when building an incentive structure for your team.

Get your team involved to help structure an incentive program that will work for and motivate them to achieve your goals and make sure that employees can—but are not required to—participate equally.

Keep your bonus policy separate from your specific incentive program and be ready to make changes to your program as your needs and goals change.

Perhaps most importantly, make sure to protect your business interests when you institute a new incentive program, and that you are not encouraging an increase in one metric at the expense of other important metrics.

When it comes down to it, your incentive programs are an employee benefit. Therefore, your team should see them in a strictly positive light, even if they elect not to use them.

Read these blogs to know more about the business strategies you need to run a successful and profitable medical aesthetics practice:

Want help deciding what shape your incentive program should take? Download CEDR's Manager's Playbook: Your Company Culture as a Management Tool to learn how your business' unique culture can help inform your decisions.

CEDR HR Solutions believes that better workplaces make better lives. CEDR provides custom, legally compliant employee handbooks, expert human resources support and powerful team management software to owners of more than 2,000 dental, medical and wellness businesses across all 50 states. Its expert advisors work directly with business owners to find workable, compliant solutions to HR and team management issues. Because when you improve your workplace, you improve your life.

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