Three Strategies for Compensation Structure

Posted By Mike Meyer, Wednesday, September 16, 2020

By Terri Ross, Terri Ross Consulting

Compensation for med spa staff is a much-talked about topic, and in this blog we'll cover the three main strategies to incorporate as you are onboarding new staff members and evaluating your current staff.

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

What is the Purpose of Your Compensation Structure?

I always say, "Keep your why close by." Before you set goals, it is important to understand the why behind them. Ask yourself, "What do you want your compensation structure to reward? What behavior do you want your team to continue to develop and get better at?

So, take a moment as you are reading this and jot down the "why"/purpose that is relevant to your practice in terms of compensation.

In general, your compensation structure should:

  • Grow the practice: Write down what that looks like for you. What are you going to reward compensation-wise to help your practice grow? Is your current structure meeting the goals you set? For example, perhaps a major goal for you is to increase your hourly revenue or add more patients to the schedule.
  • Encourage skill development: The aesthetics space is a competitive arena – skill level is very important to achieve optimal results, which is your best sales tool. Write down what skills you may need your team to further develop.
  • Promote "team thinking" over "me thinking": This is where transparency comes into play. You want to establish a healthy and team-oriented work environment. Setting overall goals and financial numbers for the entire practice to hit can help foster team thinking and encourage everyone to do their part.

Now that you'e outlined your own goals, let's talk about the three critical steps to structuring your compensation, which we go into in more depth in our new Financial Foundations course.

Determining Base Pay

  • Salary vs. hourly: This is a simple choice, but there may be various factors involved. For example, if you have a practitioner or provider who is the type that will come in early and stay until 7 p.m. and works a lot of overtime, you may choose to pay a salary to avoid racking up overtime you didn't plan for. You also can compensate employees with a salary and the flexibility for overtime as long as you are cognizant of how much overtime you can allow for.
  • Aligns with credentials: It is important to determine which credentials you value most in your practice. You can pull pay scales for your market based on credentials for a general guideline or good starting point. For example, if you are hiring a nurse practitioner who knows skin and lasers and has several years of experience, you'll want to compensate them more based on credentials than someone who is at the injectables 101 level.
  • Aligns with the market: Your compensation must align with the cost of doing business in your area. For example, the cost of doing business in Manhattan versus in a small town is very different.

Determining Pay Increases

Creating a broadband pay structure clearly shows a current or new employee how they can get increases in their base pay. It gives a new hire a career path plan on how they can grow with your practice.

Your broadband pay structure should:

  • Communicate what is expected in order to get an increase in base pay – some examples could be attending secondary level courses, upselling hours or attending a conference or sales training;
  • Outline that raises will be given annually at either the employee's anniversary date or the start of a new fiscal or calendar year (which you determine);
  • Align with the practice's current financial reality – for example, during the COVID-19 pandemic, there have not likely been many raises given due to the current financial situation; and
  • Align with key productivity indicators and benchmarks – for example, an increase in revenue per hour over the previous year.

Creating a Bonus Structure

This is in addition to base pay or salary increases.

Bonus structures should:

  • Have a minimum productivity level based on a cap you created, taking into account your practice's financial reality;
  • Be based on hitting a goal you determine when creating your annual budget (you can tweak as you go along) or a certain amount of gross profit; and
  • Be measurable and easy to understand and communicate to employees.

In Terri Ross Consulting's new Financial Foundations course, we have two proprietary financial calculators to help you determine compensation structure and pay bonuses. One is a multiplier of compensation calculator, based on a multiple of the employee's base compensation, and the second is a gross margin-based compensation calculator that takes the costs of goods and cost of labor into account.

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

To learn more about how Terri Ross Consulting's proven programs have helped others and can help you, visit and request to speak with one of our sales executives, who will identify the best program for you.

Terri Ross brings more than 20 years of sales and management experience to the field, having worked with leading-edge medical device companies such as Zeltiq, Medicis, EMD Serono, Merck Schering Plough and Indigo Medical, a surgical division of Johnson.

Ross' vast knowledge and experience as a sales director managing upwards of $20M in revenue and successful teams has allowed her to become a renowned plastic surgery management consultant helping aesthetic practices thrive.

To optimize revenues and business performance, Ross' practice management consulting services help physicians evaluate practice processes including, but not limited to, overall-operating efficiencies, staff skill assessment, customer service and operating efficiency strategies. The goal is to develop a comprehensive plan of action to improve productivity, quality, efficiency and return on investment.

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