Team Compensation and Incentive Systems

January 15, 2015

Incentives work best when a staff member’s base pay is sufficient so that the amount of money they earn is not a big issue.

Once this is accomplished, then there are three factors that lead to a team member’s substantially improved performance:

  1. Autonomy
  2. Mastery
  3. Purpose

Autonomy is the desire to be self-directed. If the team member can have a substantial say or control over their own level of compensation, the incentive system will be highly successful. In some industries, the bulk of the annual compensation comes at year-end when performance is tallied up and productivity is determined.

Self-direction works the best. In one large corporation, they sponsor one 24-hour period a month in which workers can work with whomever and on whatever they want. The requirement is they must simply report to the rest of the company what they did. They get lots of good ideas that they wouldn’t otherwise have received, and the company does not give them an innovation bonus of $2,500 just to have fun and create new ideas.

Mastery is the urge to get better at doing things. People will do things for free if they can see that if by doing it they will get better at it and will make a larger contribution for the better good.

Purpose.  When the profit motive gets unmoored from the purpose motive, bad things happen. It’s important to keep in mind that the purpose of the dental practice must be clearly outlined, which gives guidance from the dentist to the team members.