Have you ever caught yourself wondering how those high-performing pharmacies do it? While there are many factors, you can be certain the pharmacy owner doesn't do it alone. Creating a high-performing team with a great culture is often looked at as job #1 for any business owner. When you fill your business with employees who drive results and enjoy meeting and exceeding goals, you set yourself up for success. Leveraging an effective employee bonus program can be a big part of keeping your team aligned and on track.
What Do You Give an Employee Bonus For?
While the answer is anything you want to, Rx Advisors recommends bonusing for activities that are above and beyond the employee's normal duties. Another great idea is to reward an employee bonus for doing the critical items that need to be done, such as hitting a certain number of referrals per month. Also, you could give an employee bonus for not doing activities that would be harmful to your pharmacy, such as mis-fills.
What you decide to give an employee bonus for is entirely dependent on the goals for your pharmacy. You want to ensure your employees are focused on the very same metrics that you are concerned about. It doesn't do any good if your employees are fanatical about getting referrals, yet you are struggling to pay your wholesaler bill. By leveraging an employee bonus program based on metrics, you can drive the correct behavior to bring the success you are looking for.
How Much Should an Employee Bonus Be?
It may surprise you that it doesn't have to be a lot of money and may not need to be financial at all. When you create your employee bonus plan, it is important to ask your employees what rewards are most valuable to them. You will undoubtedly find that this will vary by person and by position. Pharmacists may not be interested in a few hundred dollars but may swoon over an extra half-day PTO. Your cashiers will probably jump for joy to get an extra $100 in their paycheck. It is not a requirement of an employee bonus program to have the same reward for all employees. In fact, your employee bonus program will be more effective if you tailor it to your employee's specific needs.
Whatever reward you decide, let the employees know up front what it is and how it will be calculated. You could choose to do a flat-rate option. A certain amount for meeting each goal in a given month, and you might have 3-4 goals. A good rule of thumb is to land between 5-10% of the employee's compensation as a bonus. Any less, and it just won't motivate the employee. You can always go higher, and many pharmacy owners do. Some pharmacies pay on the lower end of an hourly salary and offer up significant employee bonus amounts worth 20-40% of their pay. This arrangement certainly drives action toward a particular goal.
Don't forget nonmonetary employee bonus rewards. These can be items such as additional PTO, movie tickets, restaurant certificates, or travel vouchers. We have heard of some pharmacy owners using their unused timeshare points to send their employees on some great vacations for their employee bonus.
How Do You Measure an Employee Bonus Goal?
Some bonus metrics will be yes or no. Meaning you did the task that gets you the employee bonus, or no, you didn't. Some examples of this are:
completed a physical inventory count
registered the pharmacy for 5 marketing events
completed all license renewal applications
These types of activities can't be 80% done. They are either completed, or they are not.
Other metrics may be on a percentage or a sliding scale. With these types of goals, employees can over or underachieve, and their employee bonus amount will account for that. Some examples of this type are:
10 referrals per month
5 new med-sync patients every week
$1,000 in increased OTC sales
These activities can be partially or even overperformed. You can then adjust the employee bonus based on each employee's performance. If one employee got 7 referrals, they earned $70 on a potential $100 employee bonus. Another employee had 15 referrals, and they earned $150 from a potential $100 bonus. It is good to have a mix of both of these types for each employee bonus period.
Getting Team Buy-in For Critical Goals
If you feel unsure about what you should have your employees focus on, it is good to look at your financial statements. When you work with Rx Advisors, you don't have to do it alone. We will meet with you regularly throughout the year and review your pharmacy’s financial performance. You can leverage your employee bonus program to get your team excited about solving a new challenge. If we tell you your inventory is too high and needs to be cut. You can then go to your team, have an inventory spring cleaning party, and reward employees based on how much they return to your wholesaler. If you need help deciphering your financials or aren't getting financials from a trusted pharmacy accountant, please give us a call at 855-877-9807. We love to talk to pharmacy owners just like you.
To view a sample of our Quarterly Performance Report specifically designed for pharmacy owners, click here.
Please consult with your tax advisor about any potential tax consequences related to employee bonus programs.