Activity-based compensation establishes appropriate compensation based upon the activity or role performed by the individual in the position. Using this method to establish a compensation plan is very helpful towards managing long term labor costs. A common failure amongst many practice owners is to provide indiscriminate compensation increases that are related to the tenure of the person rather than upon the role that person provides in your practice. If you maintain a focus upon paying for the activity or role provided by a person in a position, you can establish pay scales for specifics roles or positions. If someone wishes to earn more than their role provides, then it can be motivating to them to understand that they will have to advance their skill sets and take on additional responsibilities in the practice that carry a compensation level more compatible with their desires.
With practice owners, it is important to separate their compensation based up their activities which might include providing veterinary services, management, practice ownership, and real estate owner. Each activity is separate, and each carries its own compensation opportunity. Owner compensation will be discussed in more depth in the near future.
An important and valuable result of establishing an activity-based compensation plan is the ability to communicate clearly with employees and team members regarding what they can and should expect relative to their role. It also provides a map to help them plan advancements in their career, because your plan is well thought and can be communicated clearly. Clarity will be welcomed by your team.
References for statistics on veterinary and staff compensation include the AVMA Report on Veterinary Compensation, Payscale, Bureau of Labor Statistics, and Compensation and Benefits by AAHA.
