Simple Ways to Keep Team Compensation Under 30%
A few patients cancel, the afternoon schedule opens up, and your team is still working a full day. Meanwhile, payroll keeps climbing.
Team compensation is one of the largest expenses in a dental practice, and it’s surprisingly easy for small inefficiencies to add up.
At Engage Advisors, we generally recommend targeting team compensation at 25% of collections and keeping it below 30%. That includes wages, employer payroll taxes, benefits, and other compensation expenses.
But keeping payroll under control isn’t just about watching the numbers. It’s also about how efficiently your practice operates.
That’s why we value working with partners like Upstream Dental Coaching, whose approach to practice management focuses on improving systems, strengthening team accountability, and helping dental practices operate more efficiently.
With that in mind, here are five practical ways to better manage team compensation without sacrificing the people who keep your practice running.
- Adjust Staffing on Slow Days
Not every day requires a full team.
If several patients cancel or the dentist is out of the office, consider adjusting employee schedules to reflect the workload.
That might mean offering voluntary time off, staggering shifts, or letting someone leave early when there’s genuinely no additional work to complete.
For example, reducing unnecessary hours by just four hours per week for two employees earning $25 an hour would save approximately $10,400 annually, before payroll taxes.
The key is planning ahead. Constant last-minute schedule changes can frustrate employees and hurt retention.
- Prevent Unnecessary Overtime
Overtime is sometimes unavoidable, but if your employees regularly stay late or arrive early, it’s worth asking why.
Are appointments running behind? Is the team struggling with closing procedures? Are administrative responsibilities poorly distributed?
Instead of simply telling employees to stop staying late, figure out what’s keeping them there.
Staggering shifts, improving scheduling, and creating better closing procedures can help prevent overtime before it happens.
Of course, employees must still be paid for all hours worked, including legally required overtime.
- Spend Five Minutes Reviewing Timecards
When was the last time you actually looked at your team’s hours rather than simply approving payroll?
Take five minutes each week to compare timecards against the patient schedule.
Are employees regularly clocking in earlier than necessary? Staying late? Working more hours than the schedule requires?
Look for patterns, not individual minutes.
A simple weekly timecard review can reveal scheduling inefficiencies that might otherwise go unnoticed.
You can’t manage an expense you aren’t paying attention to.
- Make Sure Payroll Is Actually the Problem
Here’s something worth considering: Your team compensation percentage can be too high even when staffing expenses are reasonable.
Let’s say your practice spends $32,000 per month on team compensation and collects $100,000. That’s 32%.
If collections increase to $110,000 without adding payroll expenses, your compensation percentage drops to approximately 29%.
Same team. Same payroll. Better ratio.
Before cutting hours, look at the bigger picture. Are appointment gaps hurting production? Is the hygiene department operating efficiently? Are your PPO reimbursements keeping pace with operating expenses?
Sometimes the answer isn’t reducing payroll. It’s improving the systems and revenue supporting it.
- Keep Your Team Part of the Solution
Reducing unnecessary payroll expenses shouldn’t come at the cost of losing good employees.
Explain why scheduling changes are necessary. Ask employees where they see wasted time or inefficient processes. Give them an opportunity to help identify solutions.
Your team often knows exactly where the daily bottlenecks are. You just have to ask.
Better communication and shared accountability can make your practice more efficient without making employees feel like they’re simply another expense to cut.
Better Systems, Better Payroll Management
Keeping team compensation below 30% doesn’t always require major changes. It often starts with a closer look at how your practice uses its time.
Adjust staffing when appropriate. Prevent unnecessary overtime. Review timecards regularly. And don’t overlook the impact production and collections have on your compensation percentage.
At Engage Advisors, we help dental practice owners understand their financial numbers, identify areas where expenses may be out of line, and make informed decisions about profitability.
But knowing where the numbers need to improve is only part of the equation. Making those improvements happen often requires changes to the way a practice operates.
That’s where our preferred partner, Upstream Dental Coaching, can help. Their team works with dental practices to improve operational efficiency, strengthen team performance, and build better management systems.
Together, financial insight and operational improvements can help practice owners create healthier, more profitable businesses.
Because the goal isn’t simply to spend less on your team. It’s to build a practice where your people, processes, and profitability work together.