1. Cutting salaries. Deciding to cut salaries rather than laying off employees assumes that every single member of the team is of value. It may be a good idea to present the choice between salary cuts and layoffs to employees, because staff may resent being put up for sacrifices. For the sake of morale, leadership should consider taking cuts with the rest of the team. “It sends a message that we’re all in this together,” Mr. Zoch says.
2. Laying off staff. A layoff may be an opportunity to let go of someone you’re not happy with anyway. On the other hand, it may signal to the rest of the staff that they might be next in line, and they might start looking for another job. “It is important to communicate with the team why the layoff is necessary and how you see the future,” Mr. Zoch says. “Transparency is a wonderful way to reassure or warn people of changes in the business.” Employees who remain need to be assured of their value to the enterprise to avoid any uncertainty.
3. Pay freezes. Pay raises may have to be deferred to balance the budget. In certain cases it might make sense to draw down on a line of credit to pay for raises, such as when accounts receivables or knowledge of the billing cycle indicate an imminent rise in revenue. Otherwise, consider a pay temporary freeze. “If you want to maintain morale and retain valued staff, you should implement raises when revenue improves,” Mr. Zoch says. “A mid-cycle raise will be a very pleasant surprise for employees.”
4. Pay raises. “Pay raises used to be called ‘merit raises’ for a reason,” Mr. Zoch says. Some people deserve them; others don’t. “You have to pay people what they are worth or someone else will,” he says. “By and large, talented people have options. If you want them to explore their options, don’t give them a raise,” he says.
Mr. Zoch does not recommend basing raises solely on salary surveys. Surveys tend to be regional, but pay levels vary widely between urban areas within a region. “Statistics do not always represent individual reality,” he says. “The demand for one person is different from the demand for someone else. Some people provide greater value than others doing the same job.”
To determine salaries, Mr. Zoch recommends assessing different components of an employee’s work, including work output, attitude, attendance, relations with surgeons and clinical outcomes or on-time starts for surgeries. These attributes can be evaluated in a comprehensive annual review. “Reviews can be a valuable way to change behavior as well as award behavior, but too often reviews are done in an unstructured manner,” he says.
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Read more practical financial guidance for ASCs:
– 10 Ways to Improve ASC Profits Immediately
