Dr. Jack Perry, Dds Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Dr. Jack Perry, Dds Case Solution

Pros

An increase in billings of the hygienists by 7 – 13%, in the first year.
The motivation of the hygienists will increase as their pay would be commission based and they will put more efforts in generating billings for the clinic.
The strategy will differentiate the performing hygienists from the nonperforming ones, as the wages are commission based, and Mr. Perry would be able to identify the non-performing individuals, easily.
The approach enables the owner to attract more skilled hygienists.
The clinic will be generating more revenues and billings.
Rewards for hygienists will be based on their performance, which will boost their morale to meet the billing standards.

Cons

It might create conflicts between the hygienists and other employees, as they could sense a wage friction.
Rising wages expenses as the salary would be directly based on performance levels.
Pressure might get built upon the hygienists for up-selling to the clients and generating more billings.
This strategy involves risk in the wage of hygienists, which can be very low, very high or moderate. There is a possibility that the hygienists would not want risk.

Compensation Plan B

The second approach of profit sharing is to keep the commission rate of all employees equal and profit sharing percentage, from the extra collections, to be based on the employee position in the organization. According to the consultant,this approach of profit sharing would increase the productivity by 10-15% in the first year. The commission rate of all employees are kept at 19.16% and the profit sharing from collections are based on the position in the clinic, i.e. 40% for hygienists, 20% for receptionists, 30% for full – time assistants and 10% for part-time assistants (See Appendix 3). The resulted total salaries and wages expense is amounted to be 31% of the sales’ figure.

Pros

The productivity of the clinic will increase by 10-15% in the first year.
The strategy is based on rewarding the employees on generating more collections and reducing the costs, as the profit sharing percentage is based on the extra collections.
The commission is kept equal for all, so the employees’ coordination as a team will be strengthened and they will feel motivated, as they would consider themselves as part of the team and their morale would become higher.
Employees would consider it fair compensation system.

Cons

There should be transparency in the compensation systems, as the pay is linked to the collections, so that the employees can trust the organization.
It can raise the costs to an extreme high in case of high collections, which would lead towards an increase in the employees’ salaries.
Employees may start preferring sales over the quality, as the pay is linked to greater
Inability in identifying the performing individuals from non-performing ones, as it is a team coordination, and the team play strategy, i.e. the owner will be unable to identify which specific behavior in employees needs to be changed.

Recommendation

According to the case analysis; the best strategy in boosting up the morale and motivation of the employees, is to hire the hygienists as the sub-contractors. It is because of the fact that this strategy of profit sharing will meet the needs of not just the employees but also the employer. It is so because, the hygienists make a major contribution to the collections and they will get compensation according to their put efforts, which would be fair to them. On the other hand, Mr. Perry would be able to identify the performing individuals from the non-performing or underperforming ones,and reward the best performing employees. This strategy will make a fair compensation levels in the entire clinic, based on the position and performance levels as compared to an equal compensation in second approach of profit sharing......................

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Dr. Jack Perry, Dds Harvard Case Solution & Analysis