RE: How to Decline a Raise Request (Bob Hatcher, DPM)
From: Jon Purdy, DPM
The loss of an employee obviously affects different offices in different ways. Employee loss in a three-employee office is obviously different than in a twenty-employee office. The position being lost is also a major factor. However, there are similar cost calculations attributable to every situation. Ten thousand dollars is a mid-range estimate.
There are a number of factors that go into the costs incurred when an employee is replaced. Knowing exactly how much this costs your office is difficult but certainly not impossible to estimate. There are tangible and intangible costs that...
Editor's note: Dr. Purdy's extended-length letter can be read here.
RE: How to Decline a Raise Request
From: Jon Purdy, DPM
After reading this piece, I wanted to title my response “How to Decline Bad Advice.” If you have an employee whom you feel deserves a raise, you can’t afford not to give this person a raise. Consider that a fifty cents per hour raise will cost you about $1,500 annually, and having to replace that employee will cost on average $10,000 over the next three months.
Even if the employee does not leave, you have effectively bypassed your duty to pay your employee what they deserve and created ill-will in your practice. Anyone who finds themselves in this position should be creating goals of practice growth.
First, figure out if you are within the normal benchmark of 20 to 25 percent of your gross income attributable to wages. You may find you are overstaffed, however that is usually not the case. If your practice cannot support the necessary employee ratios, and you are not able to determine why, you will need some immediate professional practice management assistance. And if you do find you need this help, let your staff know of your willingness and eagerness to improve your practice situation. It will be an uplifting and motivational event for the entire staff.
Jon Purdy, DPM, New Iberia, LA, jpurdy@mindspring.com