To infuse our staff with a sense of ownership in our ambulatory surgery center, we decided to give them a stake in the action. Literally. In addition to a competitive salary structure, we set up an incentive program that encourages the staff to think and behave like owners of a family business. Not only has it turned out to be a wonderful recruiting and retention tool in today's ultra-competitive nursing job market, but our staff has profited as well. We paid out more than $175,000 in bonuses to our 25 full- and part-timers in 2001 and 2002, and have budgeted $100,000 for this year's incentive program. Here's how we did it and how you can, too.

Ms. Daley ("[email protected]")) is the administrator of the AtlantiCare Surgery Center.

Inside the numbers
We started distributing dividends to the center's shareholders and staff stakeholders in 2000 and every quarter since. The concept is simple: As our surgery center generates a profit for the shareholders, it also creates a bonus for the staff.

Our program pays up to nine percent of total staff salaries as quarterly bonuses. We pay out 7.5 percent of salaries when the staff meets specific goals, and an additional 1.5 percent if the staff meets established "stretch" goals.

Although we wanted the staff to care about all aspects of the business, we recognized there were some areas in which they had greater influence. With this in mind, we designated a percentage of the total bonus for meeting specific goals in each of these areas:

• Patient satisfaction ' 40%
• Profitability ' 30%
• Efficiency ' 20%
• Growth ' 10%

In 2001, the incentive program cost $75,000. We paid out 7.5 percent of staff salaries for meeting our performance goals, but we didn't achieve our stretch goals. The program cost more than $100,000 for 2002, and we have budgeted the same amount for 2003. This means each staff member could earn roughly $3,000 extra (based on hours worked) in 2001, and $4,000 extra in 2002 and 2003. At the end of the three years, the total potential payout of $11,000 in bonuses is greater than the marketplace-driven, base salary.

AtlantiCare Surgery Center Employee Incentive Plan First Quarter 2003 Calculation of Bonus Payout   Payout Achievement Earned To Date Payout Calculation  Financial Goal 30% Yes 30%    Growth 10% Yes 10%    Efficiency 20% Yes 20%    Customer satisfaction - Target 20% Yes 20%    Customer satisfaction - Superior 20% No 15%              Total Earned 100%   95%              Maximum Salary %       9%            Percentage Achieved for the Quarter       8.6%            Year-to-Date Salary Expense       $100,000.00         (*permanent employee salaries only)  Total Earned Pool                    Reserve for Year-End       $8,550.00           (We reserve a portion of the bonuses from 25% quarters one, two, and three for the fourth quarter. The year-end payout is the largest)    Total Distributable       $6,412.50  Less: YTD Distributions       $0.00  Total Quarterly Distribution       $6,412.50  Current Quarter Distribution as a Percentage of YTD Salaries 6.4%

Money well spent
You might be thinking, "That's a lot of money. We couldn't afford that." But just consider these numbers:

• In our 10-question customer satisfaction survey, the "big question" is the patient's overall experience at the surgery center. We started at 94 to 95 percent "very and completely" satisfied. We're at 99.4 percent in our latest survey.
• We budgeted a robust return to our investors, and significantly exceeded our projections.
• In terms of efficiency, our goal was operating room turnover of less than 15 minutes per case. Now we are consistently 10 minutes or less per case.
• As we've brought in new technologies and services, our case volume and scope of services have increased dramatically. We've gone from 3,600 cases in 2000 to 6,700 cases in 2001 to 7,100 cases in 2002 in four ORs and two procedure rooms.

Six tips for success
As with any program, we've learned along the journey. Here are six important tips we'd like to share:

Recognize the efforts of the entire team. This will motivate staff to work together to create a better experience for patients. Link nurses and administrative staff to the mission and goals of your facility. Although we recognized that we were blessed with several high achievers, we thought it prudent to first develop a sense of unity among the staff.

Reward your star performers. Once you've hit your team goals, look for ways to reward individual contributions. We recommend that you do this as a second step, and not at the same time that you introduce the team program. For example, offer additional rewards to those with outstanding skills interacting with people (especially customer satisfaction) or to those who've offered cost-saving ideas.

Distribute bonus checks on a quarterly basis. We thought the timing of the distribution of the incentive bonus was important and needed to have a temporal relationship to performance. Historically, incentive bonuses are awarded annually but we wanted to make a point by linking the fate of stakeholders to the physician shareholders, who meet quarterly. We also didn't want to lose the momentum of this project in during the early implementation.

Make a big deal out of it. On distribution day, our president and administrative team meet with each individual, shake his or her hand, say 'thank-you' and present the bonus. This reinforces our message in a personal way. There's also lots of smiling and hugging. This interaction reminds us that this business is all about relationships and value.

Keep it simple so that you can explain it. If you can't remember how it works, neither can your staff. Make sure the staff members understand why they are getting the bonus. And set goals that are obtainable and measurable. Stretch goals are important, too, so have those from the beginning.

Make provisions for eligibility. Examples include:

• You have to be employed for at least three months to participate.
• The bonus amount is based on the total salary for the year.
• If the staff member resigns prior to the date of bonus distribution, he does not get a check.
• Those on leave of absence are not eligible.

Sharing in the success
Overall, this incentive program is one of the best things we've done. Staff turnover? It's almost non-existent (we are a preferred site of employment in the community). Customer service remains outstanding and we have broadly improved operational efficiencies. The staff performs with the same joy and energy at 2 p.m. as they do at 7:30 a.m. They understand our business and their role in its success as only stakeholders can.