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Three Strategies for Compensation Structure

I received a lot of great feedback from our last blog where I outlined the top 5 non-negotiables when it comes to compensation strategies in your medical aesthetics practice.   

So, for this week’s blog, I’m going to take things one step further and take a deeper dive into the purpose behind your compensation structure, as well as the 3 main compensation strategies to incorporate as you are onboarding new staff and evaluating your current staff.  

These are, of course, the broad strokes. In order to complete a more in-depth analysis and actually put your structure in place, you’ll want to enroll in one of our new programs, Launch or Grow, that contain the new Financial Foundations course, click here to learn more.  

You asked for this course and we listened and created it just for you!  You’ll get all the tools you need to understand and master the financial health of your practice as well as access to a comprehensive workbook and proprietary compensation calculators.  

What is the Purpose of your Compensation Structure?  

I always say keep your why close by. Before you set goals, it is important to understand the why behind them. Ask yourself, “What do you want your compensation structure to reward? What behavior do you want your team to continue to develop and get better at?  

So, take a moment as you are reading this and jot down your why/purpose that is relevant to your practice in terms of compensation.  

 In general, your compensation structure should:  

  1. Grow the practice – Write down what that looks like for you. What are you going to reward compensation wise to help grow? Is your current structure meeting the goals you set? For example, maybe a big goal for you is to increase your hourly revenue or add more patients to the schedule. 

  2. Encourage Skill Development – The aesthetics space is a competitive arena – skill level is very important to achieve optimal results which is your best sales tool. Write down what skills you may need your team to further develop. 

  3. Promote “Team Thinking” over “Me Thinking” – This is where transparency comes into play. You want to establish a healthy and team-oriented work environment. Setting overall goals and financial numbers for the entire practice to hit can help foster team thinking and everyone to do their part. 

Now that you’ve outlined your own goals, let’s talk about the three critical steps to structuring your compensation, which we go into more depth about in our new Financial Foundations Course.  

Three Strategies for Compensation Structure 

1. Determining Base Pay 

  • Salary vs. Hourly. This is a simple choice, but there may be various factors involved. For example, if you have a practitioner or provider who is the type that will come early and stay until 7 at night and works a lot of overtime, you may choose to pay a salary to avoid racking up overtime you didn’t plan for. You can also compensate with a salary and flexibility for overtime as long as you are cognizant of how much overtime you can allow for.  

  • Aligns with Credentials. It is important to determine which credentials you value most in your practice. You can pull pay scales for your market based on credentials for a general guideline or good starting point. For example, if you are hiring a nurse practitioner who knows skin and lasers and has 6-7 years of experience, you’ll want to compensate him/her more based on credentials than someone who is at the injectables 101 level.  

  • Aligns with the Market. Your compensation must align with the cost of doing business in your area. For example, the cost of doing business in Manhattan vs. a small town is very different.

2. Determining Pay Increases 

Creating a broadband pay structure clearly shows a current employee or new employee how they can get increases in their base pay. It gives a new hire a career path plan on how they can grow with your practice.  

Your broadband pay structure should: 

  • Communicate what is expected in order to get an increase in base pay (Some examples could be attending secondary level courses, upselling hours or attending a conference or sales training, etc.). 

  • Outline that raises will be given annually at either anniversary date or start of new fiscal year or calendar year (which you determine). 

  • Align with practice’s current financial reality. For example, with COVID there have not likely been many raises given due to the current financial reality. 

  • Align with key productivity indicators and benchmarks (for an example an increase in revenue per hour over the previous year). 

3. Creating a Bonus Structure. This is in addition to base pay or salary increases.  

Bonus structures should: 

  • Have a minimum productivity level based on a cap you created taking into account your practice’s financial reality.  

  • Be based on hitting a goal you determine when creating your annual budget (you can tweak as you go along) or a certain amount of gross profit. 

  • Be measurable and easy to understand and communicate to employees 

In our new Financial Foundations Course, we have 2 proprietary financial calculators to help you determine compensation structure and pay bonuses. One is a Multiplier of Compensation Calculator, based on a multiple of the employee’s base compensation, and the second is a Gross Margin Based Compensation Calculator that takes the costs of goods and cost of labor into account.   

To learn more about how our proven programs have helped others and can help you, please visit and request to speak with one of our sales executives who will identify the best program for you.  

Optimize Your Business

Terri Ross can take your business to new levels, whether you’re looking for exclusive private strategy sessions, corporate sales training, or a keynote speaker for the next major aesthetic event. Book Terri Ross today to take the first steps in giving your business the tools it needs to succeed in this incredibly competitive landscape.

Terri Ross