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All right, y’all. Welcome back to The Testing Psychologist podcast.
Today is a business episode. And in the episode today, I am going to talk about the compensation model, and more specifically, I’m going to talk about the compensation rubric that we developed in our [00:01:00] practice over the last year.
Compensation is a big topic in my mastermind groups and one-on-one consulting. Folks have a ton of questions about hourly versus salary versus percentage, which I’ve covered in other podcast episodes, but they also have questions about how much to pay their employees or contractors.
Today, I’m going to share more details about the compensation rubric that we developed and implemented in our practice last year. I’ve also included a public copy of the rubric in the show notes if you would like to download it and create your own.
If you’re a practice owner and you would like some group coaching and accountability for your practice, then I invite you to check out The Testing Psychologist mastermind groups. The next cohorts will be starting in late February or the first week of March. I actually think all of the groups are theoretically full and [00:02:00] sometimes folks drop out when it comes time to actually make the commitment. So if you’re a beginner practice owner, intermediate practice owner, or advanced practice owner, there is a group for you. You could set up a pre-group call at thetestingpsychologist.com/consulting.
All right. Let’s talk about this compensation rubric.
As we begin this episode, I want to start with a question. That question is, how do you determine what to pay your clinicians?
Most of us use historical knowledge of some sort. That could be what other practices do, what a friend does, what you got paid during your training, or [00:03:00] employment outside of practice ownership. Most of the time these aren’t necessarily anchored in anything real like your budget or your business plan. And even if they are, that’s where they stop. There’s really no path forward for many of us practice owners for how to give raises or how to compensate future employees who may or may not have the same qualifications as your existing employees.
So a lot of us go into this compensation process fairly blind. It’s hard to know exactly what to pay folks. And like I said, a lot of the time the only information we have is from Facebook groups or things we’ve heard from other practitioners. The numbers are rarely rooted in reality.
We were struggling with these exact issues in our [00:04:00] practice. As the practice grew, I found that it was getting harder and harder to know what people were supposed to make. I had general numbers in my head as far as what level of clinician warranted what starting compensation. For example, I knew, this is just making up numbers, but master’s level folks would start at $50 an hour, and doctoral-level folks would start at $53 an hour.
We had folks at different levels of experience with some more experienced individuals making less than others with less experience and no method for determining who or when they got raises. And this got to be quite disruptive and problematic [00:05:00] because people were asking questions. One, they were just asking for raises, and I realized that it was very tempting to just either not give anyone raises or grant them haphazardly without consistency or structure. So enter the salary rubric.
When I devised this compensation rubric, I wanted it to solve a few problems. I wanted it to provide a clear point for entry-level compensation. I wanted it to account for differences in training and roles within our practice. And I wanted it to be 100% transparent and equitable so that we weren’t rewarding folks who were better at asking for higher compensation or unconsciously giving or denying raises based on our own internal biases, which we know are rampant, whether we like it or not.[00:06:00] Those are some of my goals when I started on this project about a year. And this is how I did it. I have to say, there’s a lot of trial and error as we are devising the rubric and we continue to tweak the rubric as time goes on and we encounter different situations that warrant some tweaking, but this is the general process that I took.
First, I started by defining the various factors that could influence compensation. In our practice, those things are degree; we employ both master’s and Ph.D. level folks, or doctoral-level folks, I should say. So degree; licensure- and that’s just pre-licensed or fully licensed; role- that includes being a supervisor, being what we call a coordinator, or being on our leadership team. We have a compensation [00:07:00] item on the rubric that we call special things or extra talents. This would be things like being bilingual or having dual licensure or an extra formal certification like board certification, things like that. The rubric also accounts for tenure at our practice and years post-licensure.
I started by defining those things. Your list might be different. These are the things that I felt were important in considering what someone should be compensated. And that’s a combination of things that I just personally value and things that I’ve gleaned from other employment sources like hospitals and schools and things like that.
The next thing I did after I defined the important points of compensation was I guessed at a “base rate” of compensation. This is [00:08:00] the lowest rate that we would pay for a pre-licensed master’s level clinician with no tenure at the practice and no special certifications or dual licensure or anything like that. So this is just the base rate of compensation- the lowest that anyone would be hired at on the clinical side. I’m not talking about administrative staff, just to be clear.
I devised the rate based on our average hourly reimbursement for appointments and cross-referenced with job postings in our area to make sure it was more than competitive compared to community mental health hospitals and so forth.
After I found that base rate of compensation, and again, I did mess around with this, it. It went back and forth a bit, but once I settled on what I thought would be a good base rate, then I messed with the reward scale for each of the important factors defined above. And again, these are just sample numbers. [00:09:00] This is not actually what’s on our rubric. So getting licensed, for example, immediately adds 25%. Having a Ph.D. immediately adds 10% to the base rate and so on and so forth.
And so I worked out, I call it reward scale, but basically the percentage of raise you would get to that base rate depending on what your qualifications were. This is where the real trial and error happened. For instance, tenure at our practice was more important to me than years post-licensure, but my assistant director flipped that around and felt that we should reward experience rather than tenure at our practice. So we did tweak that.
I continued to manipulate the compensation increases until they fit within the budget for payroll. What that means [00:10:00] is I knew that I wanted the vast majority of our clinicians to fall under the bell curve, so to speak, like under the middle section of the bell curve in the average range being compensated somewhere around 50% to 55% of revenue collected for any given service. But I also knew that we would have a few outliers so the folks who were pre-licensed and then folks on the leadership team would fall a little bit outside, toward the tails of the bell curve if you want to envision it that way.
So again, I cross-referenced and just made sure that the “average reimbursement or compensation rate” was going to be competitive, so if we compared it to a local hospital or something like that, it would be competitive and that it also fit within the payroll constraints or budget constraints for our practice.
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Now, you’ll notice too that this is also right in line with “industry standard” for folks who pay a percentage. So something in the realm of 50% to 55% for a W2 model. So all those factors lined up and I again, tweaked the compensation until those numbers did make sense.
Once I got the rubric itself, and of course [00:12:00] ran this by the leadership team and got the okay, then we announced it in staff meeting. Most people got at least a tiny raise, which helped. Some people did not, but no one got a pay cut. That was the important thing. I did not want to roll this out and I did not want to finalize the rubric until we could be sure that no one was getting a pay cut.
So we announced the rubric in staff meeting. We also made it completely transparent so anyone can access a copy of the rubric and know the compensation rates for themselves and for their coworkers as well as the path forward should they move into a supervisor, coordinator or leadership role.
If you go to the show notes and you download the copy of the rubric that I gave you, you can see that the way that it’s structured is individuals [00:13:00] only have to check off the boxes that correspond to their qualifications and they can see exactly what compensation that would lead to. So they can manipulate that and check off different boxes and look forward to what it would be like if they were a coordinator or a supervisor if they stay at the practice for a certain amount of time and so forth.
So a big principle here was, this is a big nod to DEI principles or diversity, equity, and inclusion. We wanted to be completely transparent. The idea behind that, again, is that we would not be unconsciously rewarding or denying folks based on any biases that might be present or any other factors that might influence compensation. So it’s 100% transparent.
And the way that it’s come out here in real life now, in addition to our existing employees, is that we [00:14:00] now use it in interviews. We do no negotiating compensation at this point. And this is a change from the past. So we do no negotiation. We tell people early in the interview process what their compensation is going to be right up front, and it’s a take-it-or-leave-it situation. We explain that this is part of our commitment to equity and that transparency and keeping it real is important for us in the practice.
And then I’ll also talk with them about, okay, here’s where you might be in two years or five years. Here’s what it would look like if you end up being a supervisor and so forth. So I do engage in some of that discussion just to make sure people know that there is a path for advancement and that will change their compensation if they choose to go that route. We also use this during annual reviews and anytime a raises is on the table or someone asks for a raises, we just go back [00:15:00] to the compensation rubric.
All in all, this has been fantastic. It was a difficult process to dial in, to be honest. It took me months to calibrate the rubric, but it now saves a ton of time just trying to figure out what to compensate people. It also helps me and the rest of our leadership team feel grounded in our model and in my own business ownership.
I put a lot of time and effort into this rubric, and I know that it’s fair. I don’t spend time questioning whether I’m doing well enough by the employees. If someone turns us down for better compensation elsewhere, that’s a lot more okay now. I don’t feel pulled to negotiate a higher rate with anyone just to keep them because again, I just feel grounded in the rubric that we developed and know that it is competitive with the rest of the offers out there. [00:16:00] And so, it has removed a lot of emotional energy from me around raises and compensation and all those conversations.
The best thing is that we’ve gotten really good feedback from our employees, and I think this is the most important component. They really appreciate the transparency. They appreciate knowing that things are equitable and that that goes along with one of our main practice values. They’ve expressed really positive thoughts around this model.
So it may not be for everyone by any means, but if you would like to experiment with a compensation rubric, like I said, you can download it from the show notes no strings attached. Just make sure, and this is very clear on the document that you’ll download, just make sure to make a copy first, because the length that I gave is to the public template, and if you edit it, then it will [00:17:00] edit for everyone else who downloads it. And I would like to avoid that. So to download it, make a copy, and then mess with it on your own.
I hope this was helpful. It gives you something to consider. Just another piece in the compensation puzzle. It’s been helpful for us. Give it a shot, see if it might make an impact on your practice.
All right, y’all. Thank you so much for tuning into this episode. Always grateful to have you here. I hope that you take away some information that you can implement in your practice and in your life. Any resources that we mentioned during the episode will be listed in the show notes, so make sure to check those out.
If you like what you hear on the podcast, I would be so grateful if you left a review on iTunes or Spotify or wherever you listen to your podcast.
And if you’re a practice owner or aspiring practice owner, I’d invite you to check out The Testing Psychologist mastermind groups. I have mastermind groups at every stage of [00:18:00] practice development: beginner, intermediate, and advanced. We have homework, we have accountability, we have support, we have resources. These groups are amazing. We do a lot of work and a lot of connecting. If that sounds interesting to you, you can check out the details at thetestingpsychologist.com/consulting. You can sign up for a pre-group phone call and we will chat and figure out if a group could be a good fit for you.
Thanks so much.
The information contained in this podcast and on The Testing Psychologist website is intended for informational and educational purposes only. Nothing in this podcast or on the website is intended to be a [00:19:00] substitute for professional, psychological, psychiatric, or medical advice, diagnosis, or treatment. Please note that no doctor-patient relationship is formed here, and similarly, no supervisory or consultative relationship is formed between the host or guests of this podcast and listeners of this podcast. If you need the qualified advice of any mental health practitioner or medical provider, please seek one in your area. Similarly, if you need supervision on clinical matters, please find a supervisor with expertise that fits your needs.