With the current staffing shortage, you’re likely paying more to recruit new employees. And that necessitates bumping your current employees’ wages to maintain an appropriate wage differential. Below we discuss strategies you can use to offset these higher labor costs so they don’t dent your profit margin.

Over the past few months the biggest challenge for most practices has been staffing, particularly recruiting new assistants and hygienists. Most practices are having to raise pay to recruit new employees in this extremely tight labor market. In many cases, you may end up paying 5-10% higher wages in order to attract new employees, in addition to any signing bonuses and increased benefits.

This higher pay for new employees creates another problem—“wage compression.” That’s when the higher wages offered to new hires approaches what long-time employees make, creating another management challenge. With record-high rates of job resignations, you must increase what you pay your existing employees if you want to keep them. But that could pose a double hit to your profitability—unless you take action.

Respected practice management consultant Bill Rossi* says: “You can’t control the labor market, so you have little choice but to offer higher pay and give substantial raises. So, while you may increase wages more than you want to, it’s important to get something for it in return.”

Below are 12 strategies to help you offset these higher labor costs: