Although staffing is the greatest expense on most family practices' income and expense reports, it's also the most essential. Practices can't succeed without high-quality employees to do everything from answering the phone to drawing blood. And you can't find and keep good staff without a competitive salary schedule.

Unfortunately, “schedule” too often overstates what doctors and administrators really use to set salaries and raises: their gut feelings. It's not uncommon for two people performing similar functions in the same office to have a 50 percent disparity in their pay.

Of course you want some disparity in salaries, even for similar positions, so you can reward your top performers. But how do you keep your salaries fair across positions and ensure that you're paying staff “what they're worth”? Developing and maintaining a salary schedule lets you be fair, reward excellence and keep your salary costs under control. Here's how to do it.

Start with the job description

You can't know how much someone should be paid without knowing what that person does. So start by creating job descriptions for all your staff positions. Rather than merely stating what tasks each staff member performs, a job description should outline what you need and expect from the person who fills a position. A complete job description should include these components:

• A capsule personality profile of the ideal candidate,

• The qualifications (education and experience) the candidate should possess,

• The competencies required of the person who holds the position, including average and above-average performance (for example, typing 60 words per minute might reflect average performance and 80 words per minute might be above average),

• The responsibilities of the person in the position.

In addition to laying the groundwork for your salary schedule, creating job descriptions lets you examine how workload is divided and whether it's appropriate. You may be able to fine-tune procedures, rearrange responsibilities or cut unnecessary steps.

It's important to involve staff in the development of their job descriptions. At a minimum, you should ask staff to review new job descriptions for clarity and accuracy. Job descriptions should be reviewed and updated regularly to reflect changes in the position. You may need to revise the descriptions considerably to keep them current.

Develop the salary structure

Now you can begin developing your salary schedule by weighting each position and assigning it a grade. The weighting should be based on two factors outlined in the job description: the minimum education and experience necessary to perform the job and the number of staff who report directly to the person in the position. Based on that information, you might decide, for example, that a file clerk's grade would be I, a transcrip-tionist's would be V and an administrator's would be VIII. In most cases, you will assign more than one position to each grade.

Next you should establish levels of experience. You can choose whatever categories make sense to you — for instance, less than one year of experience, one to three years, three to five years, and so on. For ease of reference, call them levels 1, 2, 3, etc. (See “A sample salary matrix.”)

With the experience levels established, you can begin assigning them to each grade. Not every level will be appropriate for every grade. If, for instance, you determine that it's reasonable to hire an inexperienced person as a file clerk, then level 1 would be your baseline for grade I.

Identifying the top of the experience range for each grade is trickier. It requires that you determine for the positions in the grade the point at which additional years of experience no longer translate to additional skills or value. (Your decision will affect the maximum pay level for the position, as you'll see later.) Continuing with our earlier example, if you were to decide that the average file clerk with five years' experience is no more valuable than the average file clerk with six years' experience, then level 3 would be the top of the range for grade I. Therefore, the experience range would be less than one year to five years, and the meaningful levels for grade I would be 1, 2 and 3. The ranges for positions in other grades might start beyond entry level and extend beyond five years.

Determine baseline salaries

This is the most difficult step in the salary-setting process. It's a matter of supply and demand, as well as the skills and responsibilities required for each job.

Learn as much as you can about the fair-market value of each position. You can develop a composite of acceptable ranges for similar positions by examining salary surveys and studies available from professional organizations and consultants (see “Sources of salary surveys”). For regional staff-salary data, you can contact temporary employment agencies, your state or local medical society and your local hospitals. Armed with this information and your experience in hiring capable staff in a competitive market, you can set baselines for each position.

Build a salary matrix

Now you're ready to create your salary schedule. Develop a matrix that lists each grade, the positions included in each grade and the number of levels you consider appropriate for each grade.

Then determine salary ranges for each level. We suggest a 10 percent spread between the minimum and maximum pay for each level, except in level 1 (the trainee category), where we suggest a 5 percent range. These ranges allow you to offer meaningful differences in pay to employees with similar experience based on the quality of their work. We also recommend a 3 percent increase from the maximum in one level to the minimum in the next level. Of course, you may want to use different percentages to meet your practice's needs.

Each year, review your salary schedule to see whether it needs adjustment. Depending on the economy, your practice's financial health and your local job market, you may want to make an across-the-board increase or devote more resources to grades in which qualified candidates are difficult to find.

Motivation, fairness and cost control

Once you've completed your salary matrix, you're ready to introduce it to the staff. It's important to review the matrix with each employee. That way, your employees will know how their pay fits into the schedule as well as their opportunities for future pay hikes. For those near the tops of their grades, the review may encourage them to seek other positions in the practice in which they can earn more.

Your staff will also see that your approach to setting salaries is unbiased. The schedule will help you set new employees' salaries appropriately and offer raises consistently, without the emotion that could lead you to pay a desired recruit more than the position is worth or to award someone an inappropriately high raise.

Additionally, a salary schedule provides essential structure for practices that plan to expand or merge. Perhaps most important, your schedule will ensure that employees are paid appropriately while enabling you to control personnel costs.

With shrinking reimbursements reducing profit margins, standardizing your salaries and other operating systems can help your practice succeed. Re-engineering office systems is a difficult transition for most family practices, but doing so will make yours stronger and better able to cope with an unpredictable future.