E760 | 5 Staff Retention Strategies That Work

When it comes to building a successful service-based business like a physical therapy clinic, staffing is everything. Retaining quality team members ensures continuity, customer satisfaction, and sustainable growth.

Yet, retention can be challenging, particularly in healthcare, where demand for skilled professionals is high. Here are six strategies to help retain your clinic’s top talent, creating a positive work environment and improving team loyalty over time.

1. Offer Stable Pay

A reliable, stable pay structure is foundational for staff retention. When employees know they can count on a consistent income, they experience less stress and feel more secure. This stability is crucial, especially for clinics transitioning from a single-provider setup to a larger team-based model. While a commission-heavy or bonus-dependent structure might seem attractive for certain roles, these models can drive turnover and attract candidates with a high-risk tolerance who may not stay long-term.

To maintain stable pay, ensure you have cash reserves or financing options to cover your overhead as you scale. Building cash reserves equal to three to six months of expenses can offer peace of mind and reduce financial pressure as you grow.

2. Create a Positive Culture

Culture plays a huge role in retaining staff. Employees are more likely to stay if they enjoy their work environment and feel connected to their coworkers. Encouraging camaraderie through team-building activities, providing constructive feedback, and celebrating personal milestones are just a few ways to foster a positive culture.

Create a “third place” for employees—a space that feels like a supportive community rather than just a workplace. When staff look forward to coming to work, they’re less likely to leave. Employees want to feel valued, supported, and part of something bigger, which helps turn your clinic into an enjoyable place to work.

3. Demonstrate Business Growth

A growing business offers career advancement opportunities and keeps staff engaged. When employees feel they’re part of a business with a future, it’s motivating. However, while growth is exciting, it’s essential to manage it at a pace that doesn’t overwhelm the team. If your clinic is stable and not aiming for rapid expansion, you may need to replace growth-driven employees with those who prefer a steady environment.

If you’re actively growing, involve your staff in the journey. Regularly communicate progress, milestones, and improvements, helping them feel proud and invested in the company’s future.

4. Recognize Employees with Title Changes

Job titles can hold significant value for employees. A title change can show growth, recognition, and responsibility. Positions such as "Clinic Director" or "Clinical Education Director" can provide a sense of accomplishment and leadership. This recognition isn’t just about status; it also adds credibility to an employee’s resume, providing them with a stepping stone for future career opportunities.

Ensure you have a path for meaningful title changes as your business grows. Such advancements make staff feel valued and validated, which can significantly enhance retention.

5. Implement Profit Sharing and Bonuses

Incentivizing staff with profit-sharing options can be effective, but it’s important to set clear guidelines and educate employees on how the clinic’s financials work. A profit-sharing plan that involves clear, transparent accounting helps employees understand the clinic’s financial structure and their impact on its success.

If profit-sharing is too complex, consider simpler performance bonuses tied to specific metrics, such as reaching a patient volume threshold. This is often an easier way to reward contributions without diving into profit-and-loss breakdowns.

Accepting Change

Even with all these strategies, turnover is inevitable. Understand that some employees may eventually leave, regardless of how well they align with your values. The key is to retain the right people who share your vision and work ethic, creating a team that strengthens the clinic’s mission.

If you offer a stable income, foster a positive culture, encourage growth, and recognize contributions, you’ll retain talented staff, foster a supportive work environment, and set your business up for sustainable growth.

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Podcast Transcript

Hey, real quick, if you were serious about starting or growing your cash based practice, I want to formally invite you to go to Facebook and join our PT entrepreneurs Facebook group. This is a group of over 6, 000 providers all over the country. And it's a pretty amazing place to start to get involved in the conversation.

Hope to see you there soon. Hey, are you a physical therapist looking to leverage your skill set in a way that helps you create time and financial freedom for yourself and your family? If so, you're in the right spot. My name is Danny Matta and over the last 15 years I've done pretty much everything you can in the profession.

I've been a staff PT I've been an active duty military officer physical therapist. I've started my own cash practice. I've sold that cash practice And today my company physical therapy business helped over a thousand clinicians start growing scale their own cash practices So if this sounds like something you want to do listen up because i'm here to help you What's going on?

Dr. Danny here with the pt entrepreneur podcast and today we're talking about how do you retain? your staff so retention of staff in a service based business is a really important topic and it's because Service based businesses are grown through people and space, right? So you have a service you're fulfilling in this scenario.

Our clinics are seeing people primarily for PT visits or clinical sessions. And you need someone that fulfills those that works in the clinic that is a staff or, senior clinician of some sort that actually, does that renders the services. So when we look at the variables that either.

It's really your ability to effectively move into a bigger space that allows you to then employ more people to be able to, fulfill more services. That's pretty much the simple kind of way of looking at it. Now, human beings are not simple to work with. They're complex, a multifactorial can be messy, can bring their personal life into the business And to be honest with you, that is actually the pro and the con.

So what I mean by that is, if you have a staff member that is going through something personally that is affecting them. Like that is something this is a it's a real life thing, right? They're not a robot. They're a human being if They're having a baby. This is something to celebrate. Can it create a logistical issue for your clinic?

Absolutely, but it's also an incredibly important event something that's you know, it should be celebrated and there's this dichotomy between the people are the best and the hardest part of A service based business and it's just really important that if you find the right people And you give them an opportunity to grow into what they're you know, what they see as the vision for their own life that you continue to foster that relationship and improve the retention you have of the right staff Now you may hire people that you need to Let go that happens that's happened with us.

That's probably gonna happen with anybody that hires somebody you're gonna have people to leave That's gonna happen as well and the challenge is like you don't want the right people to leave the people that fit your culture the people that align with you in terms of core values of your business and Personally as well.

Like those are the people that you want to really Go out of your way to make sure that you are providing a place for them. That is an ideal work situation and really anybody that you hire, but you'll notice like some people are going to align with you more than others. And you don't really figure that out until they work with you closely for, a period of time.

So there's, let's see, five, six ways. Really five, we'll call it five. And then a fifth one one B like our five B ways of retaining staff. And the first one is. Your pay structure. So pay stability is the number one thing and we've now seen this over and over again where if you create a really sketchy compensation structure, you're gonna have higher turnover and when we started hiring people at our clinic, this was About eight years ago No, nine years ago, the first compensation structure that we had was a base salary of 4, 000 and then bonuses that kicked in at different amounts of new patients or of total patients that we're seeing, right?

If you can imagine if you have that same pay structure today, right? That's a, that's a sketchy pay structure. Like people are going to pay. To want more stability than that. The only people that are really going to take on a a really low base salary like that are people that are pretty risk tolerance.

And in that scenario, they're probably less likely to stick around in your clinic because they're basically probably going to learn from you and then just go do their own thing. And if that's what you want to attract, that's what you're going to get. But don't be mad if you attract somebody with that type of a compensation structure and the end result is that they leave and go do their own thing because they're risk tolerant, they're learning to be more risk tolerant and learning how to sell in market and all those things, you are you're essentially mismatching compensation with what you're trying to create within a clinic.

If you're trying to. So stable pay though is a challenge and here's why when you go through your first growth cycle and some of you, maybe you've already done this, maybe for some of you, this is not even on your radar. You're just literally trying to get your first couple of patients, but you'll eventually get here and there's a transitionary stage.

Of a growth phase between a single practitioner and a a business owner moving into business owner, where they're building a standalone space and they're bringing on more administrative infrastructure, technology and equipment to be able to have a footprint that they can then hire other clinicians to grow into the business down the road.

But as you go through this first stage, you are bringing on way more overhead then. Then what you're used to, as well as percentage wise, what you're making in revenue, your overhead is going to go up astronomically in comparison, whenever it's just a single provider in a sublease space. So your cashflow takes a big hit.

Now, when you go to then create a pay structure for somebody that is stable, let's say you're going to pay them 85, 000, just like flat salary, right? Something to that effect. That's a lot of money to you versus something a bit more sketchy. Like I explained where it's like 4, 000 base salary. If they don't hit these different bonus tiers, then they don't make any additional money that takes risk off of the business owner and puts it onto the employee.

But when you have a more stable pay structure, you take that risk on. So you're exchanging risk with guaranteed money. It's like the NFL, right? Guaranteed money is what everybody cares about. Not necessarily the contract. They want to know how much they're guaranteed that they're going to make. Same thing in this scenario.

So there's two ways that you can get yourself in the right position for this. And one is you can be very diligent about building up your cash reserves. We recommend that the the business owners that we work with, that they have at least three months of cash reserves on hand. So as an example, let's say that you have a 10, 000 of overhead per month.

That's going to be 30, 000 that you're gonna need to save up before you go to make a jump into a standalone space and bring on staff. And you might have to redline it a little bit and take the profitability that you're making and just sock that away and save that so that you're in a really good financial position to be able to take this next step.

Preferably, I actually, three months is like the minimum for me. I'm conservative when it comes to this stuff and I would, Wait, I waited until we had, and we probably had a year's worth of overhead before we made this transition. But six months is more comfortable for me. If you have six months of overhead, that's a much better place to be.

The other alternative is to capitalize yourself with different options, right? So you could get a line of credits that you could tap into if you need to, as far as additional cash is concerned, you could get a expansion loan, right? You could get a loan. And have that loan as a secondary cash reserve behind your the savings that you have.

And if you do that and you feel comfortable with the likelihood that you're going to be able to grow past yourself, then it's a pretty low risk bet that you're making on the business to be able to put yourself in a position where you can then create better stable pay, move into a nicer standalone space to attract more people and retain more people.

And you're taking a bigger swing, but. It's a calculated one, right? So these are the options that you have as far as this goes. But if you create variable compensation models, heavy swings in these variable compensation models, you're going to see more staff turnover associated with that and less retention.

When you create stability for your staff that creates stability for their life. Outside of the clinic. And that creates more retention stability of the staff that you have in the clinic. So that's number one. Number two is culture. I had a friend tell me one time that one of the best ways to see, like if a company had low turnover was if the people at the company were friends with each other, right?

So if your staff. Can enjoy being around each other. The likelihood of them sticking around actually goes up quite a lot. So how do you do that? How do you create a culture that is an enjoyable one to be around? And that really comes down to you spending the time with your staff. With your with your staff, like individually as well as together.

So individual feedback is really important. This is a big one for your culture. Like they know where they're at. They are getting feedback guidance there. They know what game they're playing and they know what their score is, right? They know they're doing a good job and you're reiterating the fact they're doing a good job, but then you're also.

Like doing things with them that are going to be, enjoyable for them to spend time around each other. One thing that athletes potential does now that they started doing after we sold the clinic is they will go to a, gym partner a training partner. In the area and the whole team will go and they'll do a workout at the gym that they have a partnership with.

They have a relationship with together, as a company. So they'll have everybody in there come in. They'll put a training session together just for them. And then they pay the gym for their time to do that. So it's a team building event. It's a way for them to reconnect with a referral partner and to have some fun.

And they do it during, obviously during business hours. So just as an example, stuff you can do getting them together for a team offsite once a year. Hosting a Christmas party, like doing things that are enjoyable for your staff to actually engage with and be a part of and look forward to is a great way to build culture, as well as to create that third space that so many people are missing.

Like this concept of a third space, right? Is is. Is going away, right? It used to be, you had home work and then you had some other place where you would congregate, right? And maybe that's a club or that's a team you're a part of, or that's a church or that's a, community group or something, right?

There's a third place for many people Like they don't even have a second place. So many people work from home and they have one place, right? They have one and work for people to have a place where they can go to work and enjoy conversations, enjoy the environment and and not dread going to work like that's such an important thing where you're actually creating this environment that they look forward to and they want to be a part of, and they don't want to leave that because in many cases they know what a bad culture looks like.

So if you can cultivate that's one of the strongest ways in which you can actually. Retain people, a 13 thing sounds maybe a bit counterintuitive, but it's actually business growth. So if your business is growing, it's exciting. And your staff is a part of that, right? They're a part of this startup.

That's growing. They see opportunities. They see things changing now in some ways. If you grow too fast, that could actually be a deterrent that can feel like there's too many things changing at once. And that might actually drive some people off that are not looking for that fast of a change in a company that they're working with.

So for you if you get to a stage where you're like, I don't really want to grow anymore. I just kinda, I like it like this. I want to keep it like this. You're the people that are looking for that growth in a company, they'll probably leave and then you'll have to backfill them with people that are looking for more stability.

But if you have a faster growing company, people will see that as a place where they can grow into, they can see their vision inside of your company, inside of the vision that you're casting with the company that you have. And that gives them a lot of opportunity to. move into other jobs to to be a part of this company as it's growing and take pride.

And it was like, yeah, I was like the second one here, like that is a big part of why people stick around in a small company. They want to be a part of, the story of it growing. So if you're not growing or you're intentionally not growing, you probably are going to see more turnover associated with that because it feels stagnant.

It feels like it's not moving anywhere. And that can be. Frustrating for people just as much as it may be for you, but you may also hit a stage where you're like, dude, I'm cruising here. I don't want to try to grow anymore. Like I'm tired. I just want to maintain this. That's fine. Just understand that if you do that, you may end up having turnover and people that don't really fit that mold for what they originally signed up for.

And then you transition to more of a level autopiloted business or a stable business versus a fast growth business. And that can be a different person that you're attracting. Hey, sorry to interrupt the podcast, but I have a huge favor to ask of you. If you are a long time listener or a new listener, and you're finding value in this podcast, please head over to iTunes wherever you listen to the podcast, and please leave a rating and review.

This is actually very helpful for us to get this podcast in front of more clinicians and really help them develop time and financial freedom. So if you would do that, I would greatly appreciate it. Now back to the podcast. Now, if you have people that are growing with the company and you're looking for ways to incentivize them to to actually stick around for the very first thing that people think about is equity, and I don't know why.

That's the case. I don't know if it's just because of startup culture with like software and everybody's yeah, I want to get, X percent equity in a company. And I guess if you could get a small percentage of equity in a company like software, it would be worth it, and we have to realize is. Software companies primarily are faster growing and they're valued at a, in a different way than a service based business. So here's what I mean by that. So if you have a software company, it's growing really fast. Okay, you are you are going to have the an opportunity potentially if they sell that company to a private equity company or they go public That the shares you gain along the way could be worth a lot of money a lot of money But the value that is put on a software company is based on the gross revenue of the company So the total amount of money the company makes in a year Let's say that let's say that software company makes a million dollars in a year.

They're going to be valued at the revenue You The gross revenue of the company, a multiple of that. So let's say they get a 10 times multiple of their revenue. That would be a 10 million valuation for this example. If you had the same 1 million, a physical therapy clinic, you're going to be valued off of a A multiple of most, these would describe it as net profit.

A lot of times we'll call it EBITDA, but it's basically the profit the business makes. So it's not, let's say you have a million dollar clinic, but let's say that clinic is making 250, 000 in net profit. Now, in most cases, it's going to be somewhere between a 10, Two and a six, range of net profit for businesses of that size that are service based businesses or clinics in this example, that means if you're generating 250, 000 in net profit, and let's say it's a four times multiple, the clinic is worth.

$1 million. So $1 million clinic and a $10 million software company. But they're generating the same amount of gross revenue. They're valued differently because the growth potential of a software company's far higher. If somebody can really scale the heck outta that, and a service-based business, they know is gonna be a bit slower, but far more stable.

So you're attracting a different type of an investor. So my point with this is if you had a 1% share in a physical therapy clinic that's generating. 250, 000 in profit and it sells for a million dollars. It's different than if you have a 1 percent share in a software company that sells for 10 million or a billion dollars or something to that effect.

So very different likelihood of outcomes on the backend. So I think that might be why people feel that they should ask for equity, but with that, they, I don't think they actually understand like how that's going to be worth anything one day as well as. Does that really mean much to you as well as the tax consequences of it?

If you really want that or not I don't think that's necessarily the case. I have plenty of of staff that Have never ever asked me about equity in in our businesses And it's because like they get paid really well and they have a great job and they have great real life work life balance and that's a much better exchange for me than try to navigate the legalities of trying to create this like Minority equity owner.

That's something that should be saved for the very last sort of resort of somebody that you really want to tie to the business. That's an incredible That's an incredible asset to the business. They can really help you grow it and is it a partner in their own right? Not necessarily just a partner A staff member that you don't want to leave but they are replaceable, right?

So when you look at different ways to incentivize retention through Compensation or ways like similar I guess terms of compensation There's a couple things you can look at the first one Is a title change. A title change can mean a lot to people. So it could be that this person that you see as a mentor clinically in your your clinic to your staff, they move to a.

Clinical education director role, right? so they're in charge of making sure that the standards of clinical education are high that they're continuing to look at new case studies or lit reviews they're mentoring new staff like they take more of an educational role Maybe you have a clinic director that maybe focuses more on operations and that's the direction that they want to go And again, this only happens with growth by the way because you can't have a company where there's literally it's you and two other clinicians and one's a clinical education director and one's the clinic director Like, that there's no one for them to direct, it's just them.

You can't have something like this without growth in the company. You have to start there if you're going to go this direction. A title change can make a big difference. And a title change could be the very first thing that you look at, and that's a great way to show someone that they're making progress within the company.

It's a feather in their cap when they go to thanksgiving and they tell their family about the you know The new role they have and that they're what they're doing and they're in a leadership role like that. That's huge I remember, whenever I got I got put into a role as The assistant, or I guess I was the clinic chief of a a clinic in Schofield barracks, Hawaii, where I was stationed.

And it wasn't even that it wasn't even that I had gotten promoted. My boss actually was pregnant and she had some pretty significant complications. So she was like on bedrest in the hospital for a while. So I went from the assistant clinic chief to the clinic chief. And all that happened was she just wasn't there and I was the senior officer.

But when I would introduce myself. I would tell people what I did. I said, yeah, I'm the clinic, I'm the clinic chief of Schofield barracks, PT clinic. And I felt better. I felt awesome about that. Like I felt proud of that. And and I had no change in pay. In fact, I just had more responsibility, but I felt good about the fact that I was like, I had a responsibility, had a leadership position.

So like that right there can actually be a meaningful thing for people. Don't overlook that. Like titles mean a lot to to your staff, not just while they're with you, but also. If they ever go to, to move on to take a job somewhere else, whatever their title was, whatever their role was it helps them transfer to another job at an elevated position.

So don't take that lightly. That can make a big difference. The second thing would be looking at some variation of a profit share, right? So you can set these up a lot of different ways. This is secondary to, by the way, let me back up paying them more, right? So let's just say you, you make somebody a clinical education director and they get up.

X amount, pay bump in conjunction with that, that's fine. Like you don't have to necessarily incentivize people with these complex pay structures of profit shares and equity and all these things. It could literally just be, I'm going to pay you more. And now you're doing, this role as well as seeing X number of patients.

That's a very easy place to start. So just literally pay bumps. But the second thing would be some variation of a profit share. And this is where you can do this many different ways. And it can get pretty confusing for people because there's no guidelines. Certain States have limitations, but for the most part, you can do whatever you want.

And this could be a percentage of net profit. It could be a percentage of top line revenue. It could be Tied to certain metrics in the business. It's like a pseudo profit share. We could say, okay, if the clinic hits 300 visits, then you get X amount of a additional bonus, which is essentially a variation of a profit share.

But a profit share is something that really should come secondary to these other things that we're talking about, because they're more complex. They're more challenging to track. And if you're doing a legit profit share, like a true profit share of net profit, that means you have to sit down with whoever you're doing that with and explain the pnl the profit and loss sheet the accounting of what's going on because if let's say they have a five percent profit share of net profit and let's say you had 10, 000 of profit that that month, then, they're going to want to know, okay, what was that 10, 000?

Why was it not more? Why wasn't it less? They, they'll want to know what, how that you came to that number. So you have to have really clean accounting for that to happen. And they have to understand the business financials, which can be hard to, or Understand it's like learning a new language when you're looking at a P and L.

If someone has never looked at a profit and loss sheet for the first time, they're going to have a hard time understanding what all these different categories are that the business is spending money on. It's also could be a potentially great way for them to have a bit more respect for the fact that, yeah, I realized the business is making this much money in gross revenue, but damn, it's expensive to run a clinic, right?

So there, there is a benefit to profit share, but it's not what I would recommend starting with because. It does get a bit confusing. It requires a bit of additional work on your end. And if it's a true profit share, you have to be line by line. Here's where everything went. You have to be like very careful about what you're spending money on in the business, especially if there's anything that bleeds over into sort of like pseudo business, personal expenses that people do run through their business for like tax specific purposes.

The last thing would be some variation of an equity agreement. Now, equity should either be earned or bought, period. Do not give equity away. And you have to also realize that it may not feel like it's worth much to you at the time, but if the clinic gets bigger and more You know valuable, you could be giving away a lot as well as let's say it doesn't work out to undo.

That is hard. A true equity partner. It's like a marriage, you have to, you are going to be in, in legal, Court cases with this, you're going to have to hire attorneys. You're going to have a lot of legal fees associated with severing a equity partner in a business. Like it is a business marriage.

Keep that in mind. You do not want to go into that lightly. You don't want to just give these things away and you want to have these other things done first before you move there. Unless this, unless you're starting a business with somebody or you're bringing somebody on, that's a partner in the business.

That's an incredibly important growth partner. There's variations where this makes sense. But for the most part, this is the very last thing that I look at and it's really reserved for very specific cases. And so don't go there first. And I see people do this constantly and I almost made the same mistake.

The very first compensation structure we put together. And this just shows you how little we actually knew at the time. When we looked to hire our first clinician, we gave this guy an offer and it was for it was like a salary plus 20 percent equity in the business. And it corresponded with a 20 percent profit share.

And he turned the offer down. And looking back, it's thank goodness he did because that 20 percent I would have given him. In the end, that was that would have been well over six figures of what the business was worth when we actually sold it so It was it would have been a huge mistake and as well as like just we didn't know each other this was the first person.

I mean we knew each other. We hadn't worked together. This was the first Compensation structure that I put together, no help from anybody else, just trying to figure things out. And it was a terrible idea. And I see people do the same thing all the time. So if you're thinking about doing that, please don't, that, that is, there's a lot more to it than just yeah, here, you can have some equity and you can have some equity.

This isn't Oprah, you can't just be giving cars away. Can we give equity away like that? You got to realize that there's a lot more to it than just that. Hold that in reserve for very specific cases. And, or the last thing you do with somebody. So in summary, retention is huge. We grow through people in space.

Space is a lot easier to build into than it is to hire and retain great staff. So you've got to become really good at this. So stable pay is really important. Give them stability in their life outside the business. And that will lead them to want to be around longer because that stability is, it takes a lot of stress off of their life.

Second, culture, build an amazing culture. Keep your people happy and allow them to become friends with each other and enjoy being at work together. They're there a lot. They might as well enjoy it. The third thing, business growth is exciting. People want to be a part of that. Show continual growth, show progress, show what's improving.

People will stick around for that. The last thing, or the fourth thing. Title change to make a big difference. It's very meaningful to your staff. You've probably experienced something similar. Don't underestimate how much a title change can make a difference. And then five a and B is profit share and then equity.

And these are the last two things that you would move to. If someone has been around for a while and it's somebody you really see as a long term partner in the business, do not rush into that first. There's no need to do that and it can become very messy if you have to unwind it. So I hope this helps.

These are keys to retaining staff and having smoother growth in your business. Please keep in mind, people are still going to leave and take other jobs. It's very normal. It's very normal. And you shouldn't assume that everyone you ever hire is going to work for you forever. That's not the way it works.

So if you can change your mindset about the likelihood that people are going to leave, They are, even if they're a good fit, even if you do everything right, it's still going to happen. The grass is always greener somewhere else. And people always see that even if it may not be true. So if you can follow these and you can give them the best work environment, really good pay, really good stability, have them see growth in the company and title change that come with that.

And being a part of, a faster growing company and a company, they can be proud of people will stick around the right people will stick around and you'll have a smoother growth trajectory to the next stage of the business.

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