How do I find a great optician for my shop?

[Judy Canty]

My pay structure in the past was as follows:
$15 per hour (base salary) AND 10% of NET optical income...

Now, the base salary and the 10% deal is too good to offer because my costs have come down so much that an optician would make a windfall from the system that I built...

Nonetheless, my basic philosophy is simple. You make me a fortune...and I will pay you a fortune. Waste my time and consider my shop as a place to hang out from 9-5 and I will replace you. Fair?

I'm also a bit confused here. You've now improved your buying practices so that your net income increases and you want your next Optician to work for less? Additionally, you indicated that your Opticians quit rather than being terminated for poor financial management or poor professional performance. I must agree with the others posting here that there is more to this situation and work environment than meets the eye. I would think that some sort of partnership agreement or at the very least a written employment agreement might be more attractive to the highly skilled Optician you're looking for.

[idoctor]

Good point Judy. I didn't want to complicate my previous post with details but if you want the exact formula here it is:

Expenditures= previous month optician compensation+cost of goods sold+ $1200

The $1200 is always constant and represents monthly rent, phone, utilities, benefits, insurances etc. It is a very generous figure and is a significant under representation of my actual costs. I wanted to keep this figure low so that the optician has an easier time making the commission.

My goal is not to throw up obstacles to his commission but to see them increase in every way. I am happy when I have to write a huge commision check to him because I know that means that I did well and that he will be positively stimulated by it.

If he were able to decrease costs by 20% (very achievable) and increase sales by 20% (easily acheivable); his already hefty commision would increase by 35% (or another $7000/yr). That means that with a moderate effort he would be making $57,000+.

However, having said that I must confess that I am no longer interested in paying mediocre people high salaries anymore. If anyone in the future wants to work for me they'll be offered low base and really high incentive. If they succeed they will earn better than 95% of their peers; if they can't keep costs down and sales up they will have to leave because the salary won't sustain them...

Another point of interest (sorry to be long winded). SOme people came for job interviews and I was surprised that not one of them wanted to examine lab bills and frame costs. After all, if they are being compensated on NET income wouldn't they be interested in what kind of costs they're paying? If any one of them bothered to look at the lab invoices they would have spotted that we were paying far more than necessary. Likewise, not one of them asked me for a breakdown in how well our sales have been (we keep good records). Had they examined these, they would have seen that second sales and high end options were much too low for a practice of this size. All of them were fixated on the base salary and wanted to proceed on the assumption that their commission would be zero!

[cinders831]

Are your guys reading my posts? The last two thoroughly mediocre opticians were making $50,000+ at my place!!. Isn't that enough for you? That doesn't include a complete benefits package.

Incidentally, regarding all the concerns about commission based on net income...I don't get it. Where's the confusion? Every sale, every vision plan EOB is entered into a computer and a sales statement is generated at month's end. The optician has a visa card to pay every vendor and every lab. At the end of the month his visa statement tells us the cost of goods sold. Take the total revenues, subtract cost of goods and the remainder is the NET income. He gets 10% of that. There isn't even a question of "getting ripped off". This is elemental business 101x.

Why do I like NET instead of GROSS income to figure commission? Using net income penalizes the optician for high expenditures as much as it rewards him for good sales. An optician who buys costly frame lines that languish on the boards, uses expensive labs, doesn't understand the value of uncut stock lenses will increase his costs and decrease his net income. If you compensated purely on gross income then he could be as inefficient in cost containment as he wanted and it wouldn't dent his commission. I want someone who can sell well and contain costs. Incidentally, getting 10% of NET is much, much better than 2% of gross in almost every situation (unless your overhead is over 80%!!!).

I guess I could be shot by other opticians for saying this, but idoctor I think it would be a pleasure working for you and I appreciate your quest for excellence as well as your desire to appropriatly compensate worthy employees. You have had some bad luck but I encourage you to hang in there. You will find the right person and they will be thankful to be part of your staff. Anyhow sorry for all of the flak your getting, dont settle for less then the best.

[AWTECH]

I think Judy is correct in being a little confused. You have assumed that you have improved you business so that a ton of money is now going to fall to the bottom line and what you need to make this money is a great optician, which you state you are willing to pay for.

A person working for someone else who is promised a percentage of profits as a bonus is always concerned that the books will be cooked in some way or another to knock down their bonus. If you are sure that your new procedures will print money if you have the right person, then I would suggest you put a bonus plan into place that take into account the variables the optican can control. This would include average inventory capital tied up, returns not accepted by your lab or frame suppliers. Can this optican control how many new customers come through the front door other than by good referrals? If they cannot then the volume of business is to a great degree in your control and a system of compensation should be designed that addresses only the areas that the optician has control over.

Remember no one can make out a deposit slip for their bank account and put down a percentage and get credit to their account. What most of us work for is $, I always suggest an easy way for a bonus to be calculated (not complicated), that relates well to the persons performance or simply have minimum sales goals before bonuses are paid and make the bonus easy to calculate.

Example:
If the opticians department needs to sell $15,000 per month for this department to breakeven then make the bonus plan start after $17,000 and do not make the base salary so low that they have to make a bonus to survive. If you make the base too low you are more likely to not have a motivated good employee. Make the base a realistic number, and if you do not hire the right person you just need to replace them. Now, you as the owner, have the responsibility to make sure you hire an individual who wants to increase your sales to $20,000 per month and receive a bonus for doing so. As an example you could make the bonus 20% of the amount over $17,000 or in this case $600 (20% of the $3,000 difference), this way if the base salary is $2,500 per month and your business is 25% better than you need this individual makes a great bonus and you as the owner and provider of the capital have motivated the employee. If you keep your overhead in line and have a gross profit margin of 50% on the additonal sales, you make an additional $900. The reason I said $17,000 vs your minimum requirement of $15,000 is to allow for variables that you have not accounted for. If you bring this number down to $13,000 as a breakeven point then you make more money. It is easy to get into the trap of trying to make more out of a part of your business than can be made, but it is not the employees responsiblity to produce your total bottom line.

[Judy Canty]

So, you're going to reduce the base salary of $15 per hour, based on a 2080 hour year that's less than $31,200 per year or $2600 per month and anticipating $2150 per month in commissions? Your initial threshold of $5950 per month is a significant one. If your practice follows the norm, a major portion of your business is from insurance plans which have notoriously low profit percentages yet still require the same amount of dispensary time as self-pay business. How does that figure into your equation?

I appreciate your decision to hire only well-qualified, competent Opticians, but your "buy low" sentiments will not attract them. In this day and time, base salaries are important, commissions are not because they are not guaranteed income. Believe it or not, Opticians have the same financial obligations and commitments that you do, mortgages, car payments, education costs, etc. My suggestions still stand, find a well-educated, well-recommended Optician and pay him/her what they're worth. Commissions should be a reward for doing well rather than an integral part of the salary package.

[idoctor]

Awtech brings up a good point about human nature. People are suspicious about being offered incentives based on variables that they don't immediately have a grasp of. They may suspect that they will be ripped off or that the promised flow of money won't materialize. Personally, I would open my books entirely to any serious candidate. I would take them to my quickbooks program that runs the optical shop and show them what our gross and net income has been over 5 years. I would show them a break down on our private vs. vision plan patients. I would show them reports on the cost of goods sold, average sale per patient, percentage of double sales, percentage of premium frames and options, lab fees etc. Anyone who really lives and breathes these numbers would know exactly what they're looking at. However, as Judy has mentioned they all have families to feed and would not want to take a risk. It's a shame because the right candidate could make a fortune here.

I have another colleague with a large optical shop in which he employs 3-4 opticians. He rewards each one based on daily sales. They get $3 for every AR sold, $10 for a premium frame, $5 for progressive, polaroids, $5 for second pairs etc. Their bonus is tabulated daily and this way they get an immediate sense of their accomplishments. Naturally, these opticians are not involved in lab orders, frame line decisions etc. They are rewarded purely on sales and nothing else. My colleague makes the direct decisions on those other facets of the optical.. I personally don't have time for that and therefore don't think a system like this would work for me. I ultimately need someone strong in sales but also strong in cost containment.

[optowalt]

Are your guys reading my posts? The last two thoroughly mediocre opticians were making $50,000+ at my place!!. Isn't that enough for you? That doesn't include a complete benefits package.

Incidentally, regarding all the concerns about commission based on net income...I don't get it. Where's the confusion? Every sale, every vision plan EOB is entered into a computer and a sales statement is generated at month's end. The optician has a visa card to pay every vendor and every lab. At the end of the month his visa statement tells us the cost of goods sold. Take the total revenues, subtract cost of goods and the remainder is the NET income. He gets 10% of that. There isn't even a question of "getting ripped off". This is elemental business 101x.

Why do I like NET instead of GROSS income to figure commission? Using net income penalizes the optician for high expenditures as much as it rewards him for good sales. An optician who buys costly frame lines that languish on the boards, uses expensive labs, doesn't understand the value of uncut stock lenses will increase his costs and decrease his net income. If you compensated purely on gross income then he could be as inefficient in cost containment as he wanted and it wouldn't dent his commission. I want someone who can sell well and contain costs. Incidentally, getting 10% of NET is much, much better than 2% of gross in almost every situation (unless your overhead is over 80%!!!).

50 Grand is a FORTUNE??? Hey Doc, could you or do you live off a FORTUNE like 50 grand? and the net prob includes your car insurance for the family, benz payments (I mean company car payments) ,wife as bookeeper, kids for filing file,new carpets for the home, etc. GIVE ME A BREAK!

[Alvaro Cordova]

A couple of observations on my experience. I have worked with "opticians" (with and without any certification) who although they claim 10 years in the business have less than no interest in their field. For example, I know that I can publically look for an optician on this website and they will never know it (none of them have ever had any interest in visiting this site even though I recommended it to them multiple times). Why wouldn't an optician want to browse through the most informative forum in their specialty--'cause they don't care.

This stuff ain't that hard. However, it does involve having to sit down and grasp a few concepts...and those concepts do keep changing. How can someone sell progressives all day long and not even care to go online and visit some of the very informative websites of the progressive manufacturers? Why do I, as an O.D, have to explain to my optician every new development in the market? As in all fields things do change and sometimes that involves more than just reading through 20/20 mag and vision monday. Ever wonder what makes Crizal ALize different? Ever ask yourself what are the new materials available? How is SHamir Genesis different from Comfort? Why would I sell Access computer vs. something else? OR should I just keep doing the same thing I 've done for the last 10 years without wasting any of my time with the new fangled stuff?

Hell, I even find it unbelievable that opticians who are a $150 flight (4 hours drive)away from Las Vegas don't bother to make it to Vision Expo West. The single most important meeting in their field? At the last meeting I offered my optician free flight, MOTEL and free course fees. She wouldn't take it because she wanted to stay at an expensive casino hotel and I wanted to pay for a modest motel. So she didn't go. PUHLEEZE!!!!!

P.S: I was paying over $50K

Can I work for you? :) I'm just kidding, but I find a lot of times doctors such as yourself are few and far between, at least according to my experience. You seem good natured in that you believe in the furthering of one's knowledge in the field. I have met doctor's too that "don't care." When you find a good optician make sure you value them. As a side note, for me personally money isn't everything. I'm a geek by nature (I don't think I look like one, though). Sometimes compensation comes to me in the form of freedom. For example I have a habit of walking in about 15 minutes late some days. My bosses at first were upset with the behavior but now understand that that's the way I am to a certain degree (I work nights). When I come in to work I work like a mad man. I cut easy 30 jobs all the while I will sell and dispense in between cuts. I solve their computer problems too, saving them personally a couple of hundred dollars an incident. Their acceptance of me is valuable and is simply something that I consider compensation in my own weird way. My bosses are extremely happy with me despite my occasional quirks.

;)

(I go to bed around 3 or 4 am sometimes so when I get up to go to work at around 1:00pm I can be late sometimes.)

[idoctor]

50 Grand is a FORTUNE??? Hey Doc, could you or do you live off a FORTUNE like 50 grand? and the net prob includes your car insurance for the family, benz payments (I mean company car payments) ,wife as bookeeper, kids for filing file,new carpets for the home, etc. GIVE ME A BREAK!

It was about $54,000 and it was for 4 days work/week. My recent salary comparison report from Vision West indicates that it's in the top 5th percentile in California.

[JERRY HUANG]

:finger:

[Snitgirl]

I second that Doctor...

If I know of any Opticians that will meet your needs, I will have them PM you via Optiboard.

I guess I could be shot by other opticians for saying this, but idoctor I think it would be a pleasure working for you and I appreciate your quest for excellence as well as your desire to appropriatly compensate worthy employees. You have had some bad luck but I encourage you to hang in there. You will find the right person and they will be thankful to be part of your staff. Anyhow sorry for all of the flak your getting, dont settle for less then the best.

[idoctor]

Thanks Snitgirl and dude. I must admit that "dude" sounds impressive! Cuts 30 jobs while dispensing around them? Fixes computer problems? I would kill for someone like that. Incidentally, thedude, your points are very well stated and demonstrate that when employers and employees understand and accept each others little quirks, the results can be quite magical. Obviously they appreciate your talents and are more than happy to put up with your sauntering in 15 minutes late each day. Do that at my place, however, and you'll get a bare bottom spanking from my office manager! :) Just kidding, you can come a half hour late if you fix my computers.

[Alvaro Cordova]

Although I can get a lot done, some days are better than others too. Generally I fix computers on the side and when the office has issues. Sometimes it's just easier to fix it than waiting for a tech to call. I have a BS in Computer Science too which I guess helps which is where I get my computer chops. :) It really is all about what clicks together. One optician can be poor in a certain setting and great in another depending on a lot of variables (office staff relationships, patient-optician relationships, location of store, compensation, how fulfilling the work is, tools available at the store*)

*For the longest time I tried to get the store to buy a nylon eyewire shaping plier. I find it to be one of the most useful pliers. Anyway we just got one a year ago, 3years after I requested it. I feel my adjusments are a lot cleaner in terms of temple bowing when trying to fit bowling balls with ears. :D

[Chris Ryser]

If you hire the spouse, you are insane. Experience talking.

drk, I am sure that you and me are not the only ones on this forum having a lot of expirience....................................

[Judy Canty]

And wouldn't you know it...theDude has an associate degree in Opticianry! Seems there should be a lesson in there somewhere.

[hcjilson]

Thanks Snitgirl and dude. I must admit that "dude" sounds impressive! Cuts 30 jobs while dispensing around them? Fixes computer problems? I would kill for someone like that. Incidentally, thedude, your points are very well stated and demonstrate that when employers and employees understand and accept each others little quirks, the results can be quite magical. Obviously they appreciate your talents and are more than happy to put up with your sauntering in 15 minutes late each day. Do that at my place, however, and you'll get a bare bottom spanking from my office manager! :) Just kidding, you can come a half hour late if you fix my computers.

Actually Optiboard is fortunate to have another optician that can do all or the above, with one important addition. He surfaces the 30 jobs! and is as dependable as the day is long.I have witnessed this with my own eyes and marveled at how he was able to do it. I should add that he is a fellow moderator, however during the time he was working, he really didn't have too much time to spend on Optiboard until he got home. While he was doing all the above he was building his own computers and helping Optiboarders with their computer problems. He and Steve started the Geek for Guys and Gals forum and you can visit him there anytime. I am speaking of my friend Sean who is probably the most talented optician I have seen in a career that began in August 1959.

[shellrob]

I agree idoc, you sound a bit too good to be true and that's hard to come by. I too like dude edge glasses while dispensing, adjusting, fitting glasses and contacts, answering the phones, ordering, billing, etc, etc, etc. It's tough as I'm the only fill time licensed optician here. I love it all the while always hoping for a little more money to compensate the work I do.

[Texas Ranger]

Sorry Judy, but COG is just that, has nothing to do with anything except the physical components of the eyewear; these costs are subtracted from the gross sales to give you your gross profit; then your operating overhead is subtracted from your gross profit to give you the "net" profit. rent, advertising, salaries, utilities, insurance, etc. are operating overhead. I do not know why a practice that does not do in-house finish lab work would buy finished uncut lenses? for the last 30 years, I had my own shop; i've moved on.

[Alvaro Cordova]

And wouldn't you know it...theDude has an associate degree in Opticianry! Seems there should be a lesson in there somewhere.

Avoid I.T. (Information Technology) at all costs? :) Seriously the IT field is going through some really bad bumps. I have always done something in optical which is why I have pursues a degree in Ophthalmic and decided to be an optician. Ultimately I would still like to develop software.

[Alvaro Cordova]

Actually Optiboard is fortunate to have another optician that can do all or the above, with one important addition. He surfaces the 30 jobs! and is as dependable as the day is long.I have witnessed this with my own eyes and marveled at how he was able to do it. I should add that he is a fellow moderator, however during the time he was working, he really didn't have too much time to spend on Optiboard until he got home. While he was doing all the above he was building his own computers and helping Optiboarders with their computer problems. He and Steve started the Geek for Guys and Gals forum and you can visit him there anytime. I am speaking of my friend Sean who is probably the most talented optician I have seen in a career that began in August 1959.

To idoctor: there are a significant amount of great opticians. I haven't been on the board that long and from the looks of it I would say Darryl Meister is on that list too along with Sean mentioned above. The one constant among all of them is the desire to be the better. Although some opticians lose that spark that makes the stay interested in the field, I believe that it can be reawakened. I guess its that I have a story that I would like to share and I'm pretty sure many of you will have something similar. A little girl walks into the store with her parents to get eyeglasses. (the parents are idiots by the way) She has some strabismus. If the strabismus is caused by overaccomodation usually a bifocal would be used with the full add. It is truly amazing to see the glasses instantly correct the esotropia. The girl is a little older and now seems to have a significantly reduced tropia without the glasses. I guess I think of that when I dispense because an optician does matter in a very real way. The correlation between poverty and poor vision stresses this point. People with poor eyesight will have a harder time in school etc... and not be able to land a better job than they are capable for and if they develop amblyopia in an eye because they didn't get glasses, well they can't be a pilot as well as other careers that require binocular vision.

[Judy Canty]

Sorry Judy, but COG is just that, has nothing to do with anything except the physical components of the eyewear; these costs are subtracted from the gross sales to give you your gross profit; then your operating overhead is subtracted from your gross profit to give you the "net" profit. rent, advertising, salaries, utilities, insurance, etc. are operating overhead. I do not know why a practice that does not do in-house finish lab work would buy finished uncut lenses? for the last 30 years, I had my own shop; i've moved on.

I beg to differ, Al. COGS includes cost of materials and direct expenses including labor needed to produce a product. If you're edging, tinting, casting or whatever to produce a pair of glasses for resale, the cost of manufacturing should be included.

[idoctor]

Sorry Judy, but COG is just that, has nothing to do with anything except the physical components of the eyewear; these costs are subtracted from the gross sales to give you your gross profit; then your operating overhead is subtracted from your gross profit to give you the "net" profit. rent, advertising, salaries, utilities, insurance, etc. are operating overhead. I do not know why a practice that does not do in-house finish lab work would buy finished uncut lenses? for the last 30 years, I had my own shop; i've moved on.

Texas Ranger,
We don't do any inhouse lab work but we buy uncut stock lenses and our lab edges and mounts them for a nominal fee. They do this as a service for us in conjunction with all the rest of the serious work that we send them. It saves us a considerable amount of money and involves very minimal work or effort on our part. Since we send the lab a daily shipment of frames for our jobs, it is quite easy to throw in some uncuts.

[rbaker]

If I recall correctly, GAAP (Generally Accepted Accounting Practices) states that the cost of goods sold which is shown on the income statement is computed in the following manner:

Start the Cost of Goods Sold with Beginning Inventory. Add Purchases. The total of these two is Total Goods Available for Sale. Subtract Inventory. The result is Cost of Goods Sold. Why? The logic of this comes from simple algebra. If a – b = c, then a – c = b. Beginning Inventory (at cost) plus Purchases (the cost of additional inventory) gives us the Total Goods Available for Sale (at cost, of course). If we subtract the Cost of Goods Sold we will get Ending Inventory (at cost).

If you screw around with this on corporate reports or income taxes it is referred to as “cooking the books” and you can get you into serious trouble. If, however you just want to play games with employee commissions or profit sharing it is called “management prerogative.”

However, if an employee is paid a commission or profit sharing, and a non GAAP accounting method is used to compute his wages this would constitute fraud which is a felony It would be quite a mess, superior court, IRS audit, and a lot of bad publicity. That is why this is something that you would want to run by your CPA.

[CME4SPECS]

I beg to differ, Al. COGS includes cost of materials and direct expenses including labor needed to produce a product. If you're edging, tinting, casting or whatever to produce a pair of glasses for resale, the cost of manufacturing should be included.

Sorry, but you must have missed accounting 101. COG is cost of goods only, not expenses related to producing such goods.

[idoctor]

I think you guys are arguing minutiae. It doesn't really matter what you call it or what you use to compute it. When I calculate a commission I first consider what is the revenue portion (this is the easy part). The revenue includes all the monies paid by either cash or insurance payments for the purchase of frames and lenses. The only slight complication in this is that when we get our VSP invoices we need to seperate payments for the "exam" from payments for frames and materials. The optician's commission revenue does not include what I get paid for my exams. Our computer does this quite easily.

On the expense side it is a bit more complicated. I consider anything that it takes to run the optical shop, an expense. Obviously this includes all lab bills and frame purchases. It also includes the optician's last paycheck. There is also a recurring, non-changing figure each month that appears as an expense and actually represents rent, benefits, phone etc. This figure was derived years ago by taking the relevant expenses from the practice as a whole and apportioning the optical shop share of it.

I make a point of having the optician purchase everything he needs on an office visa card. Every one of my vendors is on an automated credit card withdrawal system so that this is on autopilot. My optician knows every month how much he has spent by simply reviewing his visa bill. He is entirely responsible for checking all the invoices.

With my system there's no real way for the optician to get screwed. Each month he checks the computer system to figure out the revenues. He then subtracts from that his expenses (visa card bill, last month salary and the monthly expense charge previously discussed). What's left over is the net income and he gets a percentage of that. Very simple principle and we don't need any accounting courses, definitions, litigation etc.