Staff costs: the ratio that quietly decides your profit

Staff costs are most practices' largest controllable expense, and recent years have pushed them structurally higher: minimum wage rises feeding through pay scales, and employer National Insurance now at 15% with a much lower starting threshold — a change that added real money to every payroll, partly offset for smaller practices by the £10,500 employment allowance.

How the ratio drifts

No single decision does it. An extra part-time receptionist during a busy patch, a retention pay rise, overtime that becomes routine, a role never re-scoped after someone left — each defensible, each small, and three years later staff costs have climbed several points as a share of fee income while profit fell by the same amount. The drift is invisible month to month; it's obvious on a quarterly ratio chart.

What well-run practices do

• Track it quarterly against your own trend and dental benchmarks — see the numbers that matter.
• Price roles fully — salary plus 15% employer NIC plus pension plus cover; the true cost of a hire is the number that belongs in the decision.
• Match hours to demand — chair utilisation by day should drive rotas; quiet Tuesdays with full staffing is the ratio drifting in real time.
• Re-scope on every departure — a leaver is a free opportunity to redesign the role before autopilot refills it.
• Grow the denominator — sometimes the ratio is right to fix from the income side: fee reviews, plan growth, better diary utilisation.

Payroll is also where compliance risk hides — hygienist and associate arrangements included: see employment status done right.