Practice Smarter columnist Mark Opperman is the president and founder of Veterinary Management Consultation Inc., director of veterinary practice management at Mission Veterinary Partners, and founder of the Veterinary Hospital Managers Association. His column won first place in the Florida Magazine Association’s 2020 Charlie Awards.Read Articles Written by Mark Opperman
Has hiring employees gotten harder lately? Not just finding veterinarians, but also veterinary nurses and other team members. Naturally, low unemployment is one reason for the problem. Another is the fact that we have underpaid veterinary employees for quite some time.
I don’t think any practice purposefully underpays team members. Instead, we do it because we undercharge for services, we give things away and we discount. Because of this, there isn’t enough income generated to pay our team members what they deserve.
Veterinary salaries have gone up in the past few years; supply and demand has made it happen. But unless veterinary practices alter their charging and discounting policies, the result will be decreased profitability.
I have long said and, in fact, proven that we undercharge for services. We discount our services when we do not need to, and we give away services. A recent study indicated that the average full-time veterinarian gives away over $98,450 a year in uncharged services.
The labor market might change what I and many others have not been able to, but in the meantime, we need to retain our employees and hopefully do a better job of compensating them and providing them with reasonable benefits.
Offer a Little More
Have you thought how you might be able to improve your employees’ compensation or benefits? Starbucks is offering to pay off employees’ college education. I don’t think we can afford to do that, but we can do some things to help make a practice more of a practice of choice than the one down the street.
On the benefits side, the one most sought after by employees is health insurance. You can offer health insurance and pay all or a percentage of the premium. While it’s true that insurance costs are up, you might be able to find something reasonable.
The second most-sought-after benefit is time off. Most practices offer paid time off (PTO). If you wish to offer it, then why not give more PTO than the norm? The incremental cost of adding a day, or even two or three, to employees’ PTO would be worth it if the policy helps attract a better applicant pool or retain employees.
Some practices offer employees their birthday off as an additional paid holiday. Again, the benefit is not expensive, but it lets employees know you care about them as individuals. And perhaps no other practice is your area does it.
By far the most important and effective thing our consulting practices do to help recruit and retain employees is incorporate an incentive program. The Veterinary Management Consultation Inc. incentive program has been around for quite a few years but remains one of the key tools to developing “10” employees and improving both practice profitability and employee retention.
The VMC Incentive Program
Our incentive program consists of a financial component and a performance component. On the financial side, we suggest you take 10% of the increase of gross from one quarter, compared to the same quarter of the previous year, and set it aside in an employee fund. For mature practices, 10% of the increase would be used, but in a fledgling practice, the percentage might be lower.
For the performance component, each employee needs to be evaluated quarterly. To accomplish this, we have developed evaluation forms for every position in a practice — receptionist, veterinary nurse, veterinary assistant, office manager, practice manager, kennel attendant.
Employees first fill out a self-evaluation. The forms have 10 criteria, and employees rate themselves on a scale of 0 to 10. A direct supervisor then fills out the same evaluation, rating the employee. The supervisor also obtains input from the doctors and practice owner, incorporating it into the evaluation.
The direct supervisor then sits down with the employee and reviews the evaluation. The meeting is an open discussion, and the manager needs to communicate why the employee deserved a certain rating. If the employee can justify a different rating, the manager should be open to a reevaluation. This aspect of the program is important. Once the process is completed, the evaluation is scored and the employee earns anywhere from 0 to 100 points.
The next part is a little tricky but important. The employee’s score needs to be adjusted based on the hours worked during the quarter. If the employee is part time and worked an average of 20 hours a week, the score needs to be cut in half because the person worked only 50% of a full-time employee’s hours.
Adjusted scores are then divided by the total of all the scores to obtain a percentage. The percentage determines how much of the incentive fund each employee receives. So, for example, if the fund held $1,000 and one employee scored a 60 and the other scored a 40 after an hours adjustment, then one would receive $600 and the other $400.
Before you get too tied up in the math, consider this: This incentive program does not discriminate. The veterinary nurse can get just as much out of the incentive fund as can the practice manager or kennel assistant. The program says, in effect, that if you do a good job as evidenced by the performance evaluation, you can get just as much money from the fund as anyone else.
I don’t know about you, but that is the way I think it should be. No one is better than anyone else in my company, and we all need to work together if we are going to succeed.
Additional Ground Rules
We have successfully incorporated this program into many practices, but I have found a couple of caveats:
- An employee must work during the entire three-month period. Employees who come in or leave during the period do not participate.
- Employees must receive a 70 or greater on the evaluation form before any adjustment for hours. Why would you want to reward someone who scored lower?
We also have found that you need to be true to the program I outlined. Some practices have tried to do the evaluations every six months or three times a year instead of quarterly. It just does not work.
You also need to tell the team how well the practice is performing. Posting a graph showing the income from last year and this year keeps everyone engaged in the employee incentive program.
If we are to retain our employees, we need to show them that we are willing to make them part of the team and your practice’s success. Keeping team members informed, providing feedback on how well they are doing, and including them in profit-sharing can go a long way in helping to retain excellent team members.
We need to improve employee compensation and benefits. Hopefully the VMC incentive program will help you accomplish this.