Today's Veterinary Business

FEB 2018

Today’s Veterinary Business provides information and resources designed to help veterinarians and office management improve the financial performance of their practices, allowing them to increase the level of patient care and client service.

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Page 53 of 67

52 Today's Veterinary Business Leadership A core value of the hospital I manage is to foster an environment that balances the needs of employ- ees with the needs of clients, pa- tients and the business. We want to share the practice's success with our employees, not profit despite them. We also understand that being too generous with hourly wages and scheduling can have devastating consequences during lean times. With that in mind, we guar- antee that a specific percentage of hospital revenue will be spent on human resources expenses, including owner and employee wages, taxes, health insurance and benefits like pet care, IRAs, con- tinuing education, uniforms and meals. We intentionally control our wage expense so we can provide fair and competitive hourly pay but at the threshold of a slightly below-average year. When our H.R. expenses are under budget, which should happen during any average or better year, we bonus out the remainder twice a year. Reward Loyalty This money is a tool I can use to incentivize the type of behavior I hope our employees will exhibit. To reward loyalty to the hospital, our bonus system is weighted based on years of employment and hours worked during the period. This allows us to give our long-term, full-time employees a higher ceiling for annual pay without us having to commit to perpetual raises that may make a team member too expen- sive to employ should we have a slow revenue period. We also give all employees the chance to work for a larger share of the bonus, regardless of longevity or job title. "Bonus bonus" opportu- nities include credit for: • Attending a continuing ed- ucation seminar and, during a team meeting, recapping what was learned. When bonus pay becomes an end-of-year entitlement instead of a reward for a job well done and motivator for continued improvement, it's no longer a bonus; it's a gift. This year, consider an alternative program that is lucrative for hard-working employees and protects practice profitability. Leadership TAKE CHARGE By Abby Suiter, MBA, CVPM Are you looking for a bonus pay system that is fair and sustainable? Start by incentivizing performance and encouraging cost savings. • Responding to our monthly team meeting notes. • Writing a blog for our website. • Learning a useful skill outside of the job description. • Completing deep-cleaning tasks during down time. I have built in a negative con- sequence for going over budget on our cost of goods sold. I feel this is an expense the team has significant control over and, for us, one that is regularly too high. The goal is to keep our inventory on budget by invoicing correctly, minimizing shrinkage and promoting services. When we fail to accomplish this as a team, the over- age comes out of the bonus pool and our profit margin stays on budget. While our employees appreciate a bonus, it is easily forgotten when hourly wage discussions come up. To combat this, I regularly discuss why our hospital relies on bonuses instead of raises to put employees above the national average for pay in their positions. I also like to put their last bonus in terms of pay per hour, often at least a dollar or two, which helps build perspective. What is important to me during inevitable down economic times like a recession, new competition or further fragmentation of demand is that we confidently continue to employ our team at regular hours and pay while we wait for normalcy to return. When times are good, we all prosper. When times are hard, we can weather the storm together. Do a Little Investigating A complication to this bonus sys- tem when compared to a simple percentage-of-growth model is the difficulty in projecting the dollar amount in a tangible way that employees can understand at a glance. I cannot say, "If we make X dollars this month, your bonus will be Y." Instead, I first have to fac- tor in expenses like commissions, wages and vendor bills. Factoring in these expenses is why I like the bonus system so much. If revenue is up 10 percent, it is important to understand why. If the growth required 10 percent more manpower or a spike in low-margin A better way to budget bonuses

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