If you pay peanuts, you get monkeys

WHEN IT COMES TO STAFF MANAGEMENT, THERE'S no room for monkey business. And, as the saying goes, you get what you pay for. So it should be no surprise that paying peanuts yields less-qualified, more-likely-to-be-unhappy employees—and higher turnover.

You know that hiring top-notch associates and staff members to keep your practice running smoothly is an important step in maintaining high-quality patient care. And I'm sure you know the pay and benefits you offer matter. They're an important part of attracting and keeping the best employees.

Of course, compensation doesn't stop with pay. Benefits and other factors such as the work environment also influence employees' satisfaction with your practice. And you need to consider the economics of your practice. Achieving a workable balance can be tough.

"Keeping employees motivated and well-compensated so they stay with us is one of our biggest challenges," says Dr. Michael Turley from Hamilton Road Animal Hospital in Columbus, Ohio, a participant in Benchmarks 2006: A Study of Well-Managed Practices.

So it's not easy. But facing the challenge is well worth your effort and expense. What you pay affects the level of medical care and service your practice provides. You want a compensation strategy that attracts the best possible team members and encourages the highest quality of medicine—without busting your budget.

Figure 1. Summing up staff benefits

You've heard this before, but it couldn't be more true: Building a strong team costs less in the long run than employee turnover. Think of the time and resources you invest when you recruit and train each new staff member. In comparison, the increased pay to keep good staff members around is a bargain.

And competitive pay and benefits help you attract the best and brightest employees—a challenge many owners face. "Finding willing, reliable, and competent staff members who will choose to stay with veterinary medicine as a career can be tricky," says Chanda Holschbach, CVT, another Benchmarks 2006 study participant and hospital administrator of Packerland Veterinary Center in Green Bay, Wis. "The generation entering the work force today is driven by different aspirations."

Today, the best employees want to grow their skills and enjoy opportunities to advance. And if you get high achievers who make strong contributions, you can afford to pay more.

Figure 2. Getting guidance on staff pay

Compared with 2002 findings, the new study shows that veterinary assistants with less than three years of experience are earning 14 percent to 18 percent higher wages. Those with more than six years of experience enjoyed even higher increases—18 percent to 27 percent. We attribute this change to the expanding role of veterinary assistants in practice and these practices' recognition of the necessity to offer fair market wages to attract and keep the best and brightest employees. (See Figure 2 below for Benchmarks 2006 results showing staff member pay.)

Will work for fair pay

You need competitive salaries to meet potential employees' expectations, and your long-term employees expect to be paid fairly for their experience, contributions, and loyalty to your practice, too. Compensate doctors for their education, knowledge, experience, and time (Visit vetecon.com for "Associate Pay: Adjusting for Experience"). Pay nondoctor staff members based on their level of education, experience, skills, and personal attributes. Here are some other tips as you consider your staff pay:

• Use full-time staff members instead of part-time if you can; you'll have more efficient and productive employees, more consistent patient care, and fewer people to train.

• Do some homework to make sure your pay is competitive. Tap existing references such as Benchmarks 2006: A Study of Well-Managed Practices; salary Web sites, such as salary.com; and AAHA's Compensation and Benefits. Also check out classified ads and the wage scales of area businesses. Pay attention to applicants' previous salaries and the wage they're requesting.

• Consider your current employees' salaries before deciding how much to offer new employees. If you're paying current employees less than the going rate, you'll need to adjust their salaries as well—or risk losing proven, trained team members.

• If you don't already, start tying wage increases to objective measurements of technical, personal, and management skills.

Other benefits

Although salary and payroll taxes represent the largest part of employee compensation—on average 24 percent of total revenue—you can't ignore other benefits. Employees place a high value on benefits such as retirement plans and health insurance. Vacation days, sick days, and reduced-cost pet care also make your practice attractive to top potential employees. (For a look at what benefits Well-Managed Practices offer, see Figure 1 and Figure 3.)

Figure 3. Deciding on days off

Again, research to make sure your benefits are competitive. You'll find the Benchmarks Study and AAHA's Compensation and Benefits helpful. Consider applicants' previous benefits, too.

Because the rising cost of health care is a concern for any small business owner, review your insurance policies each year to ensure you're getting the best value you can for your investment. To help manage the cost, consider having employees pay part of their healthcare coverage, and offer more benefits the longer an employee stays with the practice.

If an employee is covered by a spouse's plan, you may need to offer other benefits to make sure that person stays with your practice. Here are some ideas you could use to customize your employee benefits package:

• Additional vacation days. As long-term employees reach the top of your wage scale, they might appreciate additional time off. On average, Well-Managed Practices provide seven vacation days for employees with up to two years of tenure with the practice. They add two to four days (nine to 11 days total) for three to five years of employment, and increase that to 13.5 days after five years. Consider adding 1 to 1.5 days of vacation for each additional year of employment.

• Special holiday. Declare each employee's birthday a special holiday just for them, and give them the day off.

• Additional pet care benefits. Employees with multiple pets might appreciate a higher dollar allowance for health care for their pets. Seventeen percent of Well-Managed Practices provide a pet-care allotment of $400 to $500 per year (the remaining provide discounted care, with no limits on the annual amount). Increasing this amount in lieu of certain other benefits might be an attractive option for some staff members.

• Education assistance plan. This benefit is particularly attractive for employees who want to further their education but may not have the financial resources to fund it alone. Up to $5,250 for tuition, fees, books, and supplies may be excluded from gross income under an employer's educational assistance program. An employer who maintains an educational assistance plan must maintain records and file an information return for the plan. (See Internal Revenue Code, Section 127, for more.)

• Dependent care assistance services. Problems with childcare can be a significant drain on workers' productivity and in some cases can even result in the permanent loss of valued employees. Small businesses are particularly vulnerable, because they often don't have the financial resources to install an on-site childcare center. Employees with children sometimes spend large amounts of company time on child care, calling about possible providers, checking on the well-being of sick children, missing work to care for a sick child, and so on. And they may be prone to tardiness and miss several days of work a year because of childcare situations.

Up to $5,000 ($2,500 for married individuals filing separately) of child or dependent care assistance services that an employer pays and/or furnishes can generally be excluded from the employee's gross income. You must have a written plan, and it may not discriminate in favor of highly compensated employees. Any payment exceeding the limit is included in gross income. (This issue is covered by Internal Revenue Code, Section 129.)

In the trenches: Are you running a zoo? Environment counts, too

• Disability leave. This benefit would be attractive for employees who would be negatively impacted if their income were compromised for a short-term disability. You could provide paid disability leave to eligible employees for one-half of the required time off, subject to a minimum number of days (for example, 10 days) and a maximum number of days (for example, 20 days) in any 365-day period.

Beyond pay and benefits

Once you've got competitive compensation plans in place, your employees will choose to stay or go based on such issues as how valued they feel, what the working environment is like, and whether they feel they're improving their skills. Those kinds of "soft" issues may be the critical difference in attracting and keeping truly top-tier team members. Benchmark Study participants recognize this reality, citing a positive working environment as a plus for staff retention.

For example, Dr. Peter Fisher of Pet Care Veterinary Hospital in Virginia Beach, Va., says, "We practice high-quality medicine in an environment and facility that our employees are proud of. We're flexible and routinely show appreciation. Our staff has a sense of humor and an upbeat attitude every day—which makes our practice enjoyable for everyone."

In the same vein, Dr. John Daugherty of Poland Veterinary Centre in Poland, Ohio, says, "We strive for a family-oriented atmosphere where everyone is treated with respect. I'm available for each employee—which shows that I care about them as people."

Employees today are looking for more than just great pay—they want good benefits and a positive environment. When you think about what your practice offers, consider the total package. Attracting and keeping great employees requires a balance of all three.

Denise L. Tumblin

Denise L. Tumblin is president and owner of Wutchiett Tumblin and Associates in Columbus, Ohio. She led a team of management analysts to develop Benchmarks 2006: A Study of Well-Managed Practices. Send questions or comments to ve@advanstar.com.