Profit sharing in your vet practice

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profit sharing in your vet practice
Photo: zorandim – 123RF

Adopting a new business model which gives all employees a financial stake in the practice has had a far-reaching impact on the way the Animal Emergency Australia clinics operate. By John Burfitt

A few years back, Animal Emergency Australia co-CEO Jodi Mackinnon was on a study tour in the United States when she visited a photocopy and ink cartridge company in Detroit. When she saw how that company operated, specifically with a high-level of employee engagement across the board, her outlook on how a business should be run changed.

“The strong culture and ownership of that business from every level of the team was extraordinary, to the degree I said to one of the senior staff, ‘Where are your real employees? All these people must be paid actors!’” Mackinnon recalls with a laugh.

“There was just so much engagement and love for what they were doing. It made such an impression and made me wonder what we could be doing with our business to operate the same way.”

The model at work within the Detroit company was developed 35 years ago by US business owner Jack Stack, and is described in his book The Great Game of Business. The GGOB model, which has also been adopted by companies as diverse as Intel and Harley Davidson, works on the premise of open-book management. 

This prioritises financial transparency, with all employees being given access to the company’s books. As shareholders, employees also have a stake in the company’s profitability, motivating them to become directly involved in making key decisions.

Stack’s guiding philosophy in The Great Game of Business is, ‘When employees think, act and feel like owners, everybody wins.’

A year ago, Animal Emergency Australia (AEA) adopted the GGOB model and in September, rolled it out in eight of its clinics across Queensland. It’s the first veterinary business in Australia to adopt the model.

“By directly involving members who do the work every day, the Great Game of Business empowers every team member,” Mackinnon, a former veterinary nurse, says. 

“We’re now making business decisions by leading from the frontline, because it’s our motivation to create change within the veterinary profession. Encouraging our team members to make better, more informed and guided decisions, will bring about that change.”

A consultant coach was brought in to help set up the new way of working, training the AEA team to understand the practicalities of the system.

The model involves weekly team meetings, during which forecasts for the month are set and explored. The profit and loss table is also discussed, and team members are invited to offer suggestions of what they could do within their roles to help achieve projected outcomes.

Team members are assigned a certain number of shares, so when the business makes a profit, each team member is paid a dividend based on their shares. As the business grows, team members’ shares can become more valuable.

There are many times when you have to be prepared to let go because the team will take this to places that we had never anticipated or that might not be in the original plan, but is far better for the business.

Dr Rob Webster, co-CEO, Animal Emergency Australia

“We faced the big question of how do you explain profit, as often employees have no idea of what kind of profit is being made or where the main focus of the budget is allocated,” Mackinnon says. “So in sharing that information and all the facts, along with teaching basic financial literacy, the team can see exactly where everything goes, and this is what is needed for the shareholders to be involved in the future development. It is about shared equity across the board—from the kennel hands through to the specialist veterinarians.”

Dividends are paid quarterly and can amount to $3000 per employee per annum, in addition to their salary.

Dr Rob Webster, co-CEO of AEA, reveals working with this model has had a profound impact on the way their hospitals operate, particularly in terms of team engagement.

“When people own their jobs and their own mission for work, it helps the business develop in incredible ways,” he says. “We feel the people creating the value in the business should own it, so that’s what we did by making them shareholders.

“In this way, the business is being run from the floor, rather than having someone out in the backroom calling all the shots. Everyone has a stake in the outcome of what we all do every day. It has also allowed people to get on and do their jobs, but also see the value of how what they do fits in with the rest of the business.”

Dr Webster adds this has led to a more proactive approach to developing new ideas, as well as the need for some of the senior team members to occasionally take a step back.

“There are many times when you have to be prepared to let go because the team will take this to places that we had never anticipated or that might not be in the original plan, but is far better for the business,” he says. 

“If we insist on just pushing them in a certain way, the system won’t work. But you do need a level of discipline to implement this and ensure everyone is working with the same goal.”

In recent months, with the economic downturn leading to a reduction of the number of clients attending AEA clinics for the first time in three years, the GGOB model has been put to the test.

“That has put some pressure on the budgets but what has been most interesting is seeing the teamwork as the whole group reacted to the changes,” Dr Webster says.

“They are now looking at how we need to react to these numbers in ways they would not have done a few years ago, looking into what they need to be doing within their own roles to keep the business strong. 

“This massive call to action has facilitated an understanding of the reality of what is happening—and that’s such an improvement for all of us.”

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