How to compensate associate veterinarians ranks near the top of the list of thorniest practice management issues in veterinary medicine. Do we offer a higher salary with a small bonus, knowing it is the most straightforward and appealing way to compensate the average worker? Or do we offer a more strongly incentivized pay structure to help lure and reward the most motivated employees?
On one hand, a straight salary affords service workers the comfortable certainty of a fixed paycheck they can rely on to balance their budgets. However, it can also be perceived as promoting an excessively relaxed work environment for those predisposed to lower productivity than some employers might prefer. Neither businesses nor high-drive co-workers tend to prefer this kind of compensation structure. It is obviously unfair—by our American entrepreneurial standards, anyway.
If “self-startership” is the ruling metric for successful employment, paying service workers exclusively based on production would seem to be “fairest” for everyone involved. This way, employees earn according to their natural degree of drive, ability, and motivation.
Assuming this paradigm reigns, however, three basic things must happen for a production-only pay structure to prove equitable for all stakeholders. First, employers must offer the capacity for employees to earn a competitive living; second, employees must be ethical enough to neither over-sell services nor muscle out their co-workers along the way, and third, the prevailing economy must remain relatively stable.
Trust issues
Clearly, veterinary medicine must have trust issues. Otherwise, I imagine the “fair” method would be more widely adopted within our capitalistically-inclined culture—one that unrepentantly believes in rewarding the hardest-working, brightest minds. Yet, it is the very rare practice that pays veterinarians this way, despite several decades of economic stability in our industry.
Most practices, however, seem to agree a fixed salary alone is also a poor way to compensate associates. Apparently, no one likes to reward an “average” worker, and this, too, is possibly down to trust. After all, the incentive pay structure effectively asks, why would anyone care to work to their natural capacity in the absence of exogenous financial pressure? Moreover, the most capable are theoretically drawn to the promise of “more,” right?
A brief history
Most veterinarians born after 1990 might be confused at this point. Doesn’t pretty much everyone offer a “pro-sal” pay structure? Not so, young ones.
Here is a brief history lesson:
Until two or three decades ago, when pets began their rapid ascent to family member status (and veterinary medicine entered its early corporate practice-fueled growth phase), most practices were small and there was less need to worry about associates not earning their keep.
Associates paid a fixed amount got bounced if their work product did not justify their salaries. Those paid on production left of their own accord if they did not earn enough to satisfy their needs.
Associates who did not measure up or carve out a niche for themselves had no hope of buying in or taking over. Further, employers who did not offer acceptable working conditions or reasonable financial opportunities could kiss their weekends and exit strategies goodbye.
There were plenty of social incentives for both doing the work and employing ethically when we practiced Herriot-style (with, at most, a partner and one additional up-and-coming associate). Which is why a straight salary or a straight commission for associates made sense. You were naturally keeping an eye on your young grasshoppers. It is also why those who did not mesh well with nearby bosses simply started their own places.
All that was fairly easy back when it did not take a $500,000 bank loan (if you could get one, given all your existing debt) to hang up your shingle at a measly strip mall leasehold in far-flung suburbia. Easier still when small independent practices were not being pushed out by rapidly diminishing margins along with the bigger muscled corporate competitors down the block.
Back to trust
Back then, getting paid was, to a much greater extent, entrepreneurial by nature. Nowadays, it is often hard to find work at a place where your boss is even in the building. Is it any wonder we are starting to pine for the days of in-person mentorship and peer-to-peer collaboration?
Larger practice groups, corporate ownership, and limited veterinary oversight has not only had a bearing on mentorship and collegiality, but it has also affected the trust employers have in their employees—and vice versa, to an equal (or greater) degree.
All of which is to say… it makes sense small animal veterinary medicine has gravitated toward a “hybrid” model when it comes to compensating its employees.
While plenty of small private practices continue to adhere to a salary-only approach (quite successfully, in most cases), practices with more than two veterinarians in attendance almost always offer some form of incentivized pay structure.
This way, practice owners do not have to rely on direct observation and personal influence to incentivize associates, and associates do not have to accept positions where they might be unexpectedly unable to meet their financial needs or shortchanged for the exceptionally hard work or long hours they elect to take on.
Splitting the baby
This effectively explains why most U.S. practices have decided it is best to split the baby and pay the “pro-sal” way, meaning, we abide by a variety of uniform versions of a hybrid method that includes both base salary and bonus compensation, typically for exceeding revenue targets during a given timeframe.
Instead of offering a straight salary or straight production pay, we have elected to offer a compensation structure that serves both as a backstop for abuse and a stand-in for trust. It does not prevent the former or perfectly mirror the latter, of course, but the method works reasonably well for most practices and most practitioners given the current state of our industry.
All in all, this method is not exactly revolutionary for service workers. In the U.S., we have been paying everyone from restaurant servers to investment bankers a version of this method for generations, and it seems to be what most associate veterinarians want. (That, and a signing bonus, too, but I will leave that topic for another column.)
It works, but…
Sure, it seems to work for the current state of things, but that does not mean I have to like it. Nor do I believe it bodes well for the mental health of our veterinarians or, ultimately, for the quality of veterinary care we provide. The way I see it, the so-called “pro-sal” method is a poor substitute for fundamental fairness, true oversight, and effective mentorship.
At this point, I probably should confess: For almost the entirety of my first 20 years in practice, I was paid on a production-only basis. To be clear, that means I earned my income as a veterinary service provider purely as a percentage of the dollars collected from clients after services were rendered. In fact, if clients’ checks did not clear or we did not collect for some reason, I did not get paid.
It sounds like a harsh way to pay someone (especially a single mom), but it is also pretty old school—in a good way, I think. It made me work more entrepreneurially, trained me to see the practice the way my bosses did, has made me a better communicator to my clients, and, along the way, probably prepared me to be a better practice owner. It is also why I insist on paying my experienced associates the same way. (Newbies get special treatment until they are seasoned.)
To be fair, I had advantages. I trusted my first bosses implicitly, and they trusted me. Then I bought them out and kept running things the same way they did. It is not like I invented this wheel, I just like living on it and cannot help from longing for the days when more practices could reasonably hire, mentor, retain, and rely on associates for a graceful retirement.
Sigh, I sound so old.
Patty Khuly, VMD, MBA, owns a small animal practice in Miami, Fla. and is available at drpattykhuly.com. Columnists’ opinions do not necessarily reflect those of Veterinary Practice News.